Singapore Real Estate Robust sales at two condo launches at the weekend Source: Straits Times Brisk sales at weekend launches of two 99-year leasehold condominiums at Pasir Ris and West Coast suggest that the recent rebound in private home sales could be set to continue. Analysts said the robust demand was a good sign, but attractive pricing probably played a large part.
CDL cuts prices for Coco Palms launch 82% of 600 units available at weekend launch have been sold Source: Business Times / Singapore CITY Developments (CDL) sold most of its launch units in the Coco Palms project over the weekend after trimming the price tag, the developer said yesterday. Coco Palms, a joint venture between CDL and Hong Realty (Pte) Ltd, sold about 490 units at an average price of $980 per square foot (psf) as at 3pm yesterday. The number of units sold represents 82 per cent of the 600 units available at the weekend launch, or 52 per cent of the 944 units in the entire development. Separately, a representative for Aspial Corp subsidiary World Class Land said that its Waterfront@Faber project sold 80 units, but declined to disclose how many units were offered for launch. Against the project's entire stock, the developer sold 38 per cent of the 210 units in the entire development.
CDL said that it sold the Coco Palms units below initial expectations. -By Kenneth Lim http://www.businesstimes.com.sg/premium/singapore/cdl-cuts-prices-coco-palms-launch-20140519 Views, Reviews & Forum Challenges facing Singapore's economy Source: Straits Times The 50th anniversary of Singapore's birth as a nation next year will also mark the midpoint of a bold effort to reshape its future. The country launched a 10-year economic restructuring plan in 2010, centring on raising the economy's productivity and lifting the salaries of its workers.
Economic restructuring for growth Source: Straits Times The Government reacted quickly, convening an Economic Committee in April 1985 to review the economy and identify new strategies for growth. This was the start of what would become a pattern of economic soul-searching after each major recession in Singapore.
Transport lessons from Govt's housing policies Source: Straits Times It seems obvious by now that the Government's handling of housing issues has been the most successful of several outstanding policy issues. At least, this is going by the results of a recent Straits Times survey on key election issues and their progress since the 2011 General Election. By contrast, government policies on transport issues have yet to resonate.
Home prices unlikely to fall, due to high demand Source: Today Online / Voices I refer to the report “Resale prices of non-landed private homes hit 16-month low” (May 13). The expectation by one of the analysts, that the residential property price index would fall by 5 per cent to 10 per cent this year, appears to be an overestimation. Ultimately, a supply and demand imbalance will influence property prices and rentals. The Urban Redevelopment Authority estimated the number of homes being completed will be 20,000 this year and 24,000 next year. Despite this record number of homes flooding the market, the potential demand would outstrip supply and counter the effect of the cooling and loan curb measures. Four main areas of real demand will support both the resale and rental market. First, new permanent residents and citizens are added annually to the population and they are able to absorb the influx of completed homes. Second, the OCBC Investment Research showed that, when interest rates fell from 2.2 per cent in 2008 to 0.56 per cent in 2012, households earning S$8,700 a month could have afforded a S$1 million condominium. Only 10 per cent of these 447,000 households would match the supply of homes this year and next. Third, there has been pent-up demand due to rapid population growth and undersupply from 2005 to 2010, which has been largely unfulfilled. Fourth, there are many singles in the 30 to 39 age group, enough of whom are diploma and degree holders who can take up all the shoebox units, and then some, from the mass condominium market. The other key driving factors are interest rates, affordability, rental yield, unemployment rate and liquidity. These are sound fundamentals, at least for the near future.
