Observers say Korean pension funds have been aggressively investing in commercial real estate in Asia.
According to Woori Investment & Securities, the Korean National Pension fund has put nearly US$3 billion into real estate in the past six to nine months alone.
And it appears investors are favouring commercial properties over residential ones to get better returns.
Private home prices have enjoyed a good run-up in recent months in Asia.
For example, cost of private residential properties hit a record high in Singapore in the second quarter, rising by an estimated 5.2 per cent.
But investors and asset managers are expecting home prices to moderate across the region.
So, they are turing their attention to commercial properties instead.
Woori Investment & Securities, part of South Korea’s Woori Financial Group, has seen a growing outflow of Korean money seeking such opportunities.
Derek Wong, director, Real Estate Investment & Finance, Woori Investment & Securities, says: “We’re looking favourably at the commercial sector, mainly the office building and retail sector. As a whole maybe we are looking at a range of six to eight per cent minimum for a very safe country but if it’s a high risk country then we need to add in that spread.”
Despite concerns of a supply glut in the office segment in Singapore, Henderson Global Investors says the new buildings under construction in the city have already received 80-90 per cent commitment from tenants.
Hong Kong’s supply picture is also tightening as businesses add to their headcount.
Frankie Lee, head of Property Equities, Asia, Henderson Global Investors, says: “We only conservatively assume a 25 per cent increase in rents in both Singapore and HK this year and given the type of rent increase in the first half this will prove to be quite conservative. I think now we can safely say that 25 per cent this year in these two places for 2010 and perhaps another 15 per cent for 2011 is quite achievable.”
In view of this, Henderson recommends stocks such as Hong Kong Land and Keppel Land to take advantage of the uptick in rents.
It also looks on Industrial Real Estate Investment Trusts favourably, given Singapore’s strong economic growth.
Source: Channel News Asia, 2 Jul 2010
Showing posts with label Overseas Property - Asia. Show all posts
Showing posts with label Overseas Property - Asia. Show all posts
Friday, July 2, 2010
Wednesday, May 19, 2010
The attractiveness of Asian real estate
Investors are drawn to region's underlying economic growth, stable yields, expansion of diverse market segments
POST-RECESSION, international property investors are turning their attention to Asia in pursuit of new investment opportunities.
Benefiting from the lessons learnt during the 1997 crisis, Asia was relatively less impacted by the global credit crisis of 2008 and 2009. Today, the region is an exciting investment destination. Relatively stronger fundamentals and a lack of dependence on foreign demand have helped mitigate the impact of the severe recession that has hit much of the rest of the world.
Today, we are seeing a growing trend of institutional and private investor capital flowing into the region's real estate markets. Investors are lured by the underlying economic growth, stable yields, expansion of diverse market segments, as well as the need to broaden their investment portfolios.
Asia's huge demographic shifts, with strong urbanisation and a rising middle class, also present opportunities for developers in diverse sectors ranging from housing, retail, commercial, industrial as well as leisure and tourism. The trend in commercial real estate perhaps best illustrates the point. While global commercial real estate transaction volumes have bottomed, property demand in Asia has visibly risen.
Rising property demand
The average Asian has a higher propensity to save compared to their Western counterparts and given the current low yields on fixed income products and the high volatility of equity markets, this presents a strong motivation for Asians to be attracted to the relative value-benefits of real estate investing.
In addition, succession planning is often a key factor in investment decision-making in Asia where family-controlled businesses are prevalent. The current climate has encouraged many to invest in property markets, which can allow for a more orderly transfer of assets and wealth from one generation to the next.
Asia has relatively well-capitalised financial systems: its banks have not required massive bailouts, and consumer and bank debt levels are lower than in the US, UK and Europe. Under these conditions, investors and businesses have been more willing to borrow, lend and spend.
In recent months, Singapore, Hong Kong and China have witnessed high transaction volumes and pricing, largely fuelled by low interest rates. In some countries, cooling measures have been undertaken to ensure price growth is in line with the rate of economic expansion.
In Singapore, the private property market continues to show resilience with close to 4,000 private homes sold in the first quarter of 2010, according to statistics from CB Richard Ellis (CBRE) . Similarly, Urban Redevelopment Authority data showed that demand for private homes in prime areas continued to be strong in the first quarter of the year
In Hong Kong, real estate prices reached a 12-year high in the first quarter of this year after increasing 7.5 per cent from the end of last year. According to a housing index compiled by Centaline Property Agency, this was largely due to a combination of low interest rates, limited supply and increasing confidence in Hong Kong's economic recovery. Office rents in Hong Kong climbed 5.1 per cent in Q1, exhibiting the largest percentage increase out of 25 Asia-Pacific cities, according to Colliers International, which expects rents in Hong Kong to surge 20 per cent in the next 12 months due to the limited supply of new stock in core locations.
The Seoul office market is one of the best positioned office markets in Asia to ride out the downturn. South Korea benefits from the strong economic ties with the world's fastest growing countries/regions such as China, Asean, Hong Kong and Latin America, which account for nearly half of the South Korean exports.
The economic growth translates into demand for Seoul's office space, particularly the expansion needs from those corporations that have strong business ties with China and other fast growing emerging countries. The structurally stable rental growth (which normally benchmarks to inflation) and the relatively attractive yield of 6.0-6.5 per cent set Seoul office market apart from the high growth but volatile emerging markets (for example, China, Hong Kong) and the stable but low growth markets (for example, Japan, Australia).
Japan, and in particular the Tokyo office market, continues to play a significant role in real estate investment in the region. Tokyo, behind only London, led all cities worldwide in the volume of commercial real estate transactions closed last year. After posting a steep decline in economic activity last year, with a contraction of 5.2 per cent, Deutsche Bank economists expect a rebound of the Tokyo economy with a 2.8 per cent growth rate this year. With the significant amount of short term debt and CMBS rollovers, coupled with high commercial yield spreads, the Tokyo office market will continue to present attractive buying opportunities over the coming 12-24 months.
That being said, countries such as Indonesia and Vietnam are upcoming markets to look out for.
Indonesia is the largest property market in South-east Asia. Although traditionally a closed market, the government has plans to further deregulate the industry. This move will allow foreigners to purchase homes and commercial real estate with direct ownership
Vietnam's growth story in recent years is second only to China in Asia. The property market, particularly in the mass to mid-tier residential market, is largely driven by strong demographic factors. These include the growing rural to urban migration, almost two-thirds of its population being under 35 and higher income levels.
Ho Chi Minh City and Hanoi are also expected to see a doubling of population over the next decade. Similarly, a relaxation in property ownership rules to extend the tenure of foreign buyers from 50 to 70 years will further provide incentives for residential projects of higher quality by overseas developers
In the case of Malaysia, office rentals in Kuala Lumpur continue to fall as more supply will come on-stream over the next three years. But foreign investors have gradually begun to flow in, thanks to the Malaysian government's market liberalisation initiatives made last year.
While China did not come out of the 2008 global recession unscathed, early government intervention and lower levels of debt compared to its western counterparts have helped it weather the storm better than most.
Today, it remains an attractive investment destination for investors due to the sheer size of the country, its strong real estate fundamentals, substantial urbanisation rates, growing middle class and its rise as an economic powerhouse.
Rapid recovery
Since October 2008, the Chinese government has implemented aggressive macro-economic expansion policies, along with fiscal stimulus packages and monetary expansion. These policies have led to the rapid recovery of the domestic market and also signs of a recovery in investment.
The rapid growth in the China economy has led to a 8.7 per cent annual economic growth rate last year. Among the world's major economies, China is surging at an unmatched pace with a nearly 12 per cent growth rate in the first quarter of this year.
Furthermore the number of high net-worth individuals is increasing in China. The number of people with a personal wealth of more than one billion yuan (S$204 million) has risen rapidly since 2004. At that time, there were 100, but as of last year, the number has expanded to 1,000.
Coupled with rising income levels of the middle class, this spells significant opportunities for the real estate sector to grow. Corporate investment and the increase of private sector investment in real estate will also support this growth and sustain the next phase of recovery. The recent approval of domestic insurance companies to invest in real estate as well as the expectation of the development of a China Reit market will continue to foster the institutionalisation of real estate in China.
Undoubtedly, the rise of China will be one of the greatest macro trends of the 21st century. Today, we are already witnessing China's economic growth and its transformative implications across Asia and around the world. I am sure future decades will see an even greater increase in Chinese influence.
The rate of development in Asia today, combined with increasing economic growth and the expanding depth, maturity and diversity of its real estate markets will naturally translate to greater opportunities to come.
The writer is the chairman of the Cityscape Asia Conference 2010, the world's largest B2B real estate investment and development exhibition and conference. Cityscape Asia is taking place from May 18-20, 2010 at Suntec City, Singapore
Source: Business Times, 19 May 2010
POST-RECESSION, international property investors are turning their attention to Asia in pursuit of new investment opportunities.
Benefiting from the lessons learnt during the 1997 crisis, Asia was relatively less impacted by the global credit crisis of 2008 and 2009. Today, the region is an exciting investment destination. Relatively stronger fundamentals and a lack of dependence on foreign demand have helped mitigate the impact of the severe recession that has hit much of the rest of the world.
Today, we are seeing a growing trend of institutional and private investor capital flowing into the region's real estate markets. Investors are lured by the underlying economic growth, stable yields, expansion of diverse market segments, as well as the need to broaden their investment portfolios.
Asia's huge demographic shifts, with strong urbanisation and a rising middle class, also present opportunities for developers in diverse sectors ranging from housing, retail, commercial, industrial as well as leisure and tourism. The trend in commercial real estate perhaps best illustrates the point. While global commercial real estate transaction volumes have bottomed, property demand in Asia has visibly risen.
Rising property demand
The average Asian has a higher propensity to save compared to their Western counterparts and given the current low yields on fixed income products and the high volatility of equity markets, this presents a strong motivation for Asians to be attracted to the relative value-benefits of real estate investing.
In addition, succession planning is often a key factor in investment decision-making in Asia where family-controlled businesses are prevalent. The current climate has encouraged many to invest in property markets, which can allow for a more orderly transfer of assets and wealth from one generation to the next.
Asia has relatively well-capitalised financial systems: its banks have not required massive bailouts, and consumer and bank debt levels are lower than in the US, UK and Europe. Under these conditions, investors and businesses have been more willing to borrow, lend and spend.
In recent months, Singapore, Hong Kong and China have witnessed high transaction volumes and pricing, largely fuelled by low interest rates. In some countries, cooling measures have been undertaken to ensure price growth is in line with the rate of economic expansion.
In Singapore, the private property market continues to show resilience with close to 4,000 private homes sold in the first quarter of 2010, according to statistics from CB Richard Ellis (CBRE) . Similarly, Urban Redevelopment Authority data showed that demand for private homes in prime areas continued to be strong in the first quarter of the year
In Hong Kong, real estate prices reached a 12-year high in the first quarter of this year after increasing 7.5 per cent from the end of last year. According to a housing index compiled by Centaline Property Agency, this was largely due to a combination of low interest rates, limited supply and increasing confidence in Hong Kong's economic recovery. Office rents in Hong Kong climbed 5.1 per cent in Q1, exhibiting the largest percentage increase out of 25 Asia-Pacific cities, according to Colliers International, which expects rents in Hong Kong to surge 20 per cent in the next 12 months due to the limited supply of new stock in core locations.
The Seoul office market is one of the best positioned office markets in Asia to ride out the downturn. South Korea benefits from the strong economic ties with the world's fastest growing countries/regions such as China, Asean, Hong Kong and Latin America, which account for nearly half of the South Korean exports.
The economic growth translates into demand for Seoul's office space, particularly the expansion needs from those corporations that have strong business ties with China and other fast growing emerging countries. The structurally stable rental growth (which normally benchmarks to inflation) and the relatively attractive yield of 6.0-6.5 per cent set Seoul office market apart from the high growth but volatile emerging markets (for example, China, Hong Kong) and the stable but low growth markets (for example, Japan, Australia).
Japan, and in particular the Tokyo office market, continues to play a significant role in real estate investment in the region. Tokyo, behind only London, led all cities worldwide in the volume of commercial real estate transactions closed last year. After posting a steep decline in economic activity last year, with a contraction of 5.2 per cent, Deutsche Bank economists expect a rebound of the Tokyo economy with a 2.8 per cent growth rate this year. With the significant amount of short term debt and CMBS rollovers, coupled with high commercial yield spreads, the Tokyo office market will continue to present attractive buying opportunities over the coming 12-24 months.
