Private Home Sales Keep Defying Caution

Source : The Business Times, June 16, 2009

Developers sold year-high 1,668 units in May amid discounts and improved sentiment

The buds of recovery sprouting in the private home market since February seem to have blossomed in May.

Developer sales for the month hit 1,668 units - a record for the year and 37 per cent more than the 1,214 in April. More transactions also occurred in the high-end sector at prices above $2,000 per square foot (psf).















However, some industry watchers continue to warn that the blooms may not last unless the economy improves decisively. They also remain concerned about weak rental demand and more residential supply coming on stream.

According to data from the Urban Redevelopment Authority (URA) yesterday, developer sales in May put on their strongest showing not just since January, but also since the sub-prime crisis began to rear its head. The 1,668 units sold last month were just 3 per cent shy of the last high of 1,723 units in August 2007.

'The stockmarket rally which began in mid-March has resulted in positive sentiment that has driven private residential home sales,' said CBRE Research executive director Li Hiaw Ho. Other consultants noted that lower home prices and immense liquidity searching for higher returns also kept home sales up.

In another sign that sentiment had improved, buying activity continued to return to the high-end core central region (CCR) in May. The launch of 32 units at Rochelle at Newton, for instance, was fully taken up.

Of the 1,668 units sold in May, 617 units or 37 per cent were from CCR. Colliers International pointed out that this proportion far exceeded the much lower 8 per cent seen in February.

Jones Lang LaSalle attributed the higher CCR sales to 'discounted pricing from developers', as seen in several projects such as Martin Place Residences, The Wharf Residence and Parc Centennial. At Martin Place Residences, for instance, units were first sold at a median price of $1,746 psf in January 2008. Last month, buyers took up 186 units at a median $1,423 psf.

Not only have sales increased in the high-end property market, more deals struck above $2,000 psf have emerged. According to Colliers, 14 units in May changed hands above that price level, compared with just one in February.

Notably, two apartments at The Orchard Residences went for $2,787 psf and $3,299 psf each last month. Other properties which saw median transaction prices of over $2,000 psf include Boulevard Vue, The Orange Grove, St Regis Residences and Vida.

The mid-market property sector also registered encouraging sales. Colliers noted that some 37 per cent, or 609 units of the 1,668 sold in May came from the rest of central region (RCR); the corresponding proportion in February was 29 per cent.

RCR saw the launch of the 26-unit Spring @ Langsat last month, of which nine units were taken up. Projects such as The Arte and The Mezzo continued to sell well.

Rosy sales aside, some buyers have returned units between April and May. URA data indicates, for instance, a return of 11 units at Mi Casa, three units at Verdure and three units at The Arte.

There are also industry watchers who remain guarded about the recent surge in home sales. This is 'largely fuelled by softer prices and strong latent demand, which alone will not be sufficient to sustain an overall recovery in the market', said Jones Lang LaSalle associate director of research Desmond Sim.

'Unless there are improvements in the overall economy, it may still take quite some time before we see the return of 'super-luxury launches' . . . Affordability still remains the main factor to entice buyers.'

Citi and Nomura Singapore also said in research reports last week that the property upswing may not be sustainable. Nomura, in particular, expects to see a W-shaped recovery in asset prices because downside risks such as rising unemployment, falling rents and rising supply still exist.

Colliers deputy managing director Grace Ng noted that the Singapore market is 'a bit peculiar' because buying is largely spurred by sentiment; many people 'actually come into the market because they see other people buying . . . rather than calculating yields'.

Even then, rental yields today are likely to be higher than what bank deposits can offer, she added.

Jet Li Buys $20m Binjai Rise Bungalow

Source : The Business Times, June 17, 2009

Tommie Goh acquires GCB from neighbour Sam Goi

Action star Jet Li seems to be sinking deeper roots in Singapore. He and his wife, Nina, bought a good class bungalow (GCB) on Binjai Rise for $19.8 million last month. The price works out to $871 per square foot based on the freehold land area of 22,723 square feet.

Mr Li: Spurred to set up his charitable foundation after a narrow escape from the 2004 tsunami. He moved his family to Singapore in 2007 for his children's education

Mr Li is understood to have become a Singapore citizen.

Last year, he announced plans to set up a base in Singapore for his charity and disaster-relief group One Foundation. The Jet Li One Foundation Singapore was registered in June 2008.

Mr Li had said at the Forbes Global CEO Conference here in September last year that Singapore offers the right conditions for grooming future NGO leaders.

Ex-neighbours: Mr Goi (left) and Mr Goh had been discussing the sale on and off for the past few years

He was spurred to set up his charitable foundation after a narrow escape from the 2004 tsunami. According to earlier media reports, Mr Li moved his two daughters and wife to Singapore in 2007 for his children's education.

The Beijing-born Mr Li led a life of hardship as a child (his father died when he was two) but persevered to emerge as China's overall national wushu champion for five consecutive years in the 1970s. He began his acting career in the early 1980s, starting with Shaolin Temple and today has about 40 movies under his belt.

Mr Li became a US citizen in the 1980s.

