Downsizing, refinancing and loan deferments help households in need
FOR seven years, receptionist L. Boey, 63, had been struggling to make the monthly $1,450 loan repayment to the Housing Board (HDB) for her four-room Choa Chu Kang flat.
Earlier this year, she had a lifeline thrown to her. The HDB found her a studio apartment in Bishan which was big enough for her and her 90-year-old mother, and affordable enough for her to buy using her Central Provident Fund (CPF) savings. She sold her flat in May this year, cleared her debt and moved in.
Financially relieved flat buyers like her have helped to halve the number of those with loan arrears (owing three months' instalments or more) from the peak of 55,700 cases in December 2003.
'I guess I didn't have a choice, but I also felt I was getting old and didn't need such a big apartment,' said Miss Boey.
She was among 2,000 home owners whom HDB helped to 'right-size' their flats between August 2008 and June this year, as a long-term solution to their debt problems.
Another measure the HDB instituted to help households falling behind on payment: allowing them to take an extra loan from the HDB to help them downgrade, even though they had already enjoyed two concessionary loans.
Between January 2008 and June this year, the HDB approved about 2,700 such loans.
These measures, along with others introduced in recent years, and the recovering economy have cut down the number of households who are in hock over HDB loan payments.
There are now about 26,000 HDB households who owe the HDB payments, making up 6.6 per cent of 393,000 accounts with an HDB loan as at June this year. This is down from 33,670 cases forming 7.9 per cent in September 2008.
The HDB team which helped to tackle HDB arrears cases will receive an award for its efforts at the Ministry of National Development's National Day Observance Ceremony on Friday.
An HDB spokesman told The Straits Times it has helped close to 20,000 cases since January 2008.
Short-term measures include reducing loan payments for up to six months, deferring loan instalments for up to six months, and instalment plans to clear arrears.
If the home owner still has difficulty paying the instalments, long-term solutions, such as flat downsizing, would be suggested.
In Miss Boey's case, she had sold off her first Choa Chu Kang flat for a profit and bought another four-room Choa Chu Kang flat for $335,000 on the open market in 1996.
She had a job then as a purchaser, and was granted an HDB loan of $224,000 at a concessionary rate. But in 2003, she lost her job. The money from her earlier sale was also depleted. Even after she found another job in 2008, and rented out a room, she was unable to make the payments.
Her HDB counsellor, who had been working on her case since 2006, suggested that she sell her flat and downgrade. In May this year, she sold her flat for $310,000 and bought the Bishan studio apartment for $83,000 using her CPF savings.
Miss Boey is all praise for the HDB and her MP Zaqy Mohamad. 'If the HDB didn't help me, I guess I would still have to sell my flat, but I may not have been able to find another place within my budget.'
The HDB spokesman said compulsory acquisitions are 'very rare' - slightly more than 1,480 since January 2008 - and usually happen only after a household does not take proactive steps to pay up.
Some households, the HDB said, would include working family members as joint owners to help pay for the flat, or try to enhance household income by sub-letting a room.
Mr Dennis Ng, founder of mortgage consultancy web portal housingloansg.com, said loan repayment problems arise when people do not budget for crises.
Some people, he said, use up to 50 per cent of their monthly income to service their housing loan, when the maximum should be 35 per cent.
'If you use half your income to pay for your house, you might be in trouble in bad times, when you face job loss or a pay cut...people must budget first if they don't want problems paying in the future,' he said.
Source: Straits Times, 4 Aug 2010
Wednesday, August 4, 2010
Tuesday, August 3, 2010
Prime Balmoral Condo up for sale by tender
It has an indicative price tag of $171m to $175m
BALMORAL Condominium, located in the prime District 10 area, has been put up for sale by tender with an indicative price tag of $171 million to $175 million, or about $1,866 to $1,910 per square foot per plot.
Marketing agent Savills Singapore said over 80 per cent of owners have agreed to the collective sale. A previous unsuccessful attempt at enbloc sale had been made in 2007 at much lower prices.
The 18-year- old redevelopment site sits on about 57,007 square feet (5,296 sq m) of prime residential land located at 16 Balmoral Road.
The site, which has a development baseline of 91,622 sq ft, already exceeds the permissible plot ratio of 1.6 in the 2008 Master Plan. Hence, no development charge is likely to be payable.