With a burgeoning demand, any further price fall this year is unlikely, as this would draw buyers back to the market. -By Wang Toon Tuan http://www.todayonline.com/voices/home-prices-unlikely-fall-due-high-demand Global Economy & Global Real Estate Growth in China’s home prices slows, prompting easing More relaxation of property curbs expected in coming months as market slides further, says economist Source: Today Online / Business Beijing — China’s new-home prices rose at a slower pace in more cities last month as developers offered discounts and the economy slowed, prompting the easing of property curbs in some places. Compared with 56 cities in March, prices last month climbed in 44 of the 70 cities tracked by the government — the fewest cities with price gains since October 2012, when rises were recorded in only 35 cities on a monthly basis. Home-price growth moderated both in first-tier and less affluent cities. Prices in Beijing rose 0.1 per cent from March, said the National Bureau of Statistics in a statement yesterday — the slowest since September 2012, while Shanghai prices rose 0.3 per cent, the smallest gain since November 2012. Hangzhou in the east had the largest decline last month among cities tracked, with prices falling 0.7 per cent from a month earlier. “We’ll see more relaxation of policies in the coming months because local governments will have more incentive to do this as the market slides further,” Citigroup Inc’s Hong Kong- based senior China economist Ding Shuang said yesterday. He added that home-purchase restrictions should be relaxed to increase demand. On May 13, the central bank called on the biggest lenders to accelerate the granting of mortgages, after sliding home sales and property construction helped drag the world’s second-largest economy to its slowest pace in six quarters in the first three months of the year. Developers including China Vanke Co had cut property prices since March to lure homebuyers, said China Real Estate Information Corp. Curb Easings Home sales fell 18 per cent last month from March, the statistics bureau reported last week, while private data also showed the housing market cooling. Prices climbed 9.1 per cent in April, slowing for a fourth month, said SouFun Holdings — the nation’s biggest real-estate website. At least six smaller Chinese cities have started relaxing local curbs on speculative and investment-driven home buying since last month. The city of Zhengzhou in Henan province issued draft rules to promote home purchases by low-to-middle-income households, said a statement posted on the government’s website on May 7. Prices were unchanged in 18 cities in April from a month earlier. Accelerate Credit New-home price gains in first-tier cities also slowed from a year earlier. Housing prices in Guangzhou and Shenzhen in the south each rose 11 per cent from a year earlier, while prices in Beijing jumped 8.9 per cent. All three cities recorded the slowest pace since March last year. “The only effective measure to ease the housing downturn is to reaccelerate, or at least stabilise, credit growth,” China economist Yao Wei at Societe Generale SA in Hong Kong, wrote in a May 13 report. “Clearly, policymakers know which lever to pull, but the question is to what extent.” The government should adopt a measured and targeted credit easing as a credit binge will inflate the industry again and deepen the oversupply in smaller cities, she said. Chinese policymakers’ reluctance to step up monetary stimulus is being tested by data last week that showed the nation’s economic slowdown had deepened, with unexpected decelerations in industrial output and investment growth, as well as a decline in home sales. Factory production rose 8.7 per cent last month from a year earlier, down from 8.8 per cent in March. Fixed-asset investment excluding rural households increased 17.3 per cent in the first four months of the year — the slowest for the period since 2001.