When contacted, a spokeswoman for Singapore's Immigration and Checkpoints Authority declined to confirm if Mr Li is now a Singapore citizen. 'Due to reasons of confidentiality, the ICA will not discuss individual cases publicly,' she said.

Mr Li was not the only luminary who picked up a GCB here in May.

2G Capital co-founder Tommie Goh bought 2A Ridley Park, next to his existing home, for $30 million or slightly over $1,100 psf.

The seller was 'popiah king' Sam Goi, executive chairman of Tee Yih Jia Food Manufacturing and an established investor in the GCB market.

Mr Goi is expected to move to a new palatial home that he has built on Nassim Road. BT understands that the two neighbours had been discussing the sale of 2A Ridley Park on and off for the past few years.

GCBs, with their stringent planning requirements, are the creme de la creme of Singapore's housing market. There are only about 2,400 such bungalows on the island.

Housing Downturn Hits New York City

Source : The Business Times, June 16, 2009

Number of sales in new developments in Manhattan drops 71% in April

(NEW YORK) New York City real estate prices are looking increasingly shaky as instability in two of the city's sexier submarkets - second homes in the Hamptons and new condos in Manhattan - register the latest signs of a housing downturn.

Glass ceiling: If prices on new condo towers do not fall to match the rest of the market and stay empty as a result, then it could eventually trigger foreclosures of entire properties

Property prices in the Hamptons, a fabled playground of the rich on nearby Long Island, rose steadily for almost two decades, but the prices on almost one-in-three of current listings have been cut an average 11 per cent from the initial asking, said Sofia Kim of real estate website Street Easy.com.

Back in town, the number of sales in new developments dropped a whopping 71 per cent in April from a year earlier as condo developers enmeshed in complicated financing arrangements have been slow to slash prices even as the market corrected all around them, Ms Kim said.

But if prices on these new condo towers do not fall to match the rest of the market and stay empty as a result, then it could eventually trigger foreclosures of entire properties, forcing much bigger price cuts as lenders seek to reduce their liability.

'If you have a property not priced at market, is it going to sell? Something has to give,' said Jonathan Miller, author of real estate broker Prudential Douglas Elliman's market reports.

The intensifying of the malaise afflicting New York City comes as housing in parts of the country that got hit hardest by the bust are showing signs of life. Home sales in California, Arizona and Nevada - states known for risky lending and speculation during the boom years - have risen as foreclosures and short sales lure buyers into the market.

In New York, it's the opposite. When the rest of the country was watching new neighbourhoods begin to disintegrate into foreclosure ghost towns in 2007-2008, Manhattan landlords would still publicise new buildings by hosting parties featuring pop stars, sushi and girls twirling hula hoops in a bid to convert still-airborne Wall Street bonuses into down payments.

Today, that bonus pool has dried up amid job and compensation cuts in the financial services sector that drives the city's economy.

'Things are much more subdued,' Ms Kim said. 'There's no money for parties.' The elite in the real estate industry had once hoped that Manhattan could escape relatively unhurt as other housing markets suffered. But the collapses of financial powerhouses such as Lehman and Bear Stearns destroyed such thinking.

'What ended up killing us was the foreclosure crisis because that's what killed Wall Street,' said Rick Hoffman, a regional senior vice-president in the Hamptons for the Corcoran Group, a high-end brokerage. 'It bit us in the end.'

Glass towers designed to appeal to finance industry hotshots had been shooting up across Manhattan as Wall Street's bonus boom powered a surge of new development, said Barry Hersh, a former developer and a professor of real estate at New York University's Schack Institute of Real Estate.

Now, many developers are struggling to secure lender approval to cut unit prices, he said. Without that, they could face foreclosure and bankruptcy, he said.

Some lenders, wary of an announced foreclosure's negative effect on sales, might opt for a more subtle scenario in which they quietly take control of a property.

'You walk in there as a potential buyer and there's still a developer and a broker and a marketing person; but in reality, the developer has been eliminated from the equation and the bank is deciding whether or not to accept your offer,' Mr Hersh said.

Of course, some condo developers are doing what must be done and are lowering prices either in consultation with lenders or behind the scenes with buyers.

The developers of the Georgica at 305 East 85th Street, for example, in Manhattan went so far as to address its disappointing sales by relaunching the building in mid-May with a revised marketing and pricing plan, said Beth Fisher, a director at Corcoran Sunshine Marketing Group.

Her group advised the developers not to move forward until they had negotiated the necessary price adjustments with its backers, who agreed to a range of cuts, some as much as 20 per cent.

'You're not going to outsmart the market,' she said. 'You have to give buyers what they want.'

Others maintain appearances but lower the real price - often about 5 per cent - by using concessions such as extra storage or the payment of transfer fees as bargaining chips, said Brown Harris Stevens broker Elaine Clayman.

'They just don't want to look like the prices are going down,' Ms Clayman said.

Hamptons owners cannot hide that. The blood out there may be blue, but Wall Street's bite is still spilling it.

The average sales price in the Hamptons and in the nearby North Fork market plunged 36 per cent from a year ago and 25 per cent from the fourth quarter to US$1.1 million in the first quarter, and the number of sales were down by half year-over-year, according to Prudential Douglas Elliman.

'We track bonuses pretty closely in the Hamptons,' Mr Hoffman said.

Fat bonuses whip up the market; skimpy ones flatten it. Take one Southampton property: It offers 13,500 square feet on five beachfront acres, a pond out back, nine bedrooms, a 'wine cellar/grotto' and a US$20 million discount to US$60 million from a previous price of US$80 million, according to StreetEasy. com. -- Reuters

Dubai House Prices To Fall Another 20%

Source : The Business Times, June 16, 2009

Half of the UAE's construction projects put on hold

(DUBAI) Dubai house prices will fall another 20 per cent this year, as the former boomtown continues to suffer a sharp economic downturn, a Reuters poll showed.

Residential real estate prices in Dubai - home to man-made islands in the shape of palm trees and the world's tallest building - have a less than 20 per cent chance of picking up before 2011, according to the median forecast of 10 analysts at banks, investment firms and research institutions.

Downward spiral: Property prices in Dubai have slumped since late last year

Three of 10 forecasters said that they expected prices to hit a bottom in the second half of 2009 and three predicted that it would happen in the first half of 2010. One forecaster said that prices would rise by 10 per cent from now in 2010.

Five analysts expected prices to fall a further 20 per cent or more this year, and prices could fall an additional 15 per cent next year before stabilising in 2011, the poll showed.

'We may see a further drop in prices as the magnitude of the problem in the sector is still high and the recovery of the sector may take some more time,' said Sajeer Babu, an equity analyst at National Bank of Abu Dhabi, which participated in the June 2-9 poll.

Property prices in the seaside emirate have slumped since late last year, when the global financial crisis and a drop in oil prices ended an economic boom in the Gulf Arab region.

Hundreds of billions of dollars of projects have been cancelled in the United Arab Emirates, Dubai firms have laid off thousands of employees and UAE banks have been loathe to extend new mortgage loans.

More than half of the construction projects in the UAE, worth US$582 billion, have been put on hold, Dubai-based market research firm Proleads said in February.

Rents in Dubai are seen declining by 40 per cent for the full year 2009 and a further 10 per cent in 2010 before recovering in 2011, the poll showed.

While it indicated that house prices for 2009 will fall an average of 50 per cent from a peak in the third quarter, it is likely that prices for off-plan properties, or properties still under construction, will fall in excess of that.

Liquidity problems, job losses and additional supply to the market are expected to delay the recovery in Dubai's property sector.

'We believe a recovery is likely in late 2010 or early 2011, with this based on a series of factors which include a decline in demand for buying property,' said Sana Kapadia, vice-president of equity research at EFG-Hermes in Dubai.

'Our house view is that lower or potentially negative population growth is likely to put a strain on demand,' she said, adding that more clarity regarding the legal framework for property ownership and greater confidence were also needed.

Dubai's population is set to fall 17 per cent this year, the bank said in a report in March.

In a previous Reuters poll in March, Shuaa Capital said that it expected 80,000 units of supply for the next two years.

Dubai property prices had soared sharply after the emirate opened its real estate sector to foreign investors in 2002, granting them freehold ownership rights at many developments.

From the beginning of 2007 to mid-2008, property prices jumped almost 80 per cent, according to Morgan Stanley estimates.

As buying properties became more expensive, Dubai's mainly expatriate population opted to rent instead, causing prices to spiral upwards.

Three of the analysts said that rents in Dubai could fall as much as 50 per cent during 2009.

Meanwhile, Abu Dhabi, the UAE capital and home to most of the country's oil, has fared better during the global economic downturn.

House prices there are expected to fall 25 per cent on average for the full year, with two out of eight analysts saying that prices would slump as much as 45 per cent.

Prices would remain flat in 2010 and pick up in 2011, the poll showed. -- Reuters

Discounts On UK Home Prices Shrink: Survey

Source : The Business Times, June 16, 2009

Gap between asking and selling prices narrows in May

(LONDON) UK homebuyers are clinching smaller discounts on property prices as the housing market stabilises, the Royal Institution of Chartered Surveyors (RICS) said.

Resilient: The UK housing market has endured the worst of the crash in the biggest recession in decades

Around 60 per cent of surveyors questioned in May said that the gap between asking prices and selling prices narrowed, while it widened in a survey last August, London- based RICS said yesterday.

Homes are now selling at an average of 11 per cent below the asking price.

The report adds to evidence that the British housing market has endured the worst of the crash in the biggest recession for a generation. RICS said last week the market may be 'stabilising' and mortgage lenders Halifax and Nationwide Building Society said house prices jumped in May.

Improved sentiment 'is reflected in a narrowing in the gap between asking prices and selling prices', Brigid O'Leary, an economist at RICS, said in a statement. 'The housing market will still be challenged by an uncertain economic backdrop, the threat of rising unemployment and continued restrictions on mortgage finance.'

UK home sellers raised asking prices in May by the most in more than a year, according to Rightmove plc, the operator of Britain's biggest property website.

RICS based the report on the responses to questions it occasionally adds to its monthly house-price survey that was last published on June 9. -- Bloomberg