Savills said in its press release yesterday that the sale site can potentially accommodate 65 apartments averaging 1,300 sq ft each, subject to a 12-storey height restriction.
Units on the higher floors can enjoy views of Goodwood Hill.
Balmoral Condominium is located along Balmoral Road - an exclusive and popular address which is minutes' drive to and from the Orchard Road shopping belt, Newton MRT Station, Balmoral Plaza and prestigious clubs such as The Pines and Tanglin Club.
The property is also within a one-kilometre radius of reputable and popular primary schools such as the Anglo-Chinese School (Barker Road) and the Singapore Chinese Girls' Primary School.
'We expect strong interest for Balmoral Condominium due to the lack of choice residential plots in the prime districts,' said Suzie Mok, Savills' director of investment project.
The adjoining Volari development was fully sold at prices surpassing $2,200 psf last year. The tender for Balmoral Condominium will close at 3 pm on Sept 8, 2010.
Source: Business Times, 3 Aug 2010
BALMORAL Condominium, located in the prime District 10 area, has been put up for sale by tender with an indicative price tag of $171 million to $175 million, or about $1,866 to $1,910 per square foot per plot.
Marketing agent Savills Singapore said over 80 per cent of owners have agreed to the collective sale. A previous unsuccessful attempt at enbloc sale had been made in 2007 at much lower prices.
The 18-year- old redevelopment site sits on about 57,007 square feet (5,296 sq m) of prime residential land located at 16 Balmoral Road.
The site, which has a development baseline of 91,622 sq ft, already exceeds the permissible plot ratio of 1.6 in the 2008 Master Plan. Hence, no development charge is likely to be payable.
Savills said in its press release yesterday that the sale site can potentially accommodate 65 apartments averaging 1,300 sq ft each, subject to a 12-storey height restriction.
Units on the higher floors can enjoy views of Goodwood Hill.
Balmoral Condominium is located along Balmoral Road - an exclusive and popular address which is minutes' drive to and from the Orchard Road shopping belt, Newton MRT Station, Balmoral Plaza and prestigious clubs such as The Pines and Tanglin Club.
The property is also within a one-kilometre radius of reputable and popular primary schools such as the Anglo-Chinese School (Barker Road) and the Singapore Chinese Girls' Primary School.
'We expect strong interest for Balmoral Condominium due to the lack of choice residential plots in the prime districts,' said Suzie Mok, Savills' director of investment project.
The adjoining Volari development was fully sold at prices surpassing $2,200 psf last year. The tender for Balmoral Condominium will close at 3 pm on Sept 8, 2010.
Source: Business Times, 3 Aug 2010
Park Regis hotel, Chow House sold
50 per cent stake in retail portion of Malacca Centre in Raffles Place also transacted
INVESTMENT sales of property have been gathering momentum in the private sector, with several deals inked recently.
They include the Park Regis hotel at New Market Street/Merchant Road near the Singapore River, which is said to have been sold for $218 million to Indonesian mining magnate Yusuf Merukh.
Separately, a 50 per cent stake each in the retail portion of Malacca Centre in the Raffles Place area and three shop units at Coronation Plaza have been sold to a single buyer in a deal valuing the assets at about $40 million. BT understands that the deal involves a yield guarantee.
Over at Robinson Road, Chow House is believed to have been sold for slightly over $100 million. The price for the six-storey freehold office block, which has redevelopment potential, is said to work out to about $1,200 per square foot per plot ratio (psf ppr) assuming it is redeveloped into a new office block.
If redeveloped into apartments, the unit land price is closer to $1,300 psf ppr. The site has a land area of 9,084 sq ft and is currently zoned for commercial use with an 11.2+ plot ratio under Master Plan 2008.
Outline planning permission has also been granted to redevelop the property into residential use with commercial use on the first storey.
Chow House is understood to have been bought by a group whose shareholders include entrepreneur YY Wong, founder of the WyWy Group. It is one of nine properties put up for sale by liquidator Tam Chee Chong of Deloitte & Touche, as part of the resolution of a family dispute. The other properties are mostly shophouses. DTZ marketed the properties.
Over in the Singapore River area, Park Regis hotel is being sold just ahead of its scheduled opening next month. The $218 million deal involves the 203-room, four-star hotel and a seven-storey office block comprising about 42,000 sq ft of net lettable space.