That being said, countries such as Indonesia and Vietnam are upcoming markets to look out for.
Indonesia is the largest property market in South-east Asia. Although traditionally a closed market, the government has plans to further deregulate the industry. This move will allow foreigners to purchase homes and commercial real estate with direct ownership
Vietnam's growth story in recent years is second only to China in Asia. The property market, particularly in the mass to mid-tier residential market, is largely driven by strong demographic factors. These include the growing rural to urban migration, almost two-thirds of its population being under 35 and higher income levels.
Ho Chi Minh City and Hanoi are also expected to see a doubling of population over the next decade. Similarly, a relaxation in property ownership rules to extend the tenure of foreign buyers from 50 to 70 years will further provide incentives for residential projects of higher quality by overseas developers
In the case of Malaysia, office rentals in Kuala Lumpur continue to fall as more supply will come on-stream over the next three years. But foreign investors have gradually begun to flow in, thanks to the Malaysian government's market liberalisation initiatives made last year.
While China did not come out of the 2008 global recession unscathed, early government intervention and lower levels of debt compared to its western counterparts have helped it weather the storm better than most.
Today, it remains an attractive investment destination for investors due to the sheer size of the country, its strong real estate fundamentals, substantial urbanisation rates, growing middle class and its rise as an economic powerhouse.
Rapid recovery
Since October 2008, the Chinese government has implemented aggressive macro-economic expansion policies, along with fiscal stimulus packages and monetary expansion. These policies have led to the rapid recovery of the domestic market and also signs of a recovery in investment.
The rapid growth in the China economy has led to a 8.7 per cent annual economic growth rate last year. Among the world's major economies, China is surging at an unmatched pace with a nearly 12 per cent growth rate in the first quarter of this year.
Furthermore the number of high net-worth individuals is increasing in China. The number of people with a personal wealth of more than one billion yuan (S$204 million) has risen rapidly since 2004. At that time, there were 100, but as of last year, the number has expanded to 1,000.
Coupled with rising income levels of the middle class, this spells significant opportunities for the real estate sector to grow. Corporate investment and the increase of private sector investment in real estate will also support this growth and sustain the next phase of recovery. The recent approval of domestic insurance companies to invest in real estate as well as the expectation of the development of a China Reit market will continue to foster the institutionalisation of real estate in China.
Undoubtedly, the rise of China will be one of the greatest macro trends of the 21st century. Today, we are already witnessing China's economic growth and its transformative implications across Asia and around the world. I am sure future decades will see an even greater increase in Chinese influence.
The rate of development in Asia today, combined with increasing economic growth and the expanding depth, maturity and diversity of its real estate markets will naturally translate to greater opportunities to come.
The writer is the chairman of the Cityscape Asia Conference 2010, the world's largest B2B real estate investment and development exhibition and conference. Cityscape Asia is taking place from May 18-20, 2010 at Suntec City, Singapore
Source: Business Times, 19 May 2010
Friday, May 14, 2010
China will be 2nd biggest property market by 2011
DTZ's flagship Money into Property report - now in its 36th year - says the worst of the global real estate slump is over and forecasts that global invested commercial stock assets will grow 5 per cent in 2010 to US$11.4 trillion.
Global invested commercial stock fell 6 per cent in 2009.
The report, released in Singapore yesterday, is also bullish on China.
It forecasts that China will overtake Japan and the UK to become the second-largest property market after the US by end-2011. China was fourth in 2009.
Indeed, DTZ is bullish about the entire Asia-Pacific region. The property firm is forecasting a 12 per cent increase in Asia-Pacific commercial invested stock this year.
'The Asia-Pacific continued its growth in invested stock due to the developing nature of the property market in the region, led by China and India, combined with the rapid reaction of governments to the global financial crisis,' said David Green-Morgan, head of DTZ Research for the Asia-Pacific.
Despite the slowdown in bank lending in China, he expects Asia-Pacific transaction volumes to increase this year as investors look to take advantage of improving economic conditions and strong intra-regional trade.
Based on its forecasts, DTZ recommends that investors become proactive buyers, as a large number of Asia-Pacific markets - including China and India - offer attractive investment opportunities for the next two years.
According to DTZ, 151 out of 172 markets (88 per cent) worldwide now offer buying opportunities as prices are at or below fair value. Last year, the firm recommended only one market - the London City office market.
'What a difference a year makes,' said Tony McGough, global head of forecasting and strategy research at DTZ.
'This time last year we recommended investors to wait on the sidelines as almost all commercial property markets worldwide were traded at prices above their fair value. This year, following a marked re-pricing of the market, our research shows there has seldom been a better time to invest in prime commercial real estate,' he said.
In the Asia-Pacific, 84 per cent of the markets covered by DTZ are currently trading at or below fair value - with the office and retail markets looking particularly attractive.
For Singapore, DTZ said the retail and industrial markets are good bets but it is still 'cold' on the office sector on concerns of future oversupply.
But the firm's Singapore office recently raised its forecast for office rentals after the economy put up a strong showing in the first quarter of 2010.
Just a few months ago DTZ had expected prime Raffles Place office rents to fall 10-15 per cent in 2010 - but it now expects a marginal increase of one per cent for the year.
Source: Business Times, 14 May 2010
Global invested commercial stock fell 6 per cent in 2009.
The report, released in Singapore yesterday, is also bullish on China.
It forecasts that China will overtake Japan and the UK to become the second-largest property market after the US by end-2011. China was fourth in 2009.
Indeed, DTZ is bullish about the entire Asia-Pacific region. The property firm is forecasting a 12 per cent increase in Asia-Pacific commercial invested stock this year.
'The Asia-Pacific continued its growth in invested stock due to the developing nature of the property market in the region, led by China and India, combined with the rapid reaction of governments to the global financial crisis,' said David Green-Morgan, head of DTZ Research for the Asia-Pacific.
Despite the slowdown in bank lending in China, he expects Asia-Pacific transaction volumes to increase this year as investors look to take advantage of improving economic conditions and strong intra-regional trade.
Based on its forecasts, DTZ recommends that investors become proactive buyers, as a large number of Asia-Pacific markets - including China and India - offer attractive investment opportunities for the next two years.
According to DTZ, 151 out of 172 markets (88 per cent) worldwide now offer buying opportunities as prices are at or below fair value. Last year, the firm recommended only one market - the London City office market.
'What a difference a year makes,' said Tony McGough, global head of forecasting and strategy research at DTZ.
'This time last year we recommended investors to wait on the sidelines as almost all commercial property markets worldwide were traded at prices above their fair value. This year, following a marked re-pricing of the market, our research shows there has seldom been a better time to invest in prime commercial real estate,' he said.
In the Asia-Pacific, 84 per cent of the markets covered by DTZ are currently trading at or below fair value - with the office and retail markets looking particularly attractive.
For Singapore, DTZ said the retail and industrial markets are good bets but it is still 'cold' on the office sector on concerns of future oversupply.
But the firm's Singapore office recently raised its forecast for office rentals after the economy put up a strong showing in the first quarter of 2010.
Just a few months ago DTZ had expected prime Raffles Place office rents to fall 10-15 per cent in 2010 - but it now expects a marginal increase of one per cent for the year.
Source: Business Times, 14 May 2010
Thursday, May 6, 2010
Asian office and investment property strong in Q1: CBRE
But deals slip in Greater China, with sentiment hit by govt cooling policies
OFFICE and investment property markets across Asia remained buoyant in the first quarter of 2010 as investor sentiment stayed positive, CB Richard Ellis (CBRE) said yesterday.
In the investment market, the steady flow of small and medium-size transactions seen in the second half of 2009 continued to feed through into this year.
Total direct real estate investment in Asia jumped 215 per cent year on year to US$16.5 billion in Q1 - from a low base in Q1 2009 when activity was muted.
Despite the strong year-on-year growth, transaction volume slipped in China, Hong Kong and Taiwan quarter on quarter.
This dip in Greater China was because investors turned cautious after government policy changes to cool rapidly rising prices.
Elsewhere in Asia, Japan, Korea and Singapore saw a strong rebound in investment activity quarter on quarter, with the volume of transactions in these markets rising 45, 32 and 24 per cent respectively.
Throughout Asian investment markets, transactional activity was largely driven by domestic investors, who accounted for 72 per cent of total volume. But the US$12 billion of transactions completed by domestic investors was US$2.1 billion lower than in Q4 2009 - signalling a rise in cross-border investments.
The rising proportion of cross-border activity in Q1 2010 was partly due to the return of international real estate funds, CBRE said.
'The quarter saw both opportunistic and core international institutional investors return to Asian real estate markets, attracted by signs of a sustained recovery,' said Andrew Ness, executive director of CBRE Research Asia.
'At the same time, well-capitalised Asian Reits and sovereign wealth funds resumed the portfolio expansion they halted during the most severe period of the global economic downturn, and their return was marked by a rising level of acquisitions in Japan and Singapore.'
In the office sector, a recovery in demand was reflected by growth in net absorption for the region overall - it was 31 per cent higher in Q1 2010 than Q4 2009.
Most cities surveyed recorded positive absorption of space, and the overall vacancy for Asian cities declined 80 basis points quarter on quarter to 11.8 per cent.
Rents continued to fall - but more slowly. CBRE's data shows overall office rents in Asia fell 0.1 per cent in Q1 - much less than the previous quarter's 1.9 per cent decline.
Mr Ness said office leasing activity is expected to turn robust in the current first half and lead rents out of the downward cycle as more companies boost real estate budgets to support overall regional expansion plans.
Source: Business Times, 6 May 2010
OFFICE and investment property markets across Asia remained buoyant in the first quarter of 2010 as investor sentiment stayed positive, CB Richard Ellis (CBRE) said yesterday.
In the investment market, the steady flow of small and medium-size transactions seen in the second half of 2009 continued to feed through into this year.
Total direct real estate investment in Asia jumped 215 per cent year on year to US$16.5 billion in Q1 - from a low base in Q1 2009 when activity was muted.
Despite the strong year-on-year growth, transaction volume slipped in China, Hong Kong and Taiwan quarter on quarter.
This dip in Greater China was because investors turned cautious after government policy changes to cool rapidly rising prices.
Elsewhere in Asia, Japan, Korea and Singapore saw a strong rebound in investment activity quarter on quarter, with the volume of transactions in these markets rising 45, 32 and 24 per cent respectively.
Throughout Asian investment markets, transactional activity was largely driven by domestic investors, who accounted for 72 per cent of total volume. But the US$12 billion of transactions completed by domestic investors was US$2.1 billion lower than in Q4 2009 - signalling a rise in cross-border investments.
The rising proportion of cross-border activity in Q1 2010 was partly due to the return of international real estate funds, CBRE said.
'The quarter saw both opportunistic and core international institutional investors return to Asian real estate markets, attracted by signs of a sustained recovery,' said Andrew Ness, executive director of CBRE Research Asia.
'At the same time, well-capitalised Asian Reits and sovereign wealth funds resumed the portfolio expansion they halted during the most severe period of the global economic downturn, and their return was marked by a rising level of acquisitions in Japan and Singapore.'
In the office sector, a recovery in demand was reflected by growth in net absorption for the region overall - it was 31 per cent higher in Q1 2010 than Q4 2009.
Most cities surveyed recorded positive absorption of space, and the overall vacancy for Asian cities declined 80 basis points quarter on quarter to 11.8 per cent.
Rents continued to fall - but more slowly. CBRE's data shows overall office rents in Asia fell 0.1 per cent in Q1 - much less than the previous quarter's 1.9 per cent decline.
Mr Ness said office leasing activity is expected to turn robust in the current first half and lead rents out of the downward cycle as more companies boost real estate budgets to support overall regional expansion plans.
Source: Business Times, 6 May 2010
Wednesday, April 28, 2010
Stimulus withdrawal a worry for property sector
THE way governments wind back stimulus measures poses a key risk to the region's real estate markets, according to a Citibank executive yesterday.
Mr Aamir Rahim, chief executive of Citi Private Bank Asia Pacific, told a briefing: 'The impact of such liquidity withdrawal on interest rates and the speed of private sector capital deployment to pick up the slack produced by such withdrawal measures obviously are the overriding risks to the property outlook.'
Mr Rahim also flagged inflationary pressures as 'liquidity continues to chase assets' and the tightening of monetary policies as key risks to track.
The Chinese government, for example, has introduced yet more measures to cool the property market, ordering developers not to take deposits for sales of uncompleted flats without proper approval.