Existing-home prices fell 0.2 per cent in Beijing last month from March and were unchanged in Shanghai, yesterday’s data showed. Beijing, Shanghai, the country’s financial centre, and the business hubs of Guangzhou and Shenzhen are considered first tier by the bureau of statistics. -By Bloomberg http://www.todayonline.com/business/growth-chinas-home-prices-slows-prompting-easing Dismal data in China raises likelihood of more stimulus Source: Straits Times N. Korea offers rare apology for building collapse Source: Straits Times Signs show London residential property market has peaked Prime properties see price resistance as Asian buyers grow wary Source: Business Times / Top Stories AIR is beginning to leak from the London residential property balloon. Moreover, anecdotal reports indicate that Asian and other foreign buyers are no longer rushing to buy prime London properties following the surge in prices, the jump in sterling in the past year, threats of taxation and the Bank of England's potential anti-bubble moves. "The UK prime residential market has continued to perform well with year- on-year increases in both volume and value," said Jeremy Helsby, group chief executive of Savills in the estate agent's trading statement last Monday. "(But) we have lately seen some cooling in the prime and super prime central London market." Indeed, a count of some 600 properties on sale above £2 million (S$4.2 million) on the websites of upmarket agents Savills and Knight Frank shows that only 9 per cent have been sold and only a further 14 per cent of potential buyers have agreed on an "on offer" price, but so far have not exchanged contracts with sellers. -By Neil Behrmann in London Surging home prices biggest threat to UK economy, says BOE governor Central bank head warns that more needs to be done to check market as economy improves and inflation is under control Source: Today Online / Business LONDON — Mr Mark Carney, Bank of England (BOE) governor, has identified surging housing prices as the biggest risk to the United Kingdom economy, as he outlined potential policy responses. In his strongest warning yet about the property market, Mr Carney said officials could do more to tackle excesses if needed. Among the options are: Imposing more checks on the affordability of mortgages, limiting types of loans or advising the government to rein in its Help to Buy programme. “All those things are possibilities and we will consider them all,” Mr Carney said yesterday in an interview with the Murnaghan show on Sky News. “The biggest risk to financial stability, and therefore to the durability of the expansion, those risks centre on the housing market and that’s why we are focused on that.” Housing is becoming the BOE’s most significant domestic concern now that the economy is improving and inflation is under control. Home prices jumped almost 11 per cent last month, the biggest annual gain since 2007, said the Nationwide Building Society. While Mr Carney has downplayed raising interest rates to cool off the housing market, he highlighted its economic threat. The central bank needs to ensure that lenders are strong enough to make loans and that mortgages are lent to borrowers who can afford them, Mr Carney said in the interview. The gain in prices is broadening and may also be fuelling the need for large mortgages of more than four times borrowers’ salaries, he said. “We would be concerned if there were a rapid increase in high loan-to-value mortgages across the banks,” he said. “If that were much more generalised and particularly if it were accompanied by very high loan-to-income ratios, we’ve seen that creeping up and it’s something we’re watching closely.” Affordability tests came into force in the UK last month, requiring borrowers to prove they can afford repayments even when interest rates rise in line with market expectations. After its March meeting, the BOE’s Financial Policy Committee said a tool to make the tests more stringent will be available as soon as next month. The central lender also could recommend the government curtail its Help to Buy programme. “It’s a pretty targeted programme; it’s a relatively small programme at this point, but it could grow a lot and it could change attitudes in other parts of the mortgage market (and) that’s why we have to be vigilant,” Mr Carney said. Policymakers wanted to avoid the “build-up (of) another big debt overhang that is going to hurt individuals and is very much going to slow the economy in the medium term”, he said. The UK needs more supply in the housing market, which has “deep, deep structural problems”, he said. “There are not sufficient houses built in the UK,” said Mr Carney, the former governor of the Bank of Canada. While there are half as many people in Canada as the UK, “twice as many houses are built in Canada every year than in (the) UK”. Among other risks to the economic expansion, Mr Carney said, weak growth in the eurozone area and “the strength of sterling” are creating “real challenges for our exporters” and the balance of the UK recovery. Slowdowns in emerging markets such as China and geopolitical issues pose other challenges, and the recent low volatility of markets could reverse sharply at some point, he said.