A market watcher suggested that the hotel component alone could be valued at about $730,000 per room or $148 million. The asset is being sold by an entity controlled by Asok Kumar Hiranandani of Royal Brothers Group who developed the property on a 99-year leasehold site clinched at a state tender in October 2007.
While Mr Hiranandani is selling his stake in the hotel, Australian-based StayWell Hospitality Group, in which he also has an interest, will continue to manage it, as originally planned.
In an interview with BT in June, Mr Hiranandandi put the total investment in the property at about $175 million.
Separately, RB Capital, controlled by Mr Hiranandani's nephew Kishin, is said to have sold a half stake in two retail assets for a total of about $40 million recently.
They are: the retail podium of Malacca Centre comprising close to 5,300 sq ft spread over basement 1, ground and mezzanine levels; and three shop units with a total strata area of about 6,300 sq ft at Coronation Plaza in Bukit Timah. The buyer is a Singapore private investor who has been given a three-year rental guarantee. Malacca Centre has 999-year leasehold tenure while Coronation Plaza is freehold.
Source: Business Times, 3 Aug 2010
INVESTMENT sales of property have been gathering momentum in the private sector, with several deals inked recently.
They include the Park Regis hotel at New Market Street/Merchant Road near the Singapore River, which is said to have been sold for $218 million to Indonesian mining magnate Yusuf Merukh.
Separately, a 50 per cent stake each in the retail portion of Malacca Centre in the Raffles Place area and three shop units at Coronation Plaza have been sold to a single buyer in a deal valuing the assets at about $40 million. BT understands that the deal involves a yield guarantee.
Over at Robinson Road, Chow House is believed to have been sold for slightly over $100 million. The price for the six-storey freehold office block, which has redevelopment potential, is said to work out to about $1,200 per square foot per plot ratio (psf ppr) assuming it is redeveloped into a new office block.
If redeveloped into apartments, the unit land price is closer to $1,300 psf ppr. The site has a land area of 9,084 sq ft and is currently zoned for commercial use with an 11.2+ plot ratio under Master Plan 2008.
Outline planning permission has also been granted to redevelop the property into residential use with commercial use on the first storey.
Chow House is understood to have been bought by a group whose shareholders include entrepreneur YY Wong, founder of the WyWy Group. It is one of nine properties put up for sale by liquidator Tam Chee Chong of Deloitte & Touche, as part of the resolution of a family dispute. The other properties are mostly shophouses. DTZ marketed the properties.
Over in the Singapore River area, Park Regis hotel is being sold just ahead of its scheduled opening next month. The $218 million deal involves the 203-room, four-star hotel and a seven-storey office block comprising about 42,000 sq ft of net lettable space.
A market watcher suggested that the hotel component alone could be valued at about $730,000 per room or $148 million. The asset is being sold by an entity controlled by Asok Kumar Hiranandani of Royal Brothers Group who developed the property on a 99-year leasehold site clinched at a state tender in October 2007.
While Mr Hiranandani is selling his stake in the hotel, Australian-based StayWell Hospitality Group, in which he also has an interest, will continue to manage it, as originally planned.
In an interview with BT in June, Mr Hiranandandi put the total investment in the property at about $175 million.
Separately, RB Capital, controlled by Mr Hiranandani's nephew Kishin, is said to have sold a half stake in two retail assets for a total of about $40 million recently.
They are: the retail podium of Malacca Centre comprising close to 5,300 sq ft spread over basement 1, ground and mezzanine levels; and three shop units with a total strata area of about 6,300 sq ft at Coronation Plaza in Bukit Timah. The buyer is a Singapore private investor who has been given a three-year rental guarantee. Malacca Centre has 999-year leasehold tenure while Coronation Plaza is freehold.
Source: Business Times, 3 Aug 2010
Ex-bankers launch new property venture
Trio of ex-Morgan Stanley veterans set up GreenOak Real Estate
(LONDON) Three of the world's most accomplished real estate bankers John Carrafiell, Sonny Kalsi and Fred Schmidt have launched a new investment and advisory firm as the pace of restructuring in the property sector ramps up.
The trio of ex-Morgan Stanley veterans has set up GreenOak Real Estate ahead of an expected surge in distressed loan disposals, asset firesales and mortgage-backed security (MBS) workouts in its core target markets of Europe, Japan and the United States.