It has also imposed curbs on loans for purchases of third homes and increased the downpayment requirements and mortgage rates.
However, Citi's global head of real estate, Mr Thomas Flexner, said the steps are unlikely to overshoot and restrict growth in the other parts of the economy.
Mr Flexner, who was speaking at the briefing in conjunction with Citi's two-day Asia Pacific Property Conference at the Four Seasons Hotel this week, said that while the bubble in the Chinese residential market was 'very real', it is most pronounced at the higher-end and more speculative sectors of the first-tier cities.
In these centres, about 70 per cent of buyers are speculators.
'We call them speculators, they call themselves investors... There is real vulnerability there but I don't think it is systemic,' he added.
'There is certainly the prospect of potential losses by investors in that sector and on the part of developers who own land banks and who are leveraged.'
However, he said that, unlike a debt implosion or a credit bubble, which had contagion effects, China's bubble would not affect first-time home owners and would not have a 'significant larger impact on the Chinese economy and its ability to grow over time'.
Real estate is an increasingly popular asset class, with Asian clients of Citi Private Bank having close to 50 per cent of their portfolios in property.
This compares with 33 per cent globally.
Source: Straits Times, 28 Apr 2010
Mr Aamir Rahim, chief executive of Citi Private Bank Asia Pacific, told a briefing: 'The impact of such liquidity withdrawal on interest rates and the speed of private sector capital deployment to pick up the slack produced by such withdrawal measures obviously are the overriding risks to the property outlook.'
Mr Rahim also flagged inflationary pressures as 'liquidity continues to chase assets' and the tightening of monetary policies as key risks to track.
The Chinese government, for example, has introduced yet more measures to cool the property market, ordering developers not to take deposits for sales of uncompleted flats without proper approval.
It has also imposed curbs on loans for purchases of third homes and increased the downpayment requirements and mortgage rates.
However, Citi's global head of real estate, Mr Thomas Flexner, said the steps are unlikely to overshoot and restrict growth in the other parts of the economy.
Mr Flexner, who was speaking at the briefing in conjunction with Citi's two-day Asia Pacific Property Conference at the Four Seasons Hotel this week, said that while the bubble in the Chinese residential market was 'very real', it is most pronounced at the higher-end and more speculative sectors of the first-tier cities.
In these centres, about 70 per cent of buyers are speculators.
'We call them speculators, they call themselves investors... There is real vulnerability there but I don't think it is systemic,' he added.
'There is certainly the prospect of potential losses by investors in that sector and on the part of developers who own land banks and who are leveraged.'
However, he said that, unlike a debt implosion or a credit bubble, which had contagion effects, China's bubble would not affect first-time home owners and would not have a 'significant larger impact on the Chinese economy and its ability to grow over time'.
Real estate is an increasingly popular asset class, with Asian clients of Citi Private Bank having close to 50 per cent of their portfolios in property.
This compares with 33 per cent globally.
Source: Straits Times, 28 Apr 2010
Thursday, April 22, 2010
IMF flags ‘bubble trouble’ in Asia
Many property markets overheating and correction fears loom; S’pore sees big share of new bank lending going into real estate
The International Monetary Fund warns that residential real estate markets in East Asia are overheating and that by some measures, valuations are stretched.
In its just-released Global Financial Stability report (April 2010), the IMF notes that since the second half of 2009, housing prices – especially at the high-end of the market – have rebounded quickly in China, Hong Kong, South Korea, and Singapore as well as Australia and New Zealand. In many markets, prices now exceed their 2008 peaks.
The rebound has been mainly driven by ‘unprecedented policy measures to mitigate the impact of the global financial crisis and the ensuing return of risk appetite’.
# Mortgage rates are at historical lows as central banks around the globe have cut policy rates.
# Real estate loan growth has been revived. So has the proportion of real estate loans to total bank lending, which in Singapore was close to 80 per cent in Q4 2009. This is the highest among the markets highlighted in the report. In percentage terms, year-on- year, the real estate loan growth has picked up most sharply in China.
# Governments in China and Korea introduced housing-related tax breaks in late 2008 to help boost their property markets.
# Capital inflows have further fuelled property price increases, particularly in Hong Kong and Singapore.
In Singapore, foreigners and companies accounted for 12.5 per cent of the third-quarter home purchases in 2009, compared with 8 per cent in the previous quarter.
The Fund cautions that by some measures, housing valuations are stretched. Although the average price-to-income ratio has risen modestly, in some markets – notably, China, Hong Kong, Singapore and Korea – price-to-rent ratios are ‘elevated’. It adds that many purchasers have been buying ‘in the expectation of price appreciation, rather than simply for dwelling purposes’.
The region’s booming real estate markets may pose risks to financial stability in the future, according to the IMF. Banks are ‘increasingly vulnerable’ to a price correction. Moreover, as most mortgage loans in Asian economies carry floating rates, ‘the widely anticipated rate hikes in the region will increase the burden on household balance sheets’.
The Fund acknowledges that governments in the region have taken measures to cool real estate markets, including tighter requirements on mortgage lending, increased land supply, and the reimposition of higher transaction taxes, such as stamp duties.
In Hong Kong, the average loan-to-value ratio of new mortgage loans has dropped significantly from its peak in June 2009, and banks in mainland China have started to tighten their mortgage criteria. In response to such measures, the growth rates of transaction values have declined, including in Singapore.
However, the full effects of the cooling measures ‘are still to be seen in the coming quarters’, says the Fund. It also suggests that governments may need to fine-tune their policies ‘to maintain a delicate balance between leaning against housing bubbles and ensuring a solid economic recovery’.
Source: Business Times, 22 Apr 2010
The International Monetary Fund warns that residential real estate markets in East Asia are overheating and that by some measures, valuations are stretched.
In its just-released Global Financial Stability report (April 2010), the IMF notes that since the second half of 2009, housing prices – especially at the high-end of the market – have rebounded quickly in China, Hong Kong, South Korea, and Singapore as well as Australia and New Zealand. In many markets, prices now exceed their 2008 peaks.
The rebound has been mainly driven by ‘unprecedented policy measures to mitigate the impact of the global financial crisis and the ensuing return of risk appetite’.
# Mortgage rates are at historical lows as central banks around the globe have cut policy rates.
# Real estate loan growth has been revived. So has the proportion of real estate loans to total bank lending, which in Singapore was close to 80 per cent in Q4 2009. This is the highest among the markets highlighted in the report. In percentage terms, year-on- year, the real estate loan growth has picked up most sharply in China.
# Governments in China and Korea introduced housing-related tax breaks in late 2008 to help boost their property markets.
# Capital inflows have further fuelled property price increases, particularly in Hong Kong and Singapore.
In Singapore, foreigners and companies accounted for 12.5 per cent of the third-quarter home purchases in 2009, compared with 8 per cent in the previous quarter.
The Fund cautions that by some measures, housing valuations are stretched. Although the average price-to-income ratio has risen modestly, in some markets – notably, China, Hong Kong, Singapore and Korea – price-to-rent ratios are ‘elevated’. It adds that many purchasers have been buying ‘in the expectation of price appreciation, rather than simply for dwelling purposes’.
The region’s booming real estate markets may pose risks to financial stability in the future, according to the IMF. Banks are ‘increasingly vulnerable’ to a price correction. Moreover, as most mortgage loans in Asian economies carry floating rates, ‘the widely anticipated rate hikes in the region will increase the burden on household balance sheets’.
The Fund acknowledges that governments in the region have taken measures to cool real estate markets, including tighter requirements on mortgage lending, increased land supply, and the reimposition of higher transaction taxes, such as stamp duties.
In Hong Kong, the average loan-to-value ratio of new mortgage loans has dropped significantly from its peak in June 2009, and banks in mainland China have started to tighten their mortgage criteria. In response to such measures, the growth rates of transaction values have declined, including in Singapore.
However, the full effects of the cooling measures ‘are still to be seen in the coming quarters’, says the Fund. It also suggests that governments may need to fine-tune their policies ‘to maintain a delicate balance between leaning against housing bubbles and ensuring a solid economic recovery’.
Source: Business Times, 22 Apr 2010
Saturday, April 17, 2010
Asia property investors see recovery by Q4
Most say domestic market is at or near bottom, survey of 244 major institutional and private global investors shows
REAL estate investors in Asia think that their domestic markets are already at or near the bottom of the property clock and they expect the region’s markets to recover by the fourth quarter of this year, findings of a new survey show.
Meanwhile, investors in Canada, Latin America and Eastern and Western Europe expect recovery by Q1 2011, and those in the United States in Q2 2011, the survey by real estate firm Colliers International found.
The survey, conducted between February 2010 and March 2010, compiled views from 244 major institutional and private global investors with a combined portfolio exceeding US$300 billion.
It referred to a ‘global property clock’ which equates the market cycle to specific times – 12 o’clock represents the peak of the market and six o’clock represents the bottom. Each six-hour period symbolises rising (from 6.00 to 12.00) and declining (from 12.00 to 6.00) cycles.
Findings revealed that most investors think their domestic market is at or near the bottom, with 41 per cent indicating the market is between 5.00 and 6.00 on the global property clock, while 19 per cent feel their market has already moved from the bottom and is now sitting at 8.00.
Asia was viewed to be at the market’s bottom (6.00).
‘Investors worldwide clearly see the market re-setting in general and about to enter the next up-cycle,’ said Piers Brunner, Colliers’ chief executive for Asia.
The survey also revealed that two out of three respondents are looking to expand their real estate portfolios in the next 12 months – indicating the investors have developed much more confidence in the market.
But a majority of them are still cautious and have expressed a higher comfort level in engaging in just domestic investments. Emerging markets such as Brazil, India, Poland, Ukraine and Vietnam were also singled out as countries for possible future investments.
Mr Brunner said: ‘The tendency to invest domestically is most likely a short-term phenomenon. Cross-border investments will take place once investors have a greater comfort level in the global economy and the global financial system.’
Other findings revealed that investors worldwide believe the availability and ease of getting finance for purchases is still a major concern, and that there is a shifting preference from properties with a ‘high risk’ profile towards high-quality and well-performing assets.
Source: Business Times, 17 Apr 2010
REAL estate investors in Asia think that their domestic markets are already at or near the bottom of the property clock and they expect the region’s markets to recover by the fourth quarter of this year, findings of a new survey show.
Meanwhile, investors in Canada, Latin America and Eastern and Western Europe expect recovery by Q1 2011, and those in the United States in Q2 2011, the survey by real estate firm Colliers International found.
The survey, conducted between February 2010 and March 2010, compiled views from 244 major institutional and private global investors with a combined portfolio exceeding US$300 billion.
It referred to a ‘global property clock’ which equates the market cycle to specific times – 12 o’clock represents the peak of the market and six o’clock represents the bottom. Each six-hour period symbolises rising (from 6.00 to 12.00) and declining (from 12.00 to 6.00) cycles.
Findings revealed that most investors think their domestic market is at or near the bottom, with 41 per cent indicating the market is between 5.00 and 6.00 on the global property clock, while 19 per cent feel their market has already moved from the bottom and is now sitting at 8.00.
Asia was viewed to be at the market’s bottom (6.00).
‘Investors worldwide clearly see the market re-setting in general and about to enter the next up-cycle,’ said Piers Brunner, Colliers’ chief executive for Asia.
The survey also revealed that two out of three respondents are looking to expand their real estate portfolios in the next 12 months – indicating the investors have developed much more confidence in the market.
But a majority of them are still cautious and have expressed a higher comfort level in engaging in just domestic investments. Emerging markets such as Brazil, India, Poland, Ukraine and Vietnam were also singled out as countries for possible future investments.
Mr Brunner said: ‘The tendency to invest domestically is most likely a short-term phenomenon. Cross-border investments will take place once investors have a greater comfort level in the global economy and the global financial system.’
Other findings revealed that investors worldwide believe the availability and ease of getting finance for purchases is still a major concern, and that there is a shifting preference from properties with a ‘high risk’ profile towards high-quality and well-performing assets.
Source: Business Times, 17 Apr 2010
Asia property investors see recovery by Q4
Most say domestic market is at or near bottom, survey of 244 major institutional and private global investors shows
REAL estate investors in Asia think that their domestic markets are already at or near the bottom of the property clock and they expect the region’s markets to recover by the fourth quarter of this year, findings of a new survey show.
Meanwhile, investors in Canada, Latin America and Eastern and Western Europe expect recovery by Q1 2011, and those in the United States in Q2 2011, the survey by real estate firm Colliers International found.