“The level of volatility is very low across a wide range of asset classes,” he said. “That won’t be sustained as the recovery continues; at some point there is going to be an adjustment. That adjustment could be quite sharp, that would tighten financial conditions and that would provide a new headwind for the recovery.” Carney Says Housing Poses Biggest Risks as Prices Surge Source: Bloomberg / Luxury Bank of England Governor Mark Carney shifted closer to reining in surging U.K. home prices by branding them the No. 1 risk to the economy and listing potential policy responses. In his most forthright warning yet over the property market, Carney said policy makers “could do more” to tackle excesses if needed. Options include imposing more checks on the affordability of mortgages, limiting types of loans or advising the government to rein in its stimulus program. His comments came as data showed housing continued to strengthen this month, with prices rising to a record. “All those things are possibilities and we will consider them all,” Carney said in an interview on Sky News yesterday. “The biggest risk to financial stability, and therefore to the durability of the expansion, those risks center in the housing market and that’s why we are focused on that.” Just four weeks before the Carney-helmed Financial Policy Committee convenes to assess the housing boom, it received fresh incentive to act, with Rightmove reporting prices rose 3.6 percent across England and Wales this month, propelling prices to an all-time high of 272,003 pounds ($457,700). Housing is the Bank of England’s most significant domestic concern now that the economy is improving and inflation is under control. BOE Deputy Governor Jon Cunliffe said earlier this month that it is “dangerous” to ignore the momentum. Pound ChallengesAmong other risks, Carney said the strength of the pound is creating “real challenges” for both exporters and the balance of the U.K. expansion, while he warned recent low volatility in financial markets could eventually adjust sharply. Sterling has appreciated more than 10 percent against the dollar in the past year and reached $1.6996 this month, the highest level in almost five years. Britain’s housing market is being fueled by an improving economy, record-low borrowing costs and government incentives. London is leading the surge, with an annual gain of more than 16 percent. Rightmove director Miles Shipside said the capital needs a “mammoth” building program to boost supply. Carney’s analysis that there are “deep, deep” structural problems in the form of weak housing supply across the U.K. was echoed across the political spectrum, albeit with clashes over how much the government is doing. More HomesAlso speaking on Sky News, Prime Minister David Cameron said “fundamentally we need to build more homes” and that his government is encouraging that. Deputy Prime Minister Nick Clegg said on BBC Television that the government should “pare back” its Help to Buy stimulus if Carney advised doing so. Ed Balls, Labour Party Treasury spokesman, said the government should do more to spur building, as well as reduce the top value of homes that can be purchased under Help to Buy. He said that unless the government acts, there is a danger the BOE “will be forced to raise interest rates prematurely.” The central bank needs to ensure that lenders are strong enough to make loans and that mortgages are loaned to borrowers that can afford them, Carney said in the interview. The gain in prices is broadening and may also be fueling the need for large mortgages of more than four times borrowers’ salaries, he said. “We would be concerned if there were a rapid increase in high loan-to-value mortgages across the banks,” he said. “If that were much more generalized and particularly if it were accompanied by very high loan to income ratios, we’ve seen that creeping up and it’s something we’re watching closely.” Affordability tests came into force in the U.K. last month, requiring borrowers to prove they can afford repayments even when interest rates rise. After its March meeting, the FPC said a tool to make the tests more stringent will be available as soon as June. The BOE could also recommend the government curtails Help to Buy, which allows for house purchases with a down payment of as little as 5 percent. “It’s a pretty targeted program, it’s a relatively small program at this point but it could grow a lot and it could change attitudes in other parts of the mortgage market, that’s why we have to be vigilant,” Carney said. Policy makers wanted to avoid the “build up another big debt overhang that is going to hurt individuals and is very much going to slow the economy in the medium term,” he said. -By Simon Kennedy and Oliver Staley
