Calmer home sales pace likely in 2010

Calmer home sales pace likely in 2010
Lull likely before sector picks up from late Feb; more high-end homes expected next year
By Joyce Teo

The unusual frenzy in private home sales till September this year is fast winding down, as launches slow.

It should be a short lull before new launches kick in from late February, after Chinese New Year. Next year, however, is expected to see a steadier and calmer pace.

And, unlike this year, more high-end launches are expected next year, experts said.

DTZ head of South-east Asia research Chua Chor Hoon expects sales activity to remain low for next month and early next year.

This is because there are few mass market projects being launched in the next few months.

Recent government cooling measures seem to have had an effect too, making home hunters and speculators more wary about wading in, she said.

The property market will likely pick up only after Chinese New Year in mid-February next year, said Knight Frank’s executive director (residential) Peter Ow.

Apart from the high-end launches next year, home hunters can expect several large projects including those on sites that were sold en bloc during the previous boom, experts said.

These include the site of Minton Rise condo in Hougang; a site in Dakota Crescent, near Old Airport Road; and a project in Yishun.

The 99-year Minton Rise project will have at least 1,000 units of various sizes while the Dakota Crescent site, also a 99-year project, may have around 600 units.

In Yishun, MCL Land has a launch-ready 608-unit project a 10-minute walk from the Khatib MRT station.

Prices for this 99-year condo, which offers a view of Lower Seletar Reservoir, could well be above $700 per sq ft (psf), an industry source estimated.

Other likely non-prime projects in the first half of next year include the collective sale sites of Flamingo Valley in Siglap and Rainbow Gardens in Toh Tuck Road.

But one industry source said it is the high-end market that will be interesting to watch.

Next year, developers are expected to start pushing out their high-end projects for sale, after a year with no major luxury launches. ‘Buyers will have a lot of choices so they should be selective,’ the industry source said.

Possible new prime launches include the condo on the former Parisian site in Orchard; The Laurels as well as Urban Resort in Cairnhill; Ardmore III and the new condos on Pin Tjoe Court and Anderson 18 sites in Ardmore Park.

Some of these en bloc sites were kept for lease as the developers rode out the downturn.

While mass market home prices have since peaked, high-end prices have not reached the previous high of $4,000 psf to $5,000 psf.

Today, there is still little demand for homes priced beyond $3,000 psf, sources said.

Affordability has been a key issue in the past year, such that many developers reconfigured their projects to have smaller units in general in order to keep absolute prices low.

MCL Land, for instance, reconfigured its Yishun project to allow for more small units.

Most new launches next year would still have small units in general, said Mr Ow.

Third-quarter data shows that these small units of 500 sq ft and below remained popular, with sales totalling 253 units, up from 102 units in the same period a year ago, according to data from DTZ.

They form about 2.7 per cent of total transactions this year, compared to 3 per cent last year, and just under 1 per cent in 2007.

Source : Straits Times - 29 November 2009

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Singapore firms prepared for debt crisis

Singapore firms prepared for debt crisis

Second Minister for Finance and Transport Lim Hwee Hua said Singaporean companies operating in Dubai would have been prepared for the debt crisis there.

She said companies would not be surprised by the announcement last Thursday, when government investment firm Dubai World asked for a six-month delay in repaying a US$59 billion (S$81 billion) tranche of its total debt of US$80 billion.

‘For a while, they have been giving some feedback about the difficulty with some of the projects. So I believe they would have been preparing for some of these eventualities,’ Mrs Lim said on the sidelines of a community event in Tampines.

As for Singaporean banks, she said they are very diversified in terms of their risk exposure to any location or industry.

Hence, she would not expect any exposure to affect them.

Mrs Lim said such risks are part and parcel of a globalised marketplace.

As such, companies will have to assess carefully the sovereign and corporate risks involved in every market.

‘They (companies) should work that into their own risk assessment and risk management of the business so that going forward, as they go into the new markets, they would know how to handle the different risk profiles.’

Source : Straits - 29 November 2009

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Dubai crisis won’t derail recovery, say leaders

Dubai crisis won’t derail recovery, say leaders

Major banks also play down their exposure to debt, but analysts warn of repercussions

London - World leaders have expressed confidence in the global economic recovery despite fears about a debt default by Gulf emirate Dubai, while major banks have played down their exposure to the debt.

Last Friday, stocks from Tokyo to New York were haunted by concern that banks were exposed to state companies in Dubai, whose rise from a desert backwater into the business hub of the world’s top oil-exporting area lured expatriate cash and executives.

United States markets closed lower last Friday , with the Dow losing 1.5 per cent to 10,309.92 points. The market regained its poise after European markets clawed back some of last Thursday’s horrendous losses to close about 1 per cent higher.

Asian markets slumped 3 per cent to 4 per cent across the board last Friday.

Since then, the ruler of the once-booming city-state has been to neighbouring Abu Dhabi, whose balance sheets are flush with oil revenue.

Abu Dhabi has the cash and cachet to be Dubai’s white knight providing a Gulf version of a too-big-to-fail bailout or helping to calm markets with promises to intervene if Dubai’s fiscal mess deepens.

The direction Abu Dhabi takes will likely set the tone for the coming week as analysts try to sort out which banks and institutions have the most at stake in the money crunch - which has suddenly transformed Dubai’s image from a desert dream factory of indoor ski slopes and a ’seven-star’ hotel to a reckless spender sideswiped by the recession and unable to pay its bills.

The crisis began last Wednesday when Dubai, part of the United Arab Emirates (UAE) federation, asked to delay payment on billions of dollars of debt issued by conglomerate Dubai World and its main property subsidiary Nakheel, developer of three palm-shaped islands that once attracted celebrities and the super-rich.

‘While it is a setback, I think we will find it is not on the scale of previous problems we have dealt with,’ British Prime Minister Gordon Brown told reporters from the Commonwealth Heads of Government Meeting in Port of Spain. ‘The world financial system is stronger now and able to deal with the problems that arise.’

French Prime Minister Francois Fillon said the Gulf had the resources to ensure the world would not sink into a second round of turmoil, but Russian Premier Vladimir Putin said the saga showed how hard it was to shake off a crisis that has lasted two years.

The US said its Treasury Department was closely monitoring the situation in Dubai.

Although there were expectations that Abu Dhabi would come to Dubai’s rescue, Reuters quoted an unnamed senior Abu Dhabi official yesterday as saying that the capital of the UAE would ‘pick and choose’ how to assist its debt-laden neighbour.

‘We will look at Dubai’s commitments and approach them on a case-by-case basis,’ the official said. ‘It does not mean that Abu Dhabi will underwrite all of their debts.’

Despite the world leaders’ reassurances, analysts around the world warned that Dubai’s debt woes may worsen to become a ‘major sovereign default’ that roils developing nations and cuts off capital flows to emerging markets, Bank of America strategists said.

A default would lead to a ’sudden stop of capital flows into emerging markets’ and be a ‘major step back’ in the recovery from the global financial crisis, they wrote.

UBS analysts said Dubai may owe more than the US$80 billion (S$110 billion) to US$90 billion in liabilities assumed by investors.

Reuters, Bloomberg

Source : Straits - 29 November 2009

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