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Property and it prices - Outlook for 2008

Today in ST : Views of research consultants

Factors preventing STI from going down

Factors that hit WALL ST are less relevant here

........  STI has being going down slowly and not crash as companies half year end soon and profits are healthy

.......... Get ready to collect dividends to offset slow drop in share price

 

Meanwhile Barclays said ...Prepare for glocal financial storm ..warms British Bank. Starits times June 28, 2008. as FED hasun lesaed an inflation shock by not raising rates.

 

Barclays needs $24b to bolster capital, Say Citi grp. Another day, another warming.....it still fall short recent S12b share sale, trailing EU peers.

teeth53      ( Date: 20-Jun-2008 20:52) Posted: US Sub-prime legend John Paulson: It's not over yet...Says write downs could hit S$1.8 trillion, surpassing IMF's S$1.3 trillion. and Nearly 1/3 of US chief Execs expect payroll cuts......but they also see fragile economy becoming stronger later this year and into next year. Paul is the hedge fund manager who made almost S$5.4 billion from correctly calling the implosion of US sub=prime mortgages last year. He mentioned "Sign of stress are accelerating in the housing market, and he is betting on falling securities prices. He is neither for bull or for bear, "just a realist". It started 8 months ago as also agree by Bob Janiuan, a Royal Bank of Scotland strategist in London. Sources from: Straits Times News. Dated Fri June 20, 2008.

 

Straits Times June 28, 2008.

Fund mgrs ..a concern and a possibility of contiune fallout on sub-prime credit / mortgage crises has yet to be felt  this year.

 

Straits Times Friday June 27, 2008. Prime office space rentals is nearing peaking

Last year up 92.3%. This yr 1st half up 7.3% Last Q up oni 0.6% as more office supply comes on stream. From: CB Richard Ellis (CBRE) report

 

Meanwhile same date Jun 26, 2008: Just for sharing info

CITI Grp (angmo analysts has stuck their neck out to said) sees no oversupply of homes in next two years, estimate oni 60% of d 30,000 units forecast will be completed, so fall in prices will be modest, (so a fall is fall).

Knight Frank say, a large supply of homes for occupation would negatively affect rentals, and this would in turn hit prices.

While Savills S'pore also believes d supply figures released by d Urban Redevelopment Authority (URA) are too high. URA think is just nice figures.

Bank like Credit Suisse and Barclays Capital have forecast drops of up to 40% in rents and prices, but Citi tips a fall of up to 30% and largely oni in high-end homes. Mid tier segment is likely to fall by 10% to 20%.

Luxury home prices have since surged by 149%, since d troughs in 2004. Prices in d mid tier and low-mass market segments rose by a still robust 79% and 39% respectively.

 

Straits Times June 26, 2008 (Thurs).

S'pore now has 77, 000 millionaires. figure represents a rise of 15.3%, each individual has over US$ 1m in net assets. R u one of them?. Congratulation. A few more millionaire will be made

13-Feb-2008 20:17

Others   /   The Rising Risk of Systemic Financial Meltdown

Painting a nice picture, S'pore will weather the storm, it does not effect the rich, so we will succeed in matter of fact. Most of the poor will be poorer due to d un-solve widering income gap. A few more millionaire will be made and economic report will again paint a rosy picture. Risk is get risker and only way to get rich is gamble. It is not going to get better, going to go turn ugly further down d road. To the wise, spare a thought and save some for rainy day. S'pore depending on India, China, EU (Gee...) and also alot on US to take in our factory products...rite. One down, not out, two to go.....

 

Just sharing info: SundayTimes June 22, 2008. Page 24 Invest [property]...attractive rental yields.

While sales have slumped this year after a strong run up, rental is still an attractive yields., after a spectacular year and after shophouses sales have sunk this year due to the cautious mood in the property market. Nervetheless due to high office high rental and to avoid hefty office rent increases.

Buyers bidding up prices of shophousees in choice area, esp in central business district (CBD), esp near MRT station around China Town..Amoy St and Telok Ayer St., those picking up those bill are mainly S$5mil and above, mainly from hedge funds, lawfirms, architural firms, interior designing firms and art design school.

Shophouses is attractive and popular for smaller set-ups. Said Property Research Consultants. 

  

teeth53      ( Date: 15-Jun-2008 13:25) Posted: Yap...hoping to get back some cash in return for investing......after all rental mkt still stable. soloman      ( Date: 14-Jun-2008 13:37) Posted: Of course some property developers try to say mid and loss end homes holding well Developers of course try to protect market Wait for 1-2 years more and we will see whole mkt plunge like other property consultants say Many are not buying because of the plain fact that lifetime also cannot pay off So those who buy gamble by renting rent out

 

DBS keeps Overweight call on Singapore property sector after government's 2H08 Government Land Sales Programme (GLSP) announcement cuts residential, hotel and commercial quantum made available over Confirmed List by 62%, 58%, 65% respectively vs 1H08. "While the announcement of the 2H08 GLSP does not directly affect any listed developer, it does inspire confidence in the planning of land supply in Singapore, ensuring sustainable and steady growth in the property sector for the medium-term." Tips City Developments as top pick as proxy to Singapore residential market; rates Buy with target price at $12.90. Says also likes F&N for predominantly mass-market landbank; rates at Buy with $5.80 target. Among mid-cap developers, tips Allgreen for undemanding valuation, exposure to mid-tier/mass-market segments; rates Buy with $1.66 target.

 

Singapore government land sales for 2H08 show a drop in confirmed list of properties to be launched for tender but still represent a lot of supply, says Credit Suisse. Broker notes confirmed list of residential, commercial, hotel properties around 60% lower than 1H08, but aggregate supply still maintained as reserve list much higher. Maintains Underweight call on Singapore property sector, says outlook remains tough; "we continue to see negative headwinds for the Singapore property sector: potentially rising interest rates, construction costs, supply completions and falling rents."

 

Please refer to.......thk Qs for Full article post dated on this same forum.

tanglinboy	Posted: 15-Jun-2008 time: 09:48
	Here's the full article..

 

Meanwhile in S'pore....the govt is set to stablize with less been put up for land sales / development. with key project in Kallang river area and at Jurong East St-13 (Jurong East MRT Centre).

14-Jun-2008 11:41	Others   /   Property and it prices - Outlook for 2008      4Go to Message
	Capland CEO. Mr Liew said low-end homes prices expected to stay stable. Last mth Capland reiterated its target to launching 800-1000 units this year. (isit B''cos Capland is launching??, so mtk is stable) Developers face by credit squeeze, falling sales & lower prices, (In S'pore) Developers are getting ready to release mass- to mid-market condos, encouraged by the response to modestly-priced developments recently. Industry sources say demands exists, but only at low-end against backdrop of a much quieter property mkt. While high-end projects, shot up to unrealistic levels during the property boom last year. Analysts say mkt turned silent, led some project that home prices will fall by as much as 40% over d next 2 years. My tot is left wondering who i am to listen, read or believe in........???~?~bluur, bluur liao.
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14-Jun-2008 10:57	Others   /   Property and it prices - Outlook for 2008      4Go to Message
	Just FYI (more info) Prime condo prices heading for long, gentle decline (SINGAPORE) The prices of condos and private apartments in the Core Central Region will inch downwards and are unlikely to touch their recent peaks for almost the next four years, a model developed by Cushman & Wakefield shows. Any rebound is likely in 2012. (Business Times- sources)

 

US Sub-prime legend John Paulson: It's not over yet...Says write downs could hit S$1.8 trillion, surpassing IMF's S$1.3 trillion. and

Nearly 1/3 of US chief Execs expect payroll cuts......but they also see fragile economy becoming stronger later this year and into next year.

Paul is the hedge fund manager who made almost S$5.4 billion from correctly calling the implosion of US sub=prime mortgages last year.

He mentioned "Sign of stress are accelerating in the housing market, and he is betting on falling securities prices.

He is neither for bull or for bear, "just a realist". It started 8 months ago as also agree by Bob Janiuan, a Royal Bank of Scotland strategist in London.

Sources from: Straits Times News. Dated Fri June 20, 2008.

 

Housing slump really hits home for Ex-Citi chief...No Takers: even after down d price by US$300,000, former CEO Charles Prince cannot find a buyer for his five bedroom, Tudo-style house in Greenwich, Connecticut, which he list two months age.

 

CIMB keeps Neutral stance on Singapore property sector. Broker notes new home prices still resilient, but that "secondary transactions tell a different tale," seeing 20%-40% price declines from September 2007 levels. Adds, while property traditionally ideal investment in inflationary environment, May's nearly 10% on-month, seasonally adjusted fall in non-oil exports and current high inflation levels show Singapore might be entering stagflation period. "We believe this could have negative implications for the mid-high-end of the property sector," says broker. But notes that there are some positives in sector with recent launches drawing demand due to more realistic prices. Adds, "in the current risk-averse environment, we take selective bets on well-capitalized developers with strong pre-sales expected to come though such as City Developments and Wheelock Properties; rates City Developments Outperform with $13.90 price target, Wheelock Properties at Outperform with $2.85 target price.

 

Despite Singapore's primary residential data showing signs of recovery in May with uptick in both new launches and unit sales, CLSA remains Underweight on the sector. Says developers held back launches, adopted soft launches to clear inventories, causing actual launched units to be underestimated, take-up ratio likely overstated. Notes also, overall demand remains weak, as 2008 year-to-date new sales only 29% of annual sales in last market trough in 2003; also only 11% of 2007 sales. "We remain of the view that a turnaround is not in sight. Developers are releasing more projects as reflected in the latest data, but these are at lower prices, as revealed by our analysis. This continues to reflect market weakness." Says City Developments, Keppel Land more exposed to Singapore residential slowdown than CapitaLand due to 11%-27% NAV exposure to Singapore residential, slow Vietnam residential market.

 

For Singapore real-estate exposure, JPMorgan tips developers over S-REITs. "The developers trade at an average 20% discount to reasonable RNAV estimates that already reflect across-the-board capital value declines from last year''s average levels, and we feel there is a greater likelihood of positive price catalysts with the 2H08 launch of residential projects by developers that take a realistic pricing view." Among large-cap developers, tips exposure to City Developments, CapitaLand; for mid-caps, tips Wing Tai.

 

 

Just Sharing...FYI: Valuation the culprit in artificially inflating HDB flat prices

by Bernard Fook Weng Loo Tue, Jun 17, 2008. The Straits Times OVER the past 18 to 24 months, HDB resale property prices have shot through the roof and many lower-income families have been priced out of the market. Although this is partly driven by the shortage of HDB flats and increased demand, what is not apparent to many people is the manner in which valuations have artificially fuelled inflation. Take the three-room flat, for example. This is the smallest HDB flat and is targeted at the lower-income group. Between March and May, prices of a three-room flat in Yishun, in the same block and with the same floor area, have shot up by between $18,000 and $30,000. The price of a similar three-room flat in Ang Mo Kio ranges from $184,000 to $300,000 in the same period. Similar trends are observed in almost every estate and in almost every flat type. I accept that several factors may account for the differential in the value of a property, but is it realistic to expect the valuation of the same type of flat in the same block to have risen by 10 to 50 per cent over a short three-month period? Even if the interior renovation of a unit is particularly good, could it account for such a difference? And why does the trend keep increasing? A check with several properties in the weekend classifieds shows that the valuation of similar properties in these locations has gone up by at least another $10,000 since the last transacted prices last month. What can justify the drastic increases? A three-room flat in a choice location, such as Bishan and Ang Mo Kio, now costs more than $300,000. A two-bedroom private apartment in an older development costs only slightly more - a clear sign that HDB flats are over-priced and out of reach for some lower-income families. It seems that, in valuing a property, the valuer takes the last transacted price as a benchmark. Since the last transacted price includes the cash top-up sellers usually demand from buyers, the value of the property is artificially inflated. Past experience in Singapore and Britain shows that when property prices are artificially inflated by valuation, sooner or later, prices will crash and many people will suffer. The HDB should bar inclusion of the cash top-up in valuations. Patrick Tan

 

Yap...hoping to get back some cash in return for investing......after all rental mkt still stable.

soloman      ( Date: 14-Jun-2008 13:37) Posted: Of course some property developers try to say mid and loss end homes holding well Developers of course try to protect market Wait for 1-2 years more and we will see whole mkt plunge like other property consultants say Many are not buying because of the plain fact that lifetime also cannot pay off So those who buy gamble by renting rent out

 

Here's the full article..

 

Prime condo prices heading for long, gentle decline

Cushman model shows subdued market until 2012 but firm argues it's still a good time to buy

Business Times - 14 Jun 2008
By KALPANA RASHIWALA

(SINGAPORE) The prices of condos and private apartments in the Core Central Region (CCR) will inch downwards and are unlikely to touch their recent peaks for almost the next four years, a model developed by Cushman & Wakefield (C&W) shows. The extent of the fall will depend on how slowly the Singapore economy grows, but C&W expects these median prices to drop between 8 per cent and 17 per cent from their peak of Q1 2008, before recovering by some time in 2012.

Even so, it argues that now may be a good time to look at buying into new developments, as the developers are unlikely to slash prices dramatically. Instead, a gentler decline is on the cards.

The trigger for this is 'there's still a lot of private housing supply', says C&W's head of forecasting Lee Chong Yong, who developed the model.

Mr Lee points to the Urban Redevelopment Authority's projections that about 8,000 non-landed private homes will be completed this year, followed by another 12,000 units next year, around 16,000 in 2010, and some 20,000 in 2011, before the supply eases to around 8,000 units again in 2012.

'Some of these units have not been launched yet. As time goes on, the unsold or yet-to-be-sold stock will keep creeping up, until 2011. The extent to which there will be downward price pressure from this will depend on the pace of economic growth. The stronger the economic growth, the faster the supply can be absorbed,' Mr Lee says.

Assuming Singapore's GDP grows at a rate of 4 per cent a year between 2008 and 2012, the median per square foot (psf) price for non-landed private homes in CCR - which includes the prime districts 9, 10 and 11, Downtown Core location and Sentosa Cove - will fall a total of 17 per cent between the Q1 2008 high and Q1 2012.

Based on a higher 5 per cent GDP growth rate, the price decline will be a lower 12 per cent over the same period.

If GDP grows at 6 per cent, the median price will decline 8 per cent between early 2008 and Q3 2009 before recovering back to the Q1 2008 high by end-2012.

C&W also tracked developers' sales in 255 new condo projects across Singapore and constructed an islandwide non-landed private residential new sales price index, which showed a 2.2 per cent decline between the peak in December last year and May this year.

'From the start of the credit crunch in August 2007 through to May 2008, developers of only 10 per cent of the 255 new condo projects tracked have cut their prices by more than a fifth,' C&W said.

C&W argues that 'compared to the 1997-1998 Asian crisis, today's falling prices are at present moderate without any signs of panic from the developers'. During the Asian crisis, most developers cut prices by at least 20 per cent while some reduced asking prices by up to 40 per cent in 12 months, it said.

The property consultancy group says 'now would be a good time to consider buying into new developments'. It also notes that expats living in Districts 9, 10 and 11 have seen a doubling of rents over the past two years, while sale prices of many condos are starting to see a slow price decline. 'For expats expecting to stay in Singapore, it would be a good time to consider buying (a condo) to take advantage of this short-term dip in the market,' C&W's head of residential Connie Looi says.

But JPMorgan analyst Christopher Gee gave a different view, saying that compelling values were needed to get buyers back to the market. 'The fear of making a purchase now, only to have prices fall later, is what's holding buyers back at this stage. Developers too don't want to sell too cheap; if prices recover, then they would have missed out on making bigger profits.'

One property market watcher said that tempting buyers back would require mass-market condos to be launched at $600-$650 psf on average, compared with a price of $700-$800 psf last year.

In the mid-range category, a freehold condo in the Balestier area for instance would today need to be priced at $900-plus psf, instead of the $1,000-plus psf they're still being marketed at, based on last year's pricing. For freehold projects in the prime districts 9,10 and 11, what would lure buyers back today would be an average price of no more than $3,000 psf, instead of $3,500-$4,000 psf last year, another industry observer said.

Giving his take, an experienced property industry player said: 'How Singapore home prices will pan out will depend on both internal and external factors. Residential property prices have fallen in many markets across the globe, such as the US, Europe, UK, Australia, Vietnam and China. If we want to be in line with the rest of the world, we'll also see some slide.'