Blackstone Said to Sell Boston Buildings for $2.1 Billion Source: Bloomberg / Personal Finance Blackstone Group LP (BX) agreed to sell five office properties in Boston to a venture led by Toronto-based Oxford Properties Group for about $2.1 billion, according to two people with knowledge of the transaction. The buildings total almost 3.3 million square feet (306,000 square meters) and are mostly in downtown Boston, said the people, who asked not to be named because the sale is private. The sale is Blackstone’s largest of U.S. office properties since the real estate market crash. Oxford plans to purchase 100 High St. and 125 Summer St., and team with JPMorgan Chase & Co. (JPM)’s asset-management unit to buy three other properties: 60 State St., 225 Franklin St. and One Memorial Drive in nearby Cambridge, the people said. Blackstone also is selling its roughly half-stake in Boston’s Rowes Wharf to part-owner Morgan Stanley (MS) for about $200 million, according to one of the people. Peter Rose, a spokesman for New York-based Blackstone; Claire McIntyre, a spokeswoman for Oxford Properties; Matt Burkhard, a spokesman for Morgan Stanley; and Kristen Chambers, a spokeswoman for JPMorgan, all declined to comment. The Wall Street Journal reported the transaction yesterday. Blackstone has been selling assets from its 2007 takeover of Equity Office Properties Trust as real estate in prime U.S. coastal markets rebounds. Office prices in central business districts jumped 25 percent in the 12 months through March, for the best performance of any core commercial-property type, according to Moody’s Investors Service and Real Capital Analytics Inc. Blackstone SalesBlackstone sold $8.9 billion of office buildings globally last year, up from $1.7 billion in 2012, according to New York-based property-research firm Real Capital. Sales last year included a 50 percent stake in London’s Broadgate office complex for more than $2.8 billion. Blackstone, the largest private-equity investor in real estate, had held talks with several potential buyers besides Oxford Properties. The sales price of about $2.3 billion for the six Boston assets was in line with its target for total proceeds of about $2.5 billion, which had assumed that 100 percent of Rowes Wharf would be sold. Rowes Wharf, the pink-hued building with an arch overlooking Boston’s harbor, includes a hotel as well as office space. Chicago-based Equity Office was the largest U.S. office landlord at the time Blackstone acquired it for $39 billion from billionaire Sam Zell. The private-equity firm immediately flipped many of the buildings to pay down debt. Oxford PropertiesOxford Properties, the real estate unit of the Ontario Municipal Employees Retirement System, oversees about $20 billion of assets that it manages for itself and on behalf of partners. It has stakes in about 50 million square feet of office, retail, industrial, apartment and hotel properties, mainly in Canada, the U.K. and U.S. In the U.S., the company is focusing on office and retail investments in New York and Washington, while exploring diversification into other cities, including Boston, Los Angeles and San Francisco, according to its website. Canadians were the largest cross-border buyers of U.S. office buildings from 2010 to 2013, according to Real Capital. They were involved in $5.6 billion of such acquisitions last year, more than twice the next-biggest group, from China. So far this year, buyers from Singapore and Norway are ahead of Canadians. Property Availability“Most of the major properties in Canada are already institutionally owned and don’t come up for sale often,” said Real Capital President Robert M. White. “The availability of high-quality investments and the desire to diversify their holdings are the main reasons behind the cross-border appetite of Canadians.” Demand has been climbing for core real estate, the stable, well-leased properties that typically attract pension funds and other institutional investors. Net inflows to core funds jumped to $1.4 billion in the first quarter, up 35 percent from a year earlier, according to the Chicago-based National Council of Real Estate Investment Fiduciaries. -By Hui-yong Yu London House Prices Surge to Record High Source: Bloomberg / Luxury Asking prices for London homes rose to a record this month as all 32 of the capital’s boroughs recorded increases, according to Rightmove Plc. Values climbed 3.3 percent from April to an average 592,763 pounds ($997,000), the property website operator said today. Across England and Wales,prices rose 3.6 percent, the most for this time of year since 2002, reaching an all-time high of 272,003 pounds. The housing market is being fueled by an improving economy, record-low borrowing costs and government incentive programs. London is leading the surge, with its annual gain of more than 16 percent almost twice the U.K. average. Rightmove director Miles Shipside said the capital needs a “mammoth” building program to boost supply. “London has seen the most sought-after locations jump in price as they have become prized by the world’s wealthy,” Shipside said. “Based on this month’s figures, there’s little sign of an overall slowdown even though some areas look to have topped out.” Bank of England Governor Mark Carney said last weekend that house prices pose the biggest risk to the economy and policy makers “could do more” to tackle excesses if needed. Options include imposing more checks on the affordability of mortgages, limiting types of loans or advising the government to rein in its stimulus program. The north London borough of Haringey and the capital’s Kensington and Chelsea area saw gains of more than 6 percent this month from April, Rightmove said. Greenwich was the