Signs Singapore Property Market is Slowing

(Singapore) In a recent article by the Business Times published in Singapore, signs of Singapore's slowing property market are evident. With research by URA and DTZ Research, third quarters numbers reflect a continued slow down. A slide in sub-sales and foreign buyers are the first two signs noted. The third sign is the rise in HDB upgraders.

A couple of areas to clarify before we forward: HDB is the Housing Development Board who offers below market homes (condos) to Singapore Citizens and permanent residents. This attributes to Singapore's high home ownership. The URA is the government agency called Urban Redevelopment Authority. They track sales and do most of the planning for growth in Singapore. DTZ is a property consultancy.

DTZ's analysis of caveats for private home purchases shows that total sub-sales of non-landed private homes fell 8 percent to 473 units in Q3 from the previous quarter. Sub sales also accounted for a smaller 13 percent share of purchases of non-landed private homes in Q3, compared with 16 per cent in Q2.

Sub sales of high-end condos/apartments slowed down even more in Q3 2008. The number of sub sale purchases involving units priced at least $1,000 psf fell 24.2 per cent quarter-on-quarter to only 213 transactions, accounting for 45 per cent of overall sub sales of non-landed private homes in Q3, against 54 per cent in Q2 2008.

The number of foreign buyers (including permanent residents) of private homes (both landed and non-landed) slid 6 per cent quarter-on-quarter to 903 in Q3. Also, these buyers made up 22 per cent of total private home deals in the quarter, down from 25 per cent in Q2.

Some of the central areas who experienced strong sales throughout the last year and a half saw continued lower numbers. The Sail at Marina Bay got the strongest subsale interest in Q3, with 30 deals (compared with 34 in Q2). The median subsale price for the project slid 6 per cent quarter-on-quarter to $1,719 psf, following a 14 per cent slide in Q2.
Median subsale prices also fell 3 per cent for Park Infinia at Wee Nam to $1,380 psf, The Esta (slipping 5 per cent to $910 psf) and City Square Residences (down 6 per cent to $960 psf).

The article does a good job giving us the figures but it fails to adequate job of spelling out future trends. It glosses over that it will continue slides but there will be pockets where the numbers will spike. Investors need to be aware that these numbers really give us an indication of what is to come. The trends take about six months to work their way into the buying and selling of property. So I will bet my last dollar, not worth that much these days, that the numbers will be considerably worse by Q2 of 2009. Two steps forward and three steps back for the information forecasting. When the paper relies on an agency (DTZ) for it commentary then of course they will protect their current production. Please disagree with me as I have been watching the trends for three years and it seems to be deeper than every in this hole.

Recent Headlines--What Do They Mean?

US commercial property sales to fall 70%
(SEATTLE) The value of US commercial real estate sales this year will fall to US$142 billion, 70 per cent less than last year's record US$467 billion, as the economy slows and borrowing costs rise, according to Reis Inc, a New York-based real estate research firm
Occupancy costs fall in S'pore: CBRE
(SINGAPORE) 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.
New York home prices see steep decline
(NEW YORK) The economic crisis is finally crashing New York's real estate party, forcing the city's residents to start sharing the rest of the country's pain.
HK's mortgage loans drop 40% in October
(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.
Frankfurt office property market seen softening
(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.
Abu Dhabi moves to revive housing market
(ABU DHABI) Abu Dhabi deepened efforts to stave off economic damage from the credit crisis yesterday, launching a government- backed lender to revive the housing market as major Dubai developers were reported to halt sales.
Sellers slash asking prices for homes in UK
(LONDON) Increasingly desperate sellers slashed asking prices for homes in England and Wales by 2.9 per cent in November, pushing them 7.1 per cent below their level a year ago, a survey showed yesterday.
More steps to stimulate China market on the cards
(BEIJING) China is likely to roll out more measures before long to stimulate demand for housing, but recovery in the all-important property market is unlikely for another year.

The financial melt down that started as a ripple in the US has roared across the oceans to all parts. What does this mean? Are we near the bottom? How long will this last?

Meaning is very straight forward. We are all reaping a whirlwind of hurt that was the result of blind profit taking. The following analogy came to mind. Picture the Hoover Dam and several people at different parts of the dam. This Hoover Dam is not made of stone but is made of Gold. Each person there is picking at the dam with glee as large chunks come off. Even when water starts to come out the people just move to other areas. Well, you can guess what happens.

Now that the water is flooding and drowning some, everyone is complaining about what has occurred. Each person that was on the dam is blaming the guy with the biggest shovel---the US.

How long is this going to last? This is the Great Depression of our time. We may not experience long lines of people without jobs, waiting to get food but the younger generation will be talking about the devastation this melt down has caused. Just like my grandmother who lived through the depression, she never ate rice as an adult. Mainly because as a child she only had rice to eat so she hated it as an adult. We may see things turn around when people start to feel safe again. My guess is about 2 or more years. In some areas it could be longer.

Are we at the bottom? Is it much farther now? Not far now. We are closer to the bottom then we are to the top. I wonder how this will affect how we look at the world in 5 years or 10 years.
Lets say we are at the bottom now. Is that good? Does it take a severe problem for us to remember it longer than a few months. 9-11 is now a distant memory even as India is battle their own terrorist attack in Mumbai. I bet there is a sign of relief in the US that is not them but the wounds have scarred over from 9-11 and we soon put it behind us. If we manage to get out of this financial hole, do we soon forget as our refrigerator is filled and our car has a full tank of gas?

Human nature is a survival instinct.

Is this the End? Singapore Property Going Down?

Singapore property prices are headed down. Since I arrived in Jan 08, I saw signs that indicated that the market had gone through the same steep climb that the US market had gone through. Singapore developers sold whole projects within hours of launching. Buyers were on fire and sellers were salivating.

For the past few years Singapore property market mirrored the market increase the US experienced in all its' major cities during 2003 to 2006. Here the real climb began at the end of 2005 and continued until end of 2007.

When I arrived in January 2008, I spoke to several agents who would tell me that the Singapore market could never be affected by a downturn in the US. Well, eleven months passed and two declining quarterly reports later, we finally get the following report from the Straits Times. Read and please comment:

Source: Straits Times
Nov 27, 2008

Mah sees softening of property prices
Future movements will depend on how industry adjusts to conditions
By Michelle Tay

PROPERTY prices will inevitably soften and demand will weaken amid slower economic growth, National Development Minister Mah Bow Tan said yesterday.
Private housing prices fell 2.4 per cent in the third quarter, and further price movements will 'depend on the severity of the economic slowdown'.
Mr Mah was speaking at the 49th anniversary dinner of the Real Estate Developers' Association of Singapore (Redas) at the Shangri-La Hotel.
He said future price movements will also depend on the 'ability of the industry to make adjustments in response to the changes in economic conditions'.
Meanwhile, Mr Simon Cheong, Redas president and chief executive of upscale residential developer SC Global Developments, said he expects construction prices to ease off with the trend of falling oil prices and easing inflation.
'Current pressure on construction services (will) begin to moderate once the lag in demand kicks in with a slowdown in new commitments by developers,' he said.
Mr Mah also addressed recent moves by Redas to present market analysts with other sources of market data after they had drawn bearish conclusions about the industry recently.
Redas had said the analysts' findings were based on official numbers from the Urban Redevelopment Authority (URA), which they felt are too general. Reports said the industry body met property analysts from local and foreign research firms two weeks ago to advise them that URA data may not give an accurate picture of specific sections of the market.
Mr Mah said the Government has a vital role in guarding against 'irrational market behaviour, such as excessive speculation, that is not in sync with economic fundamentals', to ensure the long-term stability and smooth functioning of the property market.
Mr Cheong agreed: 'The market is at best currently fragile and nervous. Market stability is important to prevent a widespread decimation of asset values...Redas will do its best to work closely with the Government to provide timely market feedback to facilitate a timely and effective response that the property market needs.'
But there are limits to what the Government can and should do, said Mr Mah. For one thing, it cannot work against market forces and try to prop up property prices artificially.
Mr Mah explained: 'Such efforts are not sustainable and will not be beneficial to the health of the property market in the long run. Any measure seen to be knee-jerk or excessive might even weigh market sentiment down further...It is in our interest to ensure that the property prices move in line with economic fundamentals as it affects home ownership, asset values, retirement savings and other sectors of the economy.'
But Mr Cheong said: 'Only with confidence will demand return to the market.' He advised Redas members to 'take this opportunity to do our house cleaning, improve our product and get ready for the next upturn'.
'Pricing alone does not lead to sales volume. Sentiment and confidence lead to sales volume.'
michtay@sph.com.sg
ON GUARD
'We cannot work against market forces and try to prop up property prices artificially...It is in our interest to ensure that the property prices move in line with economic fundamentals as it affects home ownership, asset values, retirement savings and other sectors of the economy.'
Minister Mah Bow Tan

Global Business in Real Estate

CULTURALLY CORRECT
Words Matter
In early November media outlets worldwide, including the Associated Press and BBC News, reported on the Bournemouth Council's "plain language" policy, which lists 19 Latin words and phrases to be avoided in official documents, e.g., bona fide or ad hoc, and suggested replacements to minimize confusion. Bournemouth is a town of 170,000 on England's south coast. The news was reported as a "ban," riling language aficionados outraged by what was equated by some as "the linguistic equivalent of ethnic cleansing." The Bouremouth Council countered inaccurate reporting, stating there had been no "banning" of words or phrases; only advice to staff to encourage "plain, appropriate and easily understood language." Much ado about nothing? Perhaps not. There's a lesson here for REALTORS® working with buyers and sellers for whom English is not a first language. Review your contracts to identify words and phrases that may not be easily understood. If appropriate, change them to be more clear. If legal council requires the language to remain as is, develop a "reader's guide" to the contract to spell out more clear definitions and/or to provide examples for key terms. If you deal frequently with customers speaking one or two languages other than English, have your contracts professionally translated.


Vietnam: A Market to Watch


In May Vietnam's government passed a resolution (effective January 1, 2009) that permits foreign individuals and organizations who invest directly in the country and those hired as executives by Vietnamese or foreign-invested enterprises to purchase and own apartments in Vietnam. The legislation will be implemented on a trial basis for five years. Read about specific opportunities and limitations of the law. Many Americans know little about this country beyond war images from the 1960s and 1970s. In 2005 NAR published an article on the Vietnamese real estate market that highlights the dramatic changes in the market economy since the Vietnam War. Even since the 2005 article, the country has attracted significant foreign investment. The Ministry of Planning and Investment (MPI) reports a GDP growth rate of 8.23% in 2006 and 8.4% in 2007. While not immune to the current economic crisis and realizing a slowed growth rate for 2008 with GDP projected at 6.5 - 7%, MPI projects a stabilizing economy in 2009 and to regain growth impetus in 2010. REALTORS® working with investors with an eye on Asia will have greater opportunities come January 1. Learn more about this growing market, including tips for conducting business.

Source: NAR International Newsletter