The survey, conducted between February 2010 and March 2010, compiled views from 244 major institutional and private global investors with a combined portfolio exceeding US$300 billion.
It referred to a ‘global property clock’ which equates the market cycle to specific times – 12 o’clock represents the peak of the market and six o’clock represents the bottom. Each six-hour period symbolises rising (from 6.00 to 12.00) and declining (from 12.00 to 6.00) cycles.
Findings revealed that most investors think their domestic market is at or near the bottom, with 41 per cent indicating the market is between 5.00 and 6.00 on the global property clock, while 19 per cent feel their market has already moved from the bottom and is now sitting at 8.00.
Asia was viewed to be at the market’s bottom (6.00).
‘Investors worldwide clearly see the market re-setting in general and about to enter the next up-cycle,’ said Piers Brunner, Colliers’ chief executive for Asia.
The survey also revealed that two out of three respondents are looking to expand their real estate portfolios in the next 12 months – indicating the investors have developed much more confidence in the market.
But a majority of them are still cautious and have expressed a higher comfort level in engaging in just domestic investments. Emerging markets such as Brazil, India, Poland, Ukraine and Vietnam were also singled out as countries for possible future investments.
Mr Brunner said: ‘The tendency to invest domestically is most likely a short-term phenomenon. Cross-border investments will take place once investors have a greater comfort level in the global economy and the global financial system.’
Other findings revealed that investors worldwide believe the availability and ease of getting finance for purchases is still a major concern, and that there is a shifting preference from properties with a ‘high risk’ profile towards high-quality and well-performing assets.
Source: Business Times, 17 Apr 2010
REAL estate investors in Asia think that their domestic markets are already at or near the bottom of the property clock and they expect the region’s markets to recover by the fourth quarter of this year, findings of a new survey show.
Meanwhile, investors in Canada, Latin America and Eastern and Western Europe expect recovery by Q1 2011, and those in the United States in Q2 2011, the survey by real estate firm Colliers International found.
The survey, conducted between February 2010 and March 2010, compiled views from 244 major institutional and private global investors with a combined portfolio exceeding US$300 billion.
It referred to a ‘global property clock’ which equates the market cycle to specific times – 12 o’clock represents the peak of the market and six o’clock represents the bottom. Each six-hour period symbolises rising (from 6.00 to 12.00) and declining (from 12.00 to 6.00) cycles.
Findings revealed that most investors think their domestic market is at or near the bottom, with 41 per cent indicating the market is between 5.00 and 6.00 on the global property clock, while 19 per cent feel their market has already moved from the bottom and is now sitting at 8.00.
Asia was viewed to be at the market’s bottom (6.00).
‘Investors worldwide clearly see the market re-setting in general and about to enter the next up-cycle,’ said Piers Brunner, Colliers’ chief executive for Asia.
The survey also revealed that two out of three respondents are looking to expand their real estate portfolios in the next 12 months – indicating the investors have developed much more confidence in the market.
But a majority of them are still cautious and have expressed a higher comfort level in engaging in just domestic investments. Emerging markets such as Brazil, India, Poland, Ukraine and Vietnam were also singled out as countries for possible future investments.
Mr Brunner said: ‘The tendency to invest domestically is most likely a short-term phenomenon. Cross-border investments will take place once investors have a greater comfort level in the global economy and the global financial system.’
Other findings revealed that investors worldwide believe the availability and ease of getting finance for purchases is still a major concern, and that there is a shifting preference from properties with a ‘high risk’ profile towards high-quality and well-performing assets.
Source: Business Times, 17 Apr 2010
Tuesday, April 13, 2010
Bubbles in Asia, but severe crash unlikely: DBS CEO
Asset bubbles have already formed in Singapore, Hong Kong and mainland China, but any correction in prices should be manageable and won’t precipitate a severe crash that derails Asia’s economic recovery, DBS Group chief executive Piyush Gupta said yesterday.
‘There are asset bubbles in Asia. That’s true of Singapore property, of Hong Kong property, of Shanghai property – there’s no question,’ Mr Gupta said at the annual general meeting of the American Chamber of Commerce in Singapore, where he was the keynote speaker.
‘But the nature of the bubble is not very different from previous cyclical bubbles we’ve seen around Asia. So I think there will be a correction – markets will level off – but I don’t think we’ll see a crash which brings everything back down on its knees.’
Asian central banks are likely to tighten monetary policy by raising borrowing costs more quickly than expected this year, partly in response to the asset bubbles, he told reporters afterwards.
‘Most Asian central banks might be a little bit behind the curve on raising rates, but I think we’ll start seeing that pretty quickly. I think you’ll see more tightening this year than people expect.’
On average, DBS analysts expect interest rates across most of Asia to rise by 1-1.25 percentage points by the end of this year, he said.
But he stopped short of criticising governments and central banks for not acting sooner to cool the property market in Singapore and elsewhere in Asia.
‘In hindsight it’s easy to say that we could have done more. Given where the economies are coming from, being prudent about withdrawing monetary easing and stimulus was the right thing, but I think now is when you might want to see a faster pace of tightening.’
Here, analysts are split over whether the Monetary Authority of Singapore (MAS) will shift its neutral stance on the Singapore dollar in its monetary policy statement tomorrow by nudging the currency higher, or keep it unchanged.
But many economists believe that Singapore’s economic output surged in the first quarter – by as much as 14 per cent – compared to the same period last year, making it likely that MAS will tighten monetary policy later this year, if not this week, to cool inflationary pressures stemming from the rapid growth.
‘Asia, in particular, has rebounded in a convincing manner,’ Mr Gupta said, citing anecdotal evidence from DBS’s operations across the region.
Credit-card spending is rising for various goods and services, including luxury items – signalling genuine optimism among consumers in Asia, he said. ‘This is not about people who’ve been able to get some money from a government voucher programme and are going out to buy groceries. People have confidence that things are good around here.’
Source: Business Times, 13 Apr 2010
‘There are asset bubbles in Asia. That’s true of Singapore property, of Hong Kong property, of Shanghai property – there’s no question,’ Mr Gupta said at the annual general meeting of the American Chamber of Commerce in Singapore, where he was the keynote speaker.
‘But the nature of the bubble is not very different from previous cyclical bubbles we’ve seen around Asia. So I think there will be a correction – markets will level off – but I don’t think we’ll see a crash which brings everything back down on its knees.’
Asian central banks are likely to tighten monetary policy by raising borrowing costs more quickly than expected this year, partly in response to the asset bubbles, he told reporters afterwards.
‘Most Asian central banks might be a little bit behind the curve on raising rates, but I think we’ll start seeing that pretty quickly. I think you’ll see more tightening this year than people expect.’
On average, DBS analysts expect interest rates across most of Asia to rise by 1-1.25 percentage points by the end of this year, he said.
But he stopped short of criticising governments and central banks for not acting sooner to cool the property market in Singapore and elsewhere in Asia.
‘In hindsight it’s easy to say that we could have done more. Given where the economies are coming from, being prudent about withdrawing monetary easing and stimulus was the right thing, but I think now is when you might want to see a faster pace of tightening.’
Here, analysts are split over whether the Monetary Authority of Singapore (MAS) will shift its neutral stance on the Singapore dollar in its monetary policy statement tomorrow by nudging the currency higher, or keep it unchanged.
But many economists believe that Singapore’s economic output surged in the first quarter – by as much as 14 per cent – compared to the same period last year, making it likely that MAS will tighten monetary policy later this year, if not this week, to cool inflationary pressures stemming from the rapid growth.
‘Asia, in particular, has rebounded in a convincing manner,’ Mr Gupta said, citing anecdotal evidence from DBS’s operations across the region.
Credit-card spending is rising for various goods and services, including luxury items – signalling genuine optimism among consumers in Asia, he said. ‘This is not about people who’ve been able to get some money from a government voucher programme and are going out to buy groceries. People have confidence that things are good around here.’
Source: Business Times, 13 Apr 2010
Thursday, March 18, 2010
Buy real estate, property funds: Aberdeen
Investors should buy real estate assets and funds that invest in property in the UK and Asia because a potential rebound in prices and economic growth will counter inflation risks, Aberdeen Asset Management Plc said.
While UK properties offer ‘attractive’ yield, real estate in Asia is supported by the strength of the region’s economic growth, Michael Turner, head of global strategy and asset allocation at Aberdeen, said on Tuesday.
He recommended buying into real-estate investment trusts and funds that hold property, without giving specific names.
‘People should allocate more money than they do now in real estate as a hedge against inflation,’ Mr Turner said. ‘Real estate, whether or not there’s inflation as a result of macro policy, is attractive in its own way.’
China, India and Australia have tightened monetary policy to curb inflation as the global economy recovers from the worst recession since World War II. Interest rates in advanced economies can remain accommodative for an ‘extended period’, while policy in ‘a number of emerging economies’ may have to be tightened ‘relatively soon’ because of signs of accelerating inflation or credit booms, the International Monetary Fund said in a Jan 19 staff note.
Minutes from the Australian central bank’s March meeting, released on Tuesday, said that policymakers raised borrowing costs this month for the fourth time in five meetings because the risk of faster economic growth stoking inflation outweighed the potential for renewed financial market turmoil.
In the US, where the housing market is still flat, the Federal Reserve on Tuesday repeated its pledge to keep its main interest rate near zero for an ‘extended period’.
It is a different story in Asia and Britain. UK house prices rose in February at the fastest pace in more than seven years, research group Acadametrics Ltd said on March 12. Nine of 10 Britons say that buying a home is a ’sensible investment’ even after the nation’s worst housing slump in three decades, a survey by YouGov Plc published on March 2 showed.
In Asia, property prices have risen as economic growth in the region outpaces the rest of the world’s. Hong Kong’s home prices surged almost 30 per cent last year, Centaline Property Agency Ltd said this month. Australian home prices jumped 13.6 per cent in 2009.
The World Bank forecast in January that the global economy would expand 2.7 per cent this year. China’s economy, the world’s third biggest, will top last year’s 8.7 per cent growth rate in 2010, the nation’s central bank estimated this month.
Singapore’s gross domestic product is forecast by the government to grow between 3 per cent and 5 per cent this year.
Source: Business Times, 18 Mar 2010
While UK properties offer ‘attractive’ yield, real estate in Asia is supported by the strength of the region’s economic growth, Michael Turner, head of global strategy and asset allocation at Aberdeen, said on Tuesday.
He recommended buying into real-estate investment trusts and funds that hold property, without giving specific names.
‘People should allocate more money than they do now in real estate as a hedge against inflation,’ Mr Turner said. ‘Real estate, whether or not there’s inflation as a result of macro policy, is attractive in its own way.’
China, India and Australia have tightened monetary policy to curb inflation as the global economy recovers from the worst recession since World War II. Interest rates in advanced economies can remain accommodative for an ‘extended period’, while policy in ‘a number of emerging economies’ may have to be tightened ‘relatively soon’ because of signs of accelerating inflation or credit booms, the International Monetary Fund said in a Jan 19 staff note.
Minutes from the Australian central bank’s March meeting, released on Tuesday, said that policymakers raised borrowing costs this month for the fourth time in five meetings because the risk of faster economic growth stoking inflation outweighed the potential for renewed financial market turmoil.
In the US, where the housing market is still flat, the Federal Reserve on Tuesday repeated its pledge to keep its main interest rate near zero for an ‘extended period’.
It is a different story in Asia and Britain. UK house prices rose in February at the fastest pace in more than seven years, research group Acadametrics Ltd said on March 12. Nine of 10 Britons say that buying a home is a ’sensible investment’ even after the nation’s worst housing slump in three decades, a survey by YouGov Plc published on March 2 showed.
In Asia, property prices have risen as economic growth in the region outpaces the rest of the world’s. Hong Kong’s home prices surged almost 30 per cent last year, Centaline Property Agency Ltd said this month. Australian home prices jumped 13.6 per cent in 2009.
The World Bank forecast in January that the global economy would expand 2.7 per cent this year. China’s economy, the world’s third biggest, will top last year’s 8.7 per cent growth rate in 2010, the nation’s central bank estimated this month.
Singapore’s gross domestic product is forecast by the government to grow between 3 per cent and 5 per cent this year.
Source: Business Times, 18 Mar 2010
Saturday, March 13, 2010
Destination Asia
ASIAN buyers of luxury real estate may be raising their profiles in New York and London by picking up luxury homes at eye-popping prices, but they haven’t been neglecting the property markets closer to home either.
While property prices in more mature Asian markets such as Singapore, Hong Kong and Thailand are still some way from their historical highs – courtesy of the beating they took due to global financial crisis – they have been moving up in tandem with stock markets, and attracting interest from individuals in the upper end of the high net-worth range.
‘The very affluent go where they choose to,’ says William E Heinecke, chief executive of Thai conglomerate The Minor Group, which among its diverse interests is a key player in the hospitality and lifestyle industries, with hotels, resorts and residential properties throughout the region. ‘A lot of people come to Thailand for the weather,’ he says. ‘As a result, if you can afford it, you have homes where you spend time.’
Minor launched its first high-end residential property project in 1995 at the Four Seasons Residences in Chiang Mai. Its growing portfolio of luxury developments includes The Estates Samui in Koh Samui, and the high-rise St Regis Residences in Bangkok is slated for completion next year. Prices for its various properties range between US$2 million and US$6 million.
Mr Heinecke says that Indian and Chinese nationals, who may have domicile in key major cities around the world, have emerged as strong players in the mega-luxury bracket, but traditional buyers from other Asian countries as well as Europeans and Americans are also active in the region. ‘As long as people have money and lifestyle is important, they are going to continue to buy in great locations,’ he says.
He adds that a significant new trend involves branded luxury residences which are located within a hotel property and can be part of the rental pool, commanding rates of several thousand dollars a night. ‘When owners visit their properties once or twice a year, it makes sense to have them professionally managed,’ says Mr Heinecke.
Mr Heinecke says that the quality at the luxe end of the market continues to improve, and there is also no shortage of high-end properties and people who are willing to buy them.
‘The bar continues to go up, and competition raises the bar,’ he says.
The luxury investment bar continues to go up as well in Singapore, where the recent launch of hotel and property developer YTL Corporation’s Kasara – The Lake collection at Sentosa Cove has yielded a highly positive result. The boutique development’s 13 villas have all been sold, at prices ranging from S$14 million to over S$25 million.
Of the buyers, seven were foreigners from Asia while six were locals. In general, there are several types of high-end buyers, says Kemmy Tan, director of international real estate at YTL Singapore.
Asian buyers are typically from Hongkong, Indonesia, Malaysia and China, with an increasing number of expatriate Indians as well. ‘American buyers may hold US passports but may not be living in the US, or they may be in places like Hongkong and have some interest in Asia,’ says Ms Tan. At the peak of the market, there were also investors from places such as Ireland. ‘When they invest, they invest with a longer-term view.’
Despite – or even because of – its restrictions on foreign ownership, Singapore has long been a significant target for investors. ‘They are property investors who own homes in key cities,’ she says. ‘If values are expensive in their home countries and Asia looks attractive, they will come here – these are definitely people with multiple homes in different cities and resorts.’
Buyers of properties in resort destinations are different from those who buy in Sentosa Cove, says Ms Tan. ‘They buy in Phuket and Bali for the resort lifestyle – those who buy here want the best of both worlds. They might have business interests and they want the comfort of city living. For wealthy investors, especially during the financial crisis, they are looking for good buys in ’safe’ locations.’
The proportion of foreign investors versus locals has increased tremendously in the past few years, she adds. And the good news is there is still some upside.
‘Real estate has always been a good hedge against inflation,’ says Ms Tan. ‘For luxury property, we are at least 10 to 15 per cent below the peak, so there’s room to move up.’
Elsewhere in Asia, there have been recent reports of a US$45 million riverfront mansion on the market in Shanghai’s financial district – an indication of the real estate boom in China. If those kinds of prices look a little scary, then there are always less heated up markets like Taiwan, where analysts report that foreign investors make up less than one per cent of the property market. Where opportunities go, of course, the money will always follow.
Source: Business Times, 13 Mar 2010
While property prices in more mature Asian markets such as Singapore, Hong Kong and Thailand are still some way from their historical highs – courtesy of the beating they took due to global financial crisis – they have been moving up in tandem with stock markets, and attracting interest from individuals in the upper end of the high net-worth range.
‘The very affluent go where they choose to,’ says William E Heinecke, chief executive of Thai conglomerate The Minor Group, which among its diverse interests is a key player in the hospitality and lifestyle industries, with hotels, resorts and residential properties throughout the region. ‘A lot of people come to Thailand for the weather,’ he says. ‘As a result, if you can afford it, you have homes where you spend time.’
Minor launched its first high-end residential property project in 1995 at the Four Seasons Residences in Chiang Mai. Its growing portfolio of luxury developments includes The Estates Samui in Koh Samui, and the high-rise St Regis Residences in Bangkok is slated for completion next year. Prices for its various properties range between US$2 million and US$6 million.
Mr Heinecke says that Indian and Chinese nationals, who may have domicile in key major cities around the world, have emerged as strong players in the mega-luxury bracket, but traditional buyers from other Asian countries as well as Europeans and Americans are also active in the region. ‘As long as people have money and lifestyle is important, they are going to continue to buy in great locations,’ he says.
He adds that a significant new trend involves branded luxury residences which are located within a hotel property and can be part of the rental pool, commanding rates of several thousand dollars a night. ‘When owners visit their properties once or twice a year, it makes sense to have them professionally managed,’ says Mr Heinecke.
Mr Heinecke says that the quality at the luxe end of the market continues to improve, and there is also no shortage of high-end properties and people who are willing to buy them.
‘The bar continues to go up, and competition raises the bar,’ he says.
The luxury investment bar continues to go up as well in Singapore, where the recent launch of hotel and property developer YTL Corporation’s Kasara – The Lake collection at Sentosa Cove has yielded a highly positive result. The boutique development’s 13 villas have all been sold, at prices ranging from S$14 million to over S$25 million.
Of the buyers, seven were foreigners from Asia while six were locals. In general, there are several types of high-end buyers, says Kemmy Tan, director of international real estate at YTL Singapore.
Asian buyers are typically from Hongkong, Indonesia, Malaysia and China, with an increasing number of expatriate Indians as well. ‘American buyers may hold US passports but may not be living in the US, or they may be in places like Hongkong and have some interest in Asia,’ says Ms Tan. At the peak of the market, there were also investors from places such as Ireland. ‘When they invest, they invest with a longer-term view.’
Despite – or even because of – its restrictions on foreign ownership, Singapore has long been a significant target for investors. ‘They are property investors who own homes in key cities,’ she says. ‘If values are expensive in their home countries and Asia looks attractive, they will come here – these are definitely people with multiple homes in different cities and resorts.’
Buyers of properties in resort destinations are different from those who buy in Sentosa Cove, says Ms Tan. ‘They buy in Phuket and Bali for the resort lifestyle – those who buy here want the best of both worlds. They might have business interests and they want the comfort of city living. For wealthy investors, especially during the financial crisis, they are looking for good buys in ’safe’ locations.’
The proportion of foreign investors versus locals has increased tremendously in the past few years, she adds. And the good news is there is still some upside.
‘Real estate has always been a good hedge against inflation,’ says Ms Tan. ‘For luxury property, we are at least 10 to 15 per cent below the peak, so there’s room to move up.’
Elsewhere in Asia, there have been recent reports of a US$45 million riverfront mansion on the market in Shanghai’s financial district – an indication of the real estate boom in China. If those kinds of prices look a little scary, then there are always less heated up markets like Taiwan, where analysts report that foreign investors make up less than one per cent of the property market. Where opportunities go, of course, the money will always follow.
Source: Business Times, 13 Mar 2010
Tuesday, March 2, 2010
Asian property prices expected to continue to rise despite govt measures
Recent measures to cool the property market in China, Hong Kong and Singapore are seen as the right moves to temper speculation and rapidly rising prices.
Still, industry watchers said that prices will have room to move upwards over the next two years.
This is because interest rates in Hong Kong continue to be low, and high-end property prices in Singapore are still below their peak.
Private home prices in Singapore rose by 24 per cent in the second half of last year, causing the government to step in.
Over in Hong Kong, the government also announced measures to avoid an asset bubble – after property prices rose by some 30 per cent last year.
The Chinese government is also doing its part to cool its red-hot property sector by tightening credit.
Analysts said these moves will limit price growth this year, but overall, they still expect prices to move upwards, even if at a slower pace.
Donald Han, managing director, Cushman & Wakefield, said: “With the introduction of these measures, and the fact that the government is keeping a lookout on the market, they may continue to intervene.
“We would expect the market currently to come down to between 8-15 per cent, depending on what market you are in in Asia Pacific. So it would probably come down by a few percentage points in terms of price increases.”
Analysts note that Singapore’s high-end residential market remains below 2008 peaks by some 20 per cent.
Meanwhile – they also say, the measures are only aimed at moderating the price increases.
Karamjit Singh, managing director, Credo Real Estate, said: “The measures that were announced by the Singapore government on February 19 do not address the root cause of the problem yet. The root cause of the problem is a short-term supply crunch at the lower end of the market, but it definitely helps mitigate the risk of bubbles being formed in the future.”
Experts said the factors set to drive prices higher this year are investors searching for higher yields, continuing hot money inflows and continuing low interest rates causing lower borrowing costs for buyers.
Source: Channel News Asia, 2 Mar 2010
Still, industry watchers said that prices will have room to move upwards over the next two years.
This is because interest rates in Hong Kong continue to be low, and high-end property prices in Singapore are still below their peak.
Private home prices in Singapore rose by 24 per cent in the second half of last year, causing the government to step in.
Over in Hong Kong, the government also announced measures to avoid an asset bubble – after property prices rose by some 30 per cent last year.
The Chinese government is also doing its part to cool its red-hot property sector by tightening credit.
Analysts said these moves will limit price growth this year, but overall, they still expect prices to move upwards, even if at a slower pace.
Donald Han, managing director, Cushman & Wakefield, said: “With the introduction of these measures, and the fact that the government is keeping a lookout on the market, they may continue to intervene.
“We would expect the market currently to come down to between 8-15 per cent, depending on what market you are in in Asia Pacific. So it would probably come down by a few percentage points in terms of price increases.”
Analysts note that Singapore’s high-end residential market remains below 2008 peaks by some 20 per cent.
Meanwhile – they also say, the measures are only aimed at moderating the price increases.
Karamjit Singh, managing director, Credo Real Estate, said: “The measures that were announced by the Singapore government on February 19 do not address the root cause of the problem yet. The root cause of the problem is a short-term supply crunch at the lower end of the market, but it definitely helps mitigate the risk of bubbles being formed in the future.”
Experts said the factors set to drive prices higher this year are investors searching for higher yields, continuing hot money inflows and continuing low interest rates causing lower borrowing costs for buyers.
Source: Channel News Asia, 2 Mar 2010
Thursday, January 28, 2010
BoA decides not to sell Merrill funds
Bank of America plans to raise new money for Merrill Lynch’s Asia property funds business instead of selling it due to a recovery in the real estate sector, sources said.
BoA was in talks with several private equity firms, including Blackstone Group and Apollo Investment Management, to sell management rights to its US$2.65 billion Asia Real Estate Opportunity Fund which the bank regarded as a non-core business, Reuters reported in July.
Despite negotiations lasting more than six months, no deal was reached because of disagreements over financial terms and the complicated structure of Merrill property funds, sources with direct knowledge of the matter told Reuters yesterday.
BoA has hired people in Beijing to raise money for a new Asia-focused property fund, the sources said, adding China remains a focus for the Merrill funds.
In China, Merrill invested a few years ago in the development of the Beijing Yintai Centre, a top-end complex where the luxury hotel Park Hyatt Beijing is located on the historic Chang An Avenue.
The sources, who were involved in the bidding process and have business ties with BoA, declined to be identified as they were not authorised to speak to the media.
‘Basically there was a lack of interest from Merrill Lynch’s part to go forward with the process,’ said a prospective bidder, who asked not to be identified.
A BoA spokesman in Hong Kong declined to comment.
Bank of America took over Merrill at the end of 2008 during the financial crisis.
In October 2008, just two months before the deal went through, Merrill closed and launched the Asia property fund with focus on Japan, China, India and South Korea.
Investors, also known as limited partners, in the Merrill property fund include many rich families and some sovereign funds in the region, said one of the sources.
Property market transactions in Asia have risen in recent months as investor confidence improves and banks start lending.
A research report released last week by property consultancy firm DTZ, for instance, showed the value of property transactions in South-east Asia rose 25 per cent in the last three months of 2009 from the preceding quarter.
Despite a clear recovery in the sector, some analysts and government officials are worried that asset bubbles were forming due to the sharp rises in property prices.
Merrill is not alone making property investments in Asia.
Rivals, including Goldman Sachs and Morgan Stanley, are long-time players in some key Asian markets like China.
In March, Morgan Stanley raised US$6 billion for a new global property fund, including money from China Investment Corp, the sovereign wealth fund.
Source: Business Times, 28 Jan 2010
BoA was in talks with several private equity firms, including Blackstone Group and Apollo Investment Management, to sell management rights to its US$2.65 billion Asia Real Estate Opportunity Fund which the bank regarded as a non-core business, Reuters reported in July.
Despite negotiations lasting more than six months, no deal was reached because of disagreements over financial terms and the complicated structure of Merrill property funds, sources with direct knowledge of the matter told Reuters yesterday.
BoA has hired people in Beijing to raise money for a new Asia-focused property fund, the sources said, adding China remains a focus for the Merrill funds.
In China, Merrill invested a few years ago in the development of the Beijing Yintai Centre, a top-end complex where the luxury hotel Park Hyatt Beijing is located on the historic Chang An Avenue.
The sources, who were involved in the bidding process and have business ties with BoA, declined to be identified as they were not authorised to speak to the media.
‘Basically there was a lack of interest from Merrill Lynch’s part to go forward with the process,’ said a prospective bidder, who asked not to be identified.
A BoA spokesman in Hong Kong declined to comment.
Bank of America took over Merrill at the end of 2008 during the financial crisis.
In October 2008, just two months before the deal went through, Merrill closed and launched the Asia property fund with focus on Japan, China, India and South Korea.
Investors, also known as limited partners, in the Merrill property fund include many rich families and some sovereign funds in the region, said one of the sources.
Property market transactions in Asia have risen in recent months as investor confidence improves and banks start lending.
A research report released last week by property consultancy firm DTZ, for instance, showed the value of property transactions in South-east Asia rose 25 per cent in the last three months of 2009 from the preceding quarter.
Despite a clear recovery in the sector, some analysts and government officials are worried that asset bubbles were forming due to the sharp rises in property prices.
Merrill is not alone making property investments in Asia.
Rivals, including Goldman Sachs and Morgan Stanley, are long-time players in some key Asian markets like China.
In March, Morgan Stanley raised US$6 billion for a new global property fund, including money from China Investment Corp, the sovereign wealth fund.
Source: Business Times, 28 Jan 2010
Tuesday, January 26, 2010
Keppel Land to launch 5,500 homes in Asia
Fourth quarter net profit jumps 56%; group on the prowl for more land
KEPPEL Land, which saw fourth-quarter earnings jump 56 per cent as property markets across Asia recovered, said it plans to launch more than 5,500 homes across the region for sale this year.
‘Keppel Land is moving into 2010 with optimism on the back of its stronger financial position, improving residential sales and office space take-up together with expectations of continued recovery of Asia and a return of capital flows from the West,’ chief executive Kevin Wong said yesterday.
In Singapore, KepLand will sell more units in two upmarket projects – Marina Bay Suites and Reflections at Keppel Bay – to capitalise on the opening of the integrated resorts, which is expected to boost the high end market.
And in China, the group will launch two projects in Shanghai as well as phase one (comprising about 1,700 units) of its 35.4 ha project in the Sino-Singapore Tianjin Eco City.
The developer yesterday reported that net profit for the quarter ended Dec 31, 2009, rose to $106.9 million from $68.5 million a year ago. Revenue rose 52 per cent to $300.5 million from $197.4 million.
‘Residential sales in Singapore and overseas have recovered, encouraged by signs of economic recovery and improved market sentiments,’ Keppel Land said. Revenue rose as the company saw progressive revenue recognition from the newly launched Madison Residences and The Promont in Singapore.
Higher revenue was also recognised for projects in Vietnam, India and China. Riviera Cove in Ho Chi Minh City has also recorded robust sales since its launch in November 2009, KepLand said.
The property group, however, recorded a net fair value loss of $12 million at the pre-tax level for fourth quarter 2009, mainly from completed investment properties owned by its listed office trust K-Reit Asia.
For the full year, Keppel Land’s profit rose 23 per cent to $280.4 million from $227.7 million in 2008. Revenue rose 10 per cent to $923.9 million compared with $842.2 million for 2008 on the back of higher sales.
Earnings per share for the full year rose to 24.2 cents from 22.4 cents in 2008.
Keppel Land is on the lookout for land to purchase. The company last year carried out a rights issue which raised gross proceeds of $708 million. ‘This ensures the group is well-positioned to capitalise on opportunities to acquire attractive assets at competitive prices in Singapore and overseas,’ it said.
The company also said the commercial segment is showing signs of bottoming out.
‘A flight to quality has been observed with Marina Bay Financial Centre (MBFC) and Ocean Financial Centre (OFC) chalking increased pre-commitment occupancy rates,’ Keppel Land said. MBFC saw a take-up of about 213,000 sq ft in 2009. Phase One of MBFC is now 79 per cent pre-committed and the overall occupancy for the entire MBFC stands at 68 per cent.
UBS Investment Research on Jan 22 issued a fresh ‘buy’ call on KepLand and upgraded the stock’s target price to $4.38 from $3.50.
‘On account of the higher office and luxury residential price assumptions, we upgrade our RNAV (revalued net asset value) estimate for Keppel Land by 25 per cent to $4.40 a share,’ said analyst Regina Lim.
Keppel Land shares gained one cent to end at $3.44 yesterday.
Source: Business Times, 26 Jan 2010
KEPPEL Land, which saw fourth-quarter earnings jump 56 per cent as property markets across Asia recovered, said it plans to launch more than 5,500 homes across the region for sale this year.
‘Keppel Land is moving into 2010 with optimism on the back of its stronger financial position, improving residential sales and office space take-up together with expectations of continued recovery of Asia and a return of capital flows from the West,’ chief executive Kevin Wong said yesterday.
In Singapore, KepLand will sell more units in two upmarket projects – Marina Bay Suites and Reflections at Keppel Bay – to capitalise on the opening of the integrated resorts, which is expected to boost the high end market.
And in China, the group will launch two projects in Shanghai as well as phase one (comprising about 1,700 units) of its 35.4 ha project in the Sino-Singapore Tianjin Eco City.
The developer yesterday reported that net profit for the quarter ended Dec 31, 2009, rose to $106.9 million from $68.5 million a year ago. Revenue rose 52 per cent to $300.5 million from $197.4 million.
‘Residential sales in Singapore and overseas have recovered, encouraged by signs of economic recovery and improved market sentiments,’ Keppel Land said. Revenue rose as the company saw progressive revenue recognition from the newly launched Madison Residences and The Promont in Singapore.
Higher revenue was also recognised for projects in Vietnam, India and China. Riviera Cove in Ho Chi Minh City has also recorded robust sales since its launch in November 2009, KepLand said.
The property group, however, recorded a net fair value loss of $12 million at the pre-tax level for fourth quarter 2009, mainly from completed investment properties owned by its listed office trust K-Reit Asia.
For the full year, Keppel Land’s profit rose 23 per cent to $280.4 million from $227.7 million in 2008. Revenue rose 10 per cent to $923.9 million compared with $842.2 million for 2008 on the back of higher sales.
Earnings per share for the full year rose to 24.2 cents from 22.4 cents in 2008.
Keppel Land is on the lookout for land to purchase. The company last year carried out a rights issue which raised gross proceeds of $708 million. ‘This ensures the group is well-positioned to capitalise on opportunities to acquire attractive assets at competitive prices in Singapore and overseas,’ it said.
The company also said the commercial segment is showing signs of bottoming out.
‘A flight to quality has been observed with Marina Bay Financial Centre (MBFC) and Ocean Financial Centre (OFC) chalking increased pre-commitment occupancy rates,’ Keppel Land said. MBFC saw a take-up of about 213,000 sq ft in 2009. Phase One of MBFC is now 79 per cent pre-committed and the overall occupancy for the entire MBFC stands at 68 per cent.
UBS Investment Research on Jan 22 issued a fresh ‘buy’ call on KepLand and upgraded the stock’s target price to $4.38 from $3.50.
‘On account of the higher office and luxury residential price assumptions, we upgrade our RNAV (revalued net asset value) estimate for Keppel Land by 25 per cent to $4.40 a share,’ said analyst Regina Lim.
Keppel Land shares gained one cent to end at $3.44 yesterday.
Source: Business Times, 26 Jan 2010
Tuesday, January 19, 2010
A dozen hedge funds seek offices in HK, S’pore
Move to Asia fuelled by new tax plans, more industry curbs in US, Europe
Bank of America Merrill Lynch is helping more than a dozen multibillion dollar international hedge funds set up or re-establish a presence in Hong Kong and Singapore as the US and Europe increase industry regulation.
A number of funds of hedge funds are also planning offices in the Asian cities, Dan McNicholas, head of Asia financing sales at Merrill Lynch said. Mr McNicholas spoke in a Bloomberg Television interview without mentioning any names.
Hedge-fund managers have been tempted by Hong Kong’s regulatory environment, the region’s economic growth and potential investment opportunities as US and Europe have proposed to increase taxes on the financial industry.
London Mayor Boris Johnson said that as many as 9,000 bankers may leave the UK capital’s financial district as a result of a 50 per cent tax on bonuses announced last month.
‘When you compare to New York or London, the business environment has been very friendly for managers,’ he said. In New York and London ‘you are seeing tax proposed and other restrictions on business that may make Hong Kong and Singapore attractive.’
Asia is also expected to absorb a larger proportion of global hedge fund inflows than it historically received as funds need to correct their under-allocations to the region, he said. More than 15 per cent of the US$50 billion to US$100 billion of hedge fund inflows expected in the first quarter may go to Asia, Mr McNicholas said.
Soros Fund Management and GLG Partners are among those planning a Hong Kong office, people familiar with their plans told Bloomberg last week.
‘Unlike 2006, when we often just saw junior research staff and execution traders coming to Asia, we’re seeing more senior staff choose to make the move,’ said Mr McNicholas.
The UK last month imposed a 50 per cent tax on banks for bonuses of more than £25,000 (S$56,600). It is also raising taxes on residents earning more than £150,000 a year to 50 per cent from 40 per cent.
In 2008, it introduced a fee of £30,000 for non- domiciled residents who had previously escaped its tax system.
The European Union is preparing rules for hedge funds that would restrict the amount they can borrow and force them to use banks domiciled in Europe.
In the US, President Barack Obama proposed raising taxes on fund executives in his first Budget last year. An increase would affect general partners at buyout firms, hedge funds, venture capital firms and other partnerships including real estate, oil and gas investments.
Asian equities outperformed the US in 2009, with the MSCI Asia Pacific Ex-Japan Index advancing 68 per cent last year compared with the Standard & Poor’s 500 Index’s 23 per cent gain.
Asia is leading the world’s emergence from its deepest recession since the 1930s after governments boosted spending, cut taxes and slashed interest rates.
China, South Korea, Taiwan, Hong Kong and 10 South-east Asian economies may expand 6.8 per cent in 2010 from 4.2 per cent last year, according to a report last month by the Asian Development Bank’s Office for Regional Economic Integration in Manila.
Emerging markets will become a leading source of investment and credit as Western economies take longer to recover from the financial crisis, Tony Tan, deputy chairman of Government of Singapore Investment Corp, said yesterday at the Commonwealth Economic Forum in Taipei. GIC manages more than US$100 billion of the city-state’s foreign reserves.
Source: Business Times, 19 Jan 2010
Bank of America Merrill Lynch is helping more than a dozen multibillion dollar international hedge funds set up or re-establish a presence in Hong Kong and Singapore as the US and Europe increase industry regulation.
A number of funds of hedge funds are also planning offices in the Asian cities, Dan McNicholas, head of Asia financing sales at Merrill Lynch said. Mr McNicholas spoke in a Bloomberg Television interview without mentioning any names.
Hedge-fund managers have been tempted by Hong Kong’s regulatory environment, the region’s economic growth and potential investment opportunities as US and Europe have proposed to increase taxes on the financial industry.
London Mayor Boris Johnson said that as many as 9,000 bankers may leave the UK capital’s financial district as a result of a 50 per cent tax on bonuses announced last month.
‘When you compare to New York or London, the business environment has been very friendly for managers,’ he said. In New York and London ‘you are seeing tax proposed and other restrictions on business that may make Hong Kong and Singapore attractive.’
Asia is also expected to absorb a larger proportion of global hedge fund inflows than it historically received as funds need to correct their under-allocations to the region, he said. More than 15 per cent of the US$50 billion to US$100 billion of hedge fund inflows expected in the first quarter may go to Asia, Mr McNicholas said.
Soros Fund Management and GLG Partners are among those planning a Hong Kong office, people familiar with their plans told Bloomberg last week.
‘Unlike 2006, when we often just saw junior research staff and execution traders coming to Asia, we’re seeing more senior staff choose to make the move,’ said Mr McNicholas.
The UK last month imposed a 50 per cent tax on banks for bonuses of more than £25,000 (S$56,600). It is also raising taxes on residents earning more than £150,000 a year to 50 per cent from 40 per cent.
In 2008, it introduced a fee of £30,000 for non- domiciled residents who had previously escaped its tax system.
The European Union is preparing rules for hedge funds that would restrict the amount they can borrow and force them to use banks domiciled in Europe.
In the US, President Barack Obama proposed raising taxes on fund executives in his first Budget last year. An increase would affect general partners at buyout firms, hedge funds, venture capital firms and other partnerships including real estate, oil and gas investments.
Asian equities outperformed the US in 2009, with the MSCI Asia Pacific Ex-Japan Index advancing 68 per cent last year compared with the Standard & Poor’s 500 Index’s 23 per cent gain.
Asia is leading the world’s emergence from its deepest recession since the 1930s after governments boosted spending, cut taxes and slashed interest rates.
China, South Korea, Taiwan, Hong Kong and 10 South-east Asian economies may expand 6.8 per cent in 2010 from 4.2 per cent last year, according to a report last month by the Asian Development Bank’s Office for Regional Economic Integration in Manila.
Emerging markets will become a leading source of investment and credit as Western economies take longer to recover from the financial crisis, Tony Tan, deputy chairman of Government of Singapore Investment Corp, said yesterday at the Commonwealth Economic Forum in Taipei. GIC manages more than US$100 billion of the city-state’s foreign reserves.
Source: Business Times, 19 Jan 2010
Risk of bubbles in China, S’pore, HK: Goldman
China’s Dec property price surge steepest in 18 months
Real estate prices in China, Singapore and Hong Kong need monitoring for signs of bubbles forming as Asia continues to grow rapidly this year, said Fred Hu, Goldman Sach Group’s chairman of Greater China.
China, Singapore and Hong Kong need to be watched for asset bubbles, especially real estate prices, Mr Hu told a conference in Taipei yesterday. He also warned of inflationary pressures in China and said that China and India would lead the way in economic growth.
Home prices in Hong Kong are at their highest in 12 years, while residential and commercial real-estate prices in 70 cities in China climbed 7.8 per cent in December, the fastest pace in 18 months. In Singapore, a record number of private homes were sold last year.
China’s economy is overheating as asset bubbles and inflation pressures build, posing a ‘major risk’ to global growth, the World Economic Forum said on Jan 14.
Hong Kong residential property prices will rise about 5 per cent this year, Credit Suisse Group AG analysts led by Hong Kong- based Cusson Leung said last week. Prices of existing homes in Hong Kong, which rose 29 per cent last year, advanced further to reach their highest in almost 12 years as at Jan 10, according to Centaline Property Agency Ltd, one of the city’s biggest.
Record-low mortgage costs, near-zero interest rates on savings deposits and buying from rich mainland Chinese stoked demand even as Hong Kong Chief Executive Donald Tsang said on Jan 14 there is no ‘obvious bubble’ in the city’s property market.
In November, Mr Tsang had warned that asset prices in cities including Hong Kong and Singapore were ‘going up to levels that are incompatible or inconsistent with the economic fundamentals.’
To help ease a shortage of homes, Hong Kong will hold its third land auction in the current financial year next month, it said last Friday.
In China, property prices rose at the fastest pace in 18 months in December, with residential and commercial real-estate values in 70 cities climbing 7.8 per cent from a year earlier, the National Development and Reform Commission said last week.
To cool speculation, the government this month reimposed a sales tax on homes sold within five years of their purchase, after cutting the taxable period to two years in January 2009 to bolster a market that was then flagging.
The central bank also raised lenders’ reserve requirements from yesterday, seeking to rein in liquidity from record lending without stalling a recovery.
A total 14,991 units were sold in 2009 in Singapore, according to Bloomberg calculations, beating the historical high of about 14,800 units set in 2007.
Source: Business Times, 19 Jan 2010
Real estate prices in China, Singapore and Hong Kong need monitoring for signs of bubbles forming as Asia continues to grow rapidly this year, said Fred Hu, Goldman Sach Group’s chairman of Greater China.
China, Singapore and Hong Kong need to be watched for asset bubbles, especially real estate prices, Mr Hu told a conference in Taipei yesterday. He also warned of inflationary pressures in China and said that China and India would lead the way in economic growth.
Home prices in Hong Kong are at their highest in 12 years, while residential and commercial real-estate prices in 70 cities in China climbed 7.8 per cent in December, the fastest pace in 18 months. In Singapore, a record number of private homes were sold last year.
China’s economy is overheating as asset bubbles and inflation pressures build, posing a ‘major risk’ to global growth, the World Economic Forum said on Jan 14.
Hong Kong residential property prices will rise about 5 per cent this year, Credit Suisse Group AG analysts led by Hong Kong- based Cusson Leung said last week. Prices of existing homes in Hong Kong, which rose 29 per cent last year, advanced further to reach their highest in almost 12 years as at Jan 10, according to Centaline Property Agency Ltd, one of the city’s biggest.
Record-low mortgage costs, near-zero interest rates on savings deposits and buying from rich mainland Chinese stoked demand even as Hong Kong Chief Executive Donald Tsang said on Jan 14 there is no ‘obvious bubble’ in the city’s property market.
In November, Mr Tsang had warned that asset prices in cities including Hong Kong and Singapore were ‘going up to levels that are incompatible or inconsistent with the economic fundamentals.’
To help ease a shortage of homes, Hong Kong will hold its third land auction in the current financial year next month, it said last Friday.
In China, property prices rose at the fastest pace in 18 months in December, with residential and commercial real-estate values in 70 cities climbing 7.8 per cent from a year earlier, the National Development and Reform Commission said last week.
To cool speculation, the government this month reimposed a sales tax on homes sold within five years of their purchase, after cutting the taxable period to two years in January 2009 to bolster a market that was then flagging.
The central bank also raised lenders’ reserve requirements from yesterday, seeking to rein in liquidity from record lending without stalling a recovery.
A total 14,991 units were sold in 2009 in Singapore, according to Bloomberg calculations, beating the historical high of about 14,800 units set in 2007.
Source: Business Times, 19 Jan 2010
Monday, December 21, 2009
Asia Pacific commercial property sales to rise in 2010
* 2009 Apac investment sales US$67b, up 22% from 2008
* Q4 2009 sales US$21.6b, down 9% from Q3
Investment sales in the Asia Pacific region’s commercial property market will keep rising in 2010, buoyed by returning economic growth and a stable banking system, global property advisor DTZ said on Monday.
Deal activity in the region totalled US$67 billion in 2009, up 22 per cent on 2008. On a quarter-by-quarter basis this marked a return to 2007 levels, DTZ said, adding fourth-quarter volumes were US$21.6 billion, down 9 per cent year-on-year.
‘Despite the fall in activity over the (fourth) quarter, we expect the upward annual trend in activity to continue into 2010,’ said David Green-Morgan, head of DTZ Asia Pacific Research, in a report.
He said this would be partially driven by economic growth returning to the majority of economies in the region, and the relatively stable banking system, which would ‘help to stimulate lending together with improving institutional allocations’.
China, Australia and Japan were the most active markets within the region, accounting for 80 per cent of fourth-quarter investment sales volumes.
Growth in the Asia Pacific commercial property market in 2009 stands in contrast to Europe, which saw investment sales more than halve in 2009 to US$112 billion, from US$53 billion.
Source: Business Times, 21 Dec 2009
* Q4 2009 sales US$21.6b, down 9% from Q3
Investment sales in the Asia Pacific region’s commercial property market will keep rising in 2010, buoyed by returning economic growth and a stable banking system, global property advisor DTZ said on Monday.
Deal activity in the region totalled US$67 billion in 2009, up 22 per cent on 2008. On a quarter-by-quarter basis this marked a return to 2007 levels, DTZ said, adding fourth-quarter volumes were US$21.6 billion, down 9 per cent year-on-year.
‘Despite the fall in activity over the (fourth) quarter, we expect the upward annual trend in activity to continue into 2010,’ said David Green-Morgan, head of DTZ Asia Pacific Research, in a report.
He said this would be partially driven by economic growth returning to the majority of economies in the region, and the relatively stable banking system, which would ‘help to stimulate lending together with improving institutional allocations’.
China, Australia and Japan were the most active markets within the region, accounting for 80 per cent of fourth-quarter investment sales volumes.
Growth in the Asia Pacific commercial property market in 2009 stands in contrast to Europe, which saw investment sales more than halve in 2009 to US$112 billion, from US$53 billion.
Source: Business Times, 21 Dec 2009
Saturday, December 19, 2009
Retail property in Asia Pacific outshines other sectors
RETAIL property in Asia Pacific continues to outshine other sectors as rents grow, showed a new report by DTZ.
Retail rents have performed well with growth of around 3 per cent per year since 2004 – without any significant falls. The level of growth has been maintained despite overall negative performance during the earlier part of 2009, DTZ noted.
Additionally, retail rents returned to positive growth in Q4 as the more heavily weighted markets (Shanghai and Singapore) have turned positive.
‘Retail markets are generally doing well with quarterly rental growth rates up to 8 per cent being reported during the year,’ said David Green-Morgan, head of DTZ Asia Pacific Research. ‘Strong retail sales have been sustaining retail markets across the region. Government stimulus across the region has helped sustain the retail sector and this is helping to sustain rental levels and boost prices in many locations.’
By contrast, the Asia Pacific office and industrial markets continue to be sluggish as 2009 comes to an end, DTZ said.
Over the course of the year, the office sector experienced the largest fall with a peak to trough decline in office rents of around 27 per cent so far. Industrial rents, on the other hand, have fallen around 3 per cent year-to-date, with the possibility of further falls to come. Despite more encouraging economic fundamentals across the region, occupier demand for these two sectors remains weak on the back of slow global growth, DTZ noted.
But the report also pointed out that both office and industrial sectors around the globe have either reached or are approaching the bottom of the rental cycle as many markets have reached a balance between supply and demand – albeit at a much lower level than the peak of the cycle.
In Q4, global office rents fell by 2 per cent while industrial fell by one per cent. But global retail rents grew by 0.2 per cent on the back of the gains in Asia Pacific and levelling out in Europe.
The report also noted that global capital city prime rents are highlighting the continuing trend for the flight to safety. Prime rents in the main markets have held up far better than anticipated. Rents in London City, Paris’s central business district, Hong Kong and Sydney have all levelled off during Q4 where many tier two cities continued to fall.
Source: Business Times, 19 Dec 2009
Retail rents have performed well with growth of around 3 per cent per year since 2004 – without any significant falls. The level of growth has been maintained despite overall negative performance during the earlier part of 2009, DTZ noted.
Additionally, retail rents returned to positive growth in Q4 as the more heavily weighted markets (Shanghai and Singapore) have turned positive.
‘Retail markets are generally doing well with quarterly rental growth rates up to 8 per cent being reported during the year,’ said David Green-Morgan, head of DTZ Asia Pacific Research. ‘Strong retail sales have been sustaining retail markets across the region. Government stimulus across the region has helped sustain the retail sector and this is helping to sustain rental levels and boost prices in many locations.’
By contrast, the Asia Pacific office and industrial markets continue to be sluggish as 2009 comes to an end, DTZ said.
Over the course of the year, the office sector experienced the largest fall with a peak to trough decline in office rents of around 27 per cent so far. Industrial rents, on the other hand, have fallen around 3 per cent year-to-date, with the possibility of further falls to come. Despite more encouraging economic fundamentals across the region, occupier demand for these two sectors remains weak on the back of slow global growth, DTZ noted.
But the report also pointed out that both office and industrial sectors around the globe have either reached or are approaching the bottom of the rental cycle as many markets have reached a balance between supply and demand – albeit at a much lower level than the peak of the cycle.
In Q4, global office rents fell by 2 per cent while industrial fell by one per cent. But global retail rents grew by 0.2 per cent on the back of the gains in Asia Pacific and levelling out in Europe.
The report also noted that global capital city prime rents are highlighting the continuing trend for the flight to safety. Prime rents in the main markets have held up far better than anticipated. Rents in London City, Paris’s central business district, Hong Kong and Sydney have all levelled off during Q4 where many tier two cities continued to fall.
Source: Business Times, 19 Dec 2009
Friday, December 18, 2009
Investment in Asia-Pac properties seen doubling
But DTZ notes that one major caveat is the capital required for de-leveraging
ABOUT US$85 billion will be available for direct investment in real estate across the Asia Pacific next year, double the US$43 billion transacted in the past 12 months, says DTZ Research.
The US$85 billion equates to 27 per cent of the US$315 billion total capital available for direct investment in real estate worldwide in 2010, DTZ says in its The Great Wall of Money report issued yesterday. The report analyses data generated by DTZ Research’s equity tracker.
It also says 2010 worldwide transaction volume should be more than double this year’s US$157 billion and could return to the level last seen in 2004.
Globally, the ratio of capital chasing real estate is about US$2 for every US$1 of deal volume. The ratio is relatively higher in Europe at closer to 2.2, compared with 2 in the Asia-Pacific and 1.8 in the Americas.
‘Asia Pacific and Europe are relative winners, with more money targeting these regions for investment than they are raising and investing elsewhere,’ DTZ’s report says. ‘Together, these regions are targets for 77 per cent combined of the total investment in 2010 but are raising only 49 per cent of available money.’
But DTZ cites one major caveat – capital required for de-leveraging. It points to the considerable amount of commercial real estate lending due for refinancing over the next two to four years.
‘While some of the available capital may be diverted to this purpose – for example, through provision of debt financing – we expect the de-leveraging and unwinding of support policies will be slowly phased in over time, limiting the immediate impact in 2010,’ it says.
Third party-managed funds are the largest investor category, accounting for 60 per cent of available equity, followed by institutions with 28 per cent and sovereign wealth funds with 6 per cent. The remainder has been raised by German open-ended funds, publicly listed companies and various private companies/high-net worth investors.
DTZ says 81 per cent of total capital raised is being directed towards multi rather than single-sector investments. Just 19 per cent of the capital has been raised to target a specific property sector only – chiefly industrial (5 per cent), office (4 per cent) and retail (3 per cent).
As well, 70 per cent of total capital is targeting two or more countries. Those investing in a single country are predominantly focused on the major liquid markets of the UK and US, accounting for 9 and 7 per cent respectively of total planned investment. Germany, China and Japan are expected to make up a combined 5 per cent of planned investment.
‘Globally, most investors are adopting multi-sector and/or multi-country strategies as part of sector and geographic diversification strategies, and reflecting the opportunistic nature of most fund mandates,’ says Nigel Almond, associate director of real estate strategy at DTZ Research.
Source: Business Times, 18 Dec 2009
ABOUT US$85 billion will be available for direct investment in real estate across the Asia Pacific next year, double the US$43 billion transacted in the past 12 months, says DTZ Research.
The US$85 billion equates to 27 per cent of the US$315 billion total capital available for direct investment in real estate worldwide in 2010, DTZ says in its The Great Wall of Money report issued yesterday. The report analyses data generated by DTZ Research’s equity tracker.
It also says 2010 worldwide transaction volume should be more than double this year’s US$157 billion and could return to the level last seen in 2004.
Globally, the ratio of capital chasing real estate is about US$2 for every US$1 of deal volume. The ratio is relatively higher in Europe at closer to 2.2, compared with 2 in the Asia-Pacific and 1.8 in the Americas.
‘Asia Pacific and Europe are relative winners, with more money targeting these regions for investment than they are raising and investing elsewhere,’ DTZ’s report says. ‘Together, these regions are targets for 77 per cent combined of the total investment in 2010 but are raising only 49 per cent of available money.’
But DTZ cites one major caveat – capital required for de-leveraging. It points to the considerable amount of commercial real estate lending due for refinancing over the next two to four years.
‘While some of the available capital may be diverted to this purpose – for example, through provision of debt financing – we expect the de-leveraging and unwinding of support policies will be slowly phased in over time, limiting the immediate impact in 2010,’ it says.
Third party-managed funds are the largest investor category, accounting for 60 per cent of available equity, followed by institutions with 28 per cent and sovereign wealth funds with 6 per cent. The remainder has been raised by German open-ended funds, publicly listed companies and various private companies/high-net worth investors.
DTZ says 81 per cent of total capital raised is being directed towards multi rather than single-sector investments. Just 19 per cent of the capital has been raised to target a specific property sector only – chiefly industrial (5 per cent), office (4 per cent) and retail (3 per cent).
As well, 70 per cent of total capital is targeting two or more countries. Those investing in a single country are predominantly focused on the major liquid markets of the UK and US, accounting for 9 and 7 per cent respectively of total planned investment. Germany, China and Japan are expected to make up a combined 5 per cent of planned investment.
‘Globally, most investors are adopting multi-sector and/or multi-country strategies as part of sector and geographic diversification strategies, and reflecting the opportunistic nature of most fund mandates,’ says Nigel Almond, associate director of real estate strategy at DTZ Research.
Source: Business Times, 18 Dec 2009
Thursday, December 17, 2009
Rising prices prompt bubble fears in Asia
Investors concerned a real estate bubble burst would derail the region’s economic recovery
Property prices in parts of Asia have risen sharply, sparking worries that bubbles are forming and prompting policymakers to rein in the sector.
Investors fear any real estate bubble burst could derail the region’s nascent economic recovery in the way the US housing sector slump brought on the worst global downturn in decades.
Here are some questions and answers on where potential bubbles are, their impact on shares, where prices are headed and policies that governments might implement next year:
Bubble threat: where does it loom largest?
China and Hong Kong face the highest risks in Asia, followed by Singapore, as property prices have risen strongly, especially in the second half, due to ample liquidity, low interest rates and a rally in stock markets.
‘If it (the China bubble) does burst, is that going to suddenly be a big burst? In this case, it’s got a big impact on the rest of Asia,’ said Jeremy Helsby, group CEO of UK-based property firm Savills .
Some cities in China and Hong Kong’s mass market have seen residential prices rise by about a third this year, while in Singapore, private home prices soared 16 per cent in the third quarter from the previous quarter, the biggest jump this decade.
‘Singapore and Hong Kong are held up as examples of the effects of excess liquidity and credit in Asia. The residential property data certainly raise cause for concern,’ said Alaistair Chan, an economist at Moody’s economy.com.
China’s aggressive stimulus measures and developers halting some projects late last year due to the economic downturn helped push up prices this year, while Hong Kong’s limited land, coupled with a government land sales hiatus boosted prices.
The bubble threat also surfaced in Australia and South Korea earlier this year though various government policies have allayed those fears.
What is the impact of potential bubbles on shares?
Property shares have been outpacing main indexes in China , Hong Kong and Singapore, with the sector sub-indices up by 70 per cent to more than doubling.
Shares of top Chinese developer China Overseas Land and Investment and Singapore’s CapitaLand, South-east Asia’s largest developer, have signifcantly outpaced their local market indexes.
While some real estate stocks are likely to continue to outperform the broad markets in 2010, gains will be muted due to wariness over governments’ tightening policies as they act to fight off the potential of a property market meltdown.
‘Next year, we won’t see the exceptional returns we’ve seen in either financials or property shares. But I do think we will see some further but moderate growth in a number of property shares,’ said Rod Cornish, division director at Macquarie Capital Advisors. If a bubble does burst, it could hamper developers and real estate agents exposed to the markets affected. For instance, if a bubble bursts in China, major developers in the market, such as Shimao Property , could see their earnings and share prices hurt, analysts said.
Where are property prices headed for next year?
Most of the huge price rises in Asia are in the residential sector as reluctance by companies to hire kept demand for office space relatively weak in the region.
Residential prices in most markets are set to stabilise next year, with rises seen gradual compared to the huge swings this year. Prices from Japan to Singapore are expected to either remain stable or rise by nearly 10 per cent.
Residential prices in China are expected to rise by as much as 5 per cent by the end of next year from now, a Reuters poll showed, less than gains logged for this year.
Comparatively, commercial prices will likely be steady or rise marginally in China, but might see a more significant increase in Singapore, analysts and industry executives say.
What kind of policies will governments come up with?
Some countries have already reacted with monetary and property-related policies to allay fears over speculation.
In December, Australia raised interest rates for a third straight time, while South Korea in September imposed mortgage lending in Seoul and nearby areas to stem a housing boom.
In the months ahead, governments in the rest of Asia will likely resort to releasing land supply, taxes and bank lending measures to stablise property prices, instead of using monetary tools, since inflation is still benign.
‘Governments are nevertheless unlikely to crack down on speculation too harshly. One worry is that this could deter legitimate investment, causing the market to slump,’ said Mr Chan at Moody’s economy.com.
Source: Business Times, 17 Dec 2009
Property prices in parts of Asia have risen sharply, sparking worries that bubbles are forming and prompting policymakers to rein in the sector.
Investors fear any real estate bubble burst could derail the region’s nascent economic recovery in the way the US housing sector slump brought on the worst global downturn in decades.
Here are some questions and answers on where potential bubbles are, their impact on shares, where prices are headed and policies that governments might implement next year:
Bubble threat: where does it loom largest?
China and Hong Kong face the highest risks in Asia, followed by Singapore, as property prices have risen strongly, especially in the second half, due to ample liquidity, low interest rates and a rally in stock markets.
‘If it (the China bubble) does burst, is that going to suddenly be a big burst? In this case, it’s got a big impact on the rest of Asia,’ said Jeremy Helsby, group CEO of UK-based property firm Savills .
Some cities in China and Hong Kong’s mass market have seen residential prices rise by about a third this year, while in Singapore, private home prices soared 16 per cent in the third quarter from the previous quarter, the biggest jump this decade.
‘Singapore and Hong Kong are held up as examples of the effects of excess liquidity and credit in Asia. The residential property data certainly raise cause for concern,’ said Alaistair Chan, an economist at Moody’s economy.com.
China’s aggressive stimulus measures and developers halting some projects late last year due to the economic downturn helped push up prices this year, while Hong Kong’s limited land, coupled with a government land sales hiatus boosted prices.
The bubble threat also surfaced in Australia and South Korea earlier this year though various government policies have allayed those fears.
What is the impact of potential bubbles on shares?
Property shares have been outpacing main indexes in China , Hong Kong and Singapore, with the sector sub-indices up by 70 per cent to more than doubling.
Shares of top Chinese developer China Overseas Land and Investment and Singapore’s CapitaLand, South-east Asia’s largest developer, have signifcantly outpaced their local market indexes.
While some real estate stocks are likely to continue to outperform the broad markets in 2010, gains will be muted due to wariness over governments’ tightening policies as they act to fight off the potential of a property market meltdown.
‘Next year, we won’t see the exceptional returns we’ve seen in either financials or property shares. But I do think we will see some further but moderate growth in a number of property shares,’ said Rod Cornish, division director at Macquarie Capital Advisors. If a bubble does burst, it could hamper developers and real estate agents exposed to the markets affected. For instance, if a bubble bursts in China, major developers in the market, such as Shimao Property , could see their earnings and share prices hurt, analysts said.
Where are property prices headed for next year?
Most of the huge price rises in Asia are in the residential sector as reluctance by companies to hire kept demand for office space relatively weak in the region.
Residential prices in most markets are set to stabilise next year, with rises seen gradual compared to the huge swings this year. Prices from Japan to Singapore are expected to either remain stable or rise by nearly 10 per cent.
Residential prices in China are expected to rise by as much as 5 per cent by the end of next year from now, a Reuters poll showed, less than gains logged for this year.
Comparatively, commercial prices will likely be steady or rise marginally in China, but might see a more significant increase in Singapore, analysts and industry executives say.
What kind of policies will governments come up with?
Some countries have already reacted with monetary and property-related policies to allay fears over speculation.
In December, Australia raised interest rates for a third straight time, while South Korea in September imposed mortgage lending in Seoul and nearby areas to stem a housing boom.
In the months ahead, governments in the rest of Asia will likely resort to releasing land supply, taxes and bank lending measures to stablise property prices, instead of using monetary tools, since inflation is still benign.
‘Governments are nevertheless unlikely to crack down on speculation too harshly. One worry is that this could deter legitimate investment, causing the market to slump,’ said Mr Chan at Moody’s economy.com.
Source: Business Times, 17 Dec 2009
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