city’s worst-performing borough, with a 0.6 percent increase. All 10 regions in England and Wales posted gains this month, led by the southeast region surrounding London, with a 4.5 percent increase. -By Scott Hamilton http://www.bloomberg.com/news/2014-05-18/london-house-prices-surge-to-record-high.html China Home-Price Growth Slowdown Spreads as Developers Discount Source: Bloomberg / Luxury China’s new-home prices rose in April in the fewest cities in a year and a half as developers offered discounts and the economy slowed, prompting the easing of property curbs in some places. Prices last month climbed in 44 of the 70 cities tracked by the government compared with 56 in March. That was the fewest metropolitan areas with price gains since October 2012 when increases were recorded in only 35 on a monthly basis. After four years of government restrictions to cool the housing market, home sales and property construction are sliding and have become a drag on the country’s economy, which recorded its slowest growth in six quarters in the first three months of the year. The central bank on May 13 called on the biggest lenders to accelerate the granting of mortgages as developers including China Vanke Co. and Greentown China Holdings Ltd. cut property prices to lure homebuyers. “China’s property market is on a very dangerous brink,” Xu Gao, Beijing-based chief economist at Everbright Securities Co., who formerly worked at the World Bank, said in a phone interview yesterday. “Concerns about the slowing market led to weakening prices and sales, which turned into a vicious circle.” Home-price growth moderated both in first-tier and less affluent cities. Prices in Beijing rose 0.1 percent from March, the National Bureau of Statistics said in a statement yesterday, the slowest since September 2012, while Shanghai prices increased 0.3 percent, the smallest gain since November 2012. The eastern city of Hangzhou had the largest decline in April among cities tracked, with prices falling 0.7 percent from a month earlier. Developers’ SharesThe Shanghai Stock Exchange Property Index, which tracks 24 developers listed, fell 1.4 percent as of 9:50 a.m., the biggest decline among five industry groups on the benchmark. Vanke, the nation’s biggest developer by market value, fell 1.6 percent to 7.58 yuan in Shenzhen, while China Overseas Land & Investment Ltd., the country’s biggest Hong Kong-listed developer, dropped 1.6 percent to HK$18.94. Home sales fell 18 percent last month from March, the statistics bureau reported last week, and private data also showed the housing market is cooling. Prices climbed 9.1 percent in April, slowing for a fourth month, according to SouFun Holdings Ltd., the nation’s biggest real estate website. Relaxing PoliciesAt least six smaller Chinese cities have started relaxing local curbs on speculative and investment-driven home buying since April. The northern city of Zhengzhou in Henan province issued draft rules to promote home purchases by low-to-middle-income households, according to a statement posted on the government’s website on May 7. “We’ll see more relaxation of policies in the coming months because local governments will have more incentive to do this as the market slides further,” Ding Shuang, Hong Kong-based senior China economist at Citigroup Inc., said in a phone interview yesterday. He said that home-purchase restrictions should be relaxed to increase demand. Prices were unchanged in 18 cities in April from a month earlier. Accelerate CreditNew-home price gains in first-tier cities also slowed from a year earlier. Housing prices in Guangzhou and Shenzhen, in the southern province of Guangzhou, each rose 11 percent from a year earlier, and prices in Beijing jumped 8.9 percent. All three cities recorded the slowest pace since March last year. “The only effective measure to ease the housing downturn is to reaccelerate, or at least stabilize, credit growth,” Yao Wei, China economist at Societe Generale SA in Hong Kong, wrote in a May 13 report. “Clearly, policy makers know which lever to pull, but the question is to what extent.” The government should adopt a “measured and targeted credit easing” because a credit binge will inflate the industry again and deepen the oversupply in smaller cities, Yao said. Data last week showed the nation’s economic slowdown deepened, with unexpected decelerations in industrial-output and investment growth. Factory production rose 8.7 percent in April from a year earlier, down from 8.8 percent in March. Fixed-asset investment excluding rural households increased 17.3 percent in the first four months of the year, the slowest for the period since 2001. Existing-home prices fell 0.2 percent in Beijing in April from March and were unchanged in Shanghai, according to yesterday’s data. Beijing, Shanghai, the country’s financial center, and the southern business hubs of Guangzhou and Shenzhen are considered first tier by the bureau of statistics. “The government won’t sit on the sidelines without intervening, otherwise the property industry would see a hard-landing,” Everbright’s Xu said. “Home-purchase restrictions will need to be relaxed and there is a high chance that the government will ease monetary policy.” -By Bloomberg News |