GreenOak has secured US$110 million of seed capital, comprising a US$10 million working capital loan and a US$100 million co-investment commitment from Amsterdam-listed investment company Tetragon Financial Group Limited, the closed-ended investor said in a statement yesterday.
Tetragon's investment will fund a limited fixed percentage amount of any GreenOak investment deal and will take a 10 per cent equity stake in GreenOak under terms of the arrangement.
Entities linked to Tetragon, including Polygon Management LP, are considering additional infusions of capital into GreenOak in the future, the Tetragon statement said.
'We think there are significant opportunities in the real estate market, including widespread distressed opportunities, and gaining further exposure to this asset class especially at attractive fee levels is very appealing,' Paddy Dear, a director of TFG and Principal of Polygon Credit Management LP, TFG's investment manager said.
GreenOak is initially likely to focus on securing advisory mandates in complex property restructuring cases across Europe and make an immediate play for distressed physical real estate and mortgage buys in Japan as a principal investor, market sources said.
It will pursue both strategies in the US from the outset, the sources added.
Mr Carrafiell stepped down as joint global head of Morgan Stanley's real estate group in December 2008, setting up his own advisory firm, Alpha Real Estate Advisors.
Mr Kalsi, who replaced Mr Carrafiell, and Mr Schmidt, who headed up the bank's Japanese property operations, left the bank in October 2009 and February 2010 respectively. -- Reuters
Source: Business Times, 3 Aug 2010
(LONDON) Three of the world's most accomplished real estate bankers John Carrafiell, Sonny Kalsi and Fred Schmidt have launched a new investment and advisory firm as the pace of restructuring in the property sector ramps up.
The trio of ex-Morgan Stanley veterans has set up GreenOak Real Estate ahead of an expected surge in distressed loan disposals, asset firesales and mortgage-backed security (MBS) workouts in its core target markets of Europe, Japan and the United States.
GreenOak has secured US$110 million of seed capital, comprising a US$10 million working capital loan and a US$100 million co-investment commitment from Amsterdam-listed investment company Tetragon Financial Group Limited, the closed-ended investor said in a statement yesterday.
Tetragon's investment will fund a limited fixed percentage amount of any GreenOak investment deal and will take a 10 per cent equity stake in GreenOak under terms of the arrangement.
Entities linked to Tetragon, including Polygon Management LP, are considering additional infusions of capital into GreenOak in the future, the Tetragon statement said.
'We think there are significant opportunities in the real estate market, including widespread distressed opportunities, and gaining further exposure to this asset class especially at attractive fee levels is very appealing,' Paddy Dear, a director of TFG and Principal of Polygon Credit Management LP, TFG's investment manager said.
GreenOak is initially likely to focus on securing advisory mandates in complex property restructuring cases across Europe and make an immediate play for distressed physical real estate and mortgage buys in Japan as a principal investor, market sources said.
It will pursue both strategies in the US from the outset, the sources added.
Mr Carrafiell stepped down as joint global head of Morgan Stanley's real estate group in December 2008, setting up his own advisory firm, Alpha Real Estate Advisors.
Mr Kalsi, who replaced Mr Carrafiell, and Mr Schmidt, who headed up the bank's Japanese property operations, left the bank in October 2009 and February 2010 respectively. -- Reuters
Source: Business Times, 3 Aug 2010
A China real estate bubble built on conflicting policy
Top state-owned banks may be sitting on enormous unreported debt
(WUHU) The Anhui Salt Industry Corp is a state-owned company that has 11,000 employees, access to government salt mines and a Communist Party boss.
Now it has swaggered into a new line of business: real estate.
The company is developing a complex of luxury high-rises here called Platinum Bay on a parcel it acquired last year by outbidding two other developers to win a local government land auction.
Anhui Salt is hardly alone among big state-owned companies. The China Railway Group is developing residential complexes in Beijing after winning the auction for a huge piece of land there.
Likewise, the China Ordnance Group, a state-led military manufacturer best known for amphibious assault weapons, paid US$260 million for Beijing property where it plans to build luxury residences and retail outlets.
And in one of China's biggest land deals yet, the state-run shipbuilder Sino Ocean paid US$1.3 billion last December and March to buy two giant tracts from Beijing's municipal government to develop residential communities.
All around the nation, giant state-owned oil, chemical, military, telecom and highway groups are bidding up prices on sprawling plots of land for big real estate projects unrelated to their core businesses.
'These are the ones that have the money to buy the land,' said Deng Yongheng at the National University in Singapore. 'Because in China, it's the government that controls the money supply and the spending.'
By driving up property prices, the state-owned companies, which are ultimately controlled by the national government, are working at cross-purposes with the central government's effort to keep China's real estate boom from becoming a debt-fuelled speculative bubble - like the one that devastated Western financial markets when it burst two years ago.
Land records show that 82 per cent of land auctions in Beijing this year have been won by big state-owned companies outbidding private developers - up from 59 per cent in 2008.
A recent study by the National Bureau of Economic Research in Cambridge, Massachusetts, found that land prices in Beijing had jumped by about 750 per cent since 2003 and that half of that gain came in the last two years. Housing prices have also skyrocketed, doubling in many cities over the last few years.
The report pegged a big part of the increase to state-owned enterprises that have 'paid 27 per cent more than other bidders for an otherwise equivalent piece of land'. Critics say the central government in Beijing unwittingly propelled the land frenzy by pushing a huge US$586 billion economic stimulus package last year and encouraging state-owned banks to lend more aggressively.
And as the prices of new apartments soar - in Shanghai, for instance, they exceed US$200,000, while the average disposable income is only about US$4,000 a year - the trend also threatens to undermine the central government's social goal of affordable housing for the rising middle class.
In some cases, local governments - which earned more than US$230 billion from land auctions in 2009 - are also being accused of demolishing old neighbourhoods and unfairly compensating residents. In a recent poll conducted by China Youth Daily, a state-run newspaper, more than 80 per cent of the respondents said local governments were a 'major driving force' behind the skyrocketing property prices.
All of this is happening to the chagrin of private developers that dominated China's property market for more than a decade but are now feeling squeezed out of a game that favours developers with state-backed financing.
'It's a little like a son who borrows money from his mother,' said Yang Shaofeng, head of the Conworld Real Estate Agency in Beijing.
Last year, state banks made a record US$1.4 trillion in loans, nearly twice as much as the year before. Analysts now say they believe much of that money was diverted into the property market through off-balance-sheet manoeuvres, leading to the record land bids and soaring property prices.
That belief is adding to concerns that some of China's biggest state-owned banks may be sitting on enormous unreported debt.
Beijing is now struggling to rein in credit without slowing the nation's roaring economy. And regulators are trying to stop state banks from using clever manoeuvres to secretly lend money to overly aggressive state-owned developers.
Beijing also wants to restrain state companies that have little or no expertise in real estate. Last March, the State Assets Supervision and Administration Commission - one of the national government's most powerful bodies - ordered 78 state-owned companies to shed their real estate divisions.
But analysts say the government will have difficulty stopping hundreds of state-owned companies and their various subsidiaries from participating in what has become one of the country's hottest industries.
Experts say that more than 90 of the 125 state-owned companies directly under Beijing's control still have property divisions. And local and provincial governments control many additional developers.
The national government is grappling with a complex set of incentives that drive state-run companies to speculate in the property market with the aid of local governments. - NYT
Source: Business Times, 3 Aug 2010
(WUHU) The Anhui Salt Industry Corp is a state-owned company that has 11,000 employees, access to government salt mines and a Communist Party boss.
Now it has swaggered into a new line of business: real estate.
The company is developing a complex of luxury high-rises here called Platinum Bay on a parcel it acquired last year by outbidding two other developers to win a local government land auction.
Anhui Salt is hardly alone among big state-owned companies. The China Railway Group is developing residential complexes in Beijing after winning the auction for a huge piece of land there.
Likewise, the China Ordnance Group, a state-led military manufacturer best known for amphibious assault weapons, paid US$260 million for Beijing property where it plans to build luxury residences and retail outlets.
And in one of China's biggest land deals yet, the state-run shipbuilder Sino Ocean paid US$1.3 billion last December and March to buy two giant tracts from Beijing's municipal government to develop residential communities.
All around the nation, giant state-owned oil, chemical, military, telecom and highway groups are bidding up prices on sprawling plots of land for big real estate projects unrelated to their core businesses.
'These are the ones that have the money to buy the land,' said Deng Yongheng at the National University in Singapore. 'Because in China, it's the government that controls the money supply and the spending.'
By driving up property prices, the state-owned companies, which are ultimately controlled by the national government, are working at cross-purposes with the central government's effort to keep China's real estate boom from becoming a debt-fuelled speculative bubble - like the one that devastated Western financial markets when it burst two years ago.
Land records show that 82 per cent of land auctions in Beijing this year have been won by big state-owned companies outbidding private developers - up from 59 per cent in 2008.
A recent study by the National Bureau of Economic Research in Cambridge, Massachusetts, found that land prices in Beijing had jumped by about 750 per cent since 2003 and that half of that gain came in the last two years. Housing prices have also skyrocketed, doubling in many cities over the last few years.
The report pegged a big part of the increase to state-owned enterprises that have 'paid 27 per cent more than other bidders for an otherwise equivalent piece of land'. Critics say the central government in Beijing unwittingly propelled the land frenzy by pushing a huge US$586 billion economic stimulus package last year and encouraging state-owned banks to lend more aggressively.
And as the prices of new apartments soar - in Shanghai, for instance, they exceed US$200,000, while the average disposable income is only about US$4,000 a year - the trend also threatens to undermine the central government's social goal of affordable housing for the rising middle class.
In some cases, local governments - which earned more than US$230 billion from land auctions in 2009 - are also being accused of demolishing old neighbourhoods and unfairly compensating residents. In a recent poll conducted by China Youth Daily, a state-run newspaper, more than 80 per cent of the respondents said local governments were a 'major driving force' behind the skyrocketing property prices.
All of this is happening to the chagrin of private developers that dominated China's property market for more than a decade but are now feeling squeezed out of a game that favours developers with state-backed financing.
'It's a little like a son who borrows money from his mother,' said Yang Shaofeng, head of the Conworld Real Estate Agency in Beijing.
Last year, state banks made a record US$1.4 trillion in loans, nearly twice as much as the year before. Analysts now say they believe much of that money was diverted into the property market through off-balance-sheet manoeuvres, leading to the record land bids and soaring property prices.
That belief is adding to concerns that some of China's biggest state-owned banks may be sitting on enormous unreported debt.
Beijing is now struggling to rein in credit without slowing the nation's roaring economy. And regulators are trying to stop state banks from using clever manoeuvres to secretly lend money to overly aggressive state-owned developers.
Beijing also wants to restrain state companies that have little or no expertise in real estate. Last March, the State Assets Supervision and Administration Commission - one of the national government's most powerful bodies - ordered 78 state-owned companies to shed their real estate divisions.
But analysts say the government will have difficulty stopping hundreds of state-owned companies and their various subsidiaries from participating in what has become one of the country's hottest industries.
Experts say that more than 90 of the 125 state-owned companies directly under Beijing's control still have property divisions. And local and provincial governments control many additional developers.
The national government is grappling with a complex set of incentives that drive state-run companies to speculate in the property market with the aid of local governments. - NYT
Source: Business Times, 3 Aug 2010
NZ property listings down 2.3% in July
(WELLINGTON) Fewer New Zealanders want to sell their homes and the average asking price is falling as the property market slows, according to an industry website.
The number of properties listed for sale fell 2.3 per cent in July from June, according to a report on realestate.co.nz on Sunday. The average asking price dropped 1.1 per cent.
The weak housing market adds to signs of slow domestic demand which may prompt central bank governor Alan Bollard to pause his interest-rate rises later this year. Last week, he raised the official cash rate a quarter point and said the pace and extent of further increases is 'likely to be more moderate' than he previously expected.
The level of unsold houses in the market rose 3 per cent from June and would take 46.8 weeks to sell, based on the current pace of completed sales, the report showed. -- Bloomberg
Source: Business Times, 3 Aug 2010
The number of properties listed for sale fell 2.3 per cent in July from June, according to a report on realestate.co.nz on Sunday. The average asking price dropped 1.1 per cent.
The weak housing market adds to signs of slow domestic demand which may prompt central bank governor Alan Bollard to pause his interest-rate rises later this year. Last week, he raised the official cash rate a quarter point and said the pace and extent of further increases is 'likely to be more moderate' than he previously expected.
The level of unsold houses in the market rose 3 per cent from June and would take 46.8 weeks to sell, based on the current pace of completed sales, the report showed. -- Bloomberg
Source: Business Times, 3 Aug 2010
London luxury-home prices slide in July
Dip is the first in 16 months as recovery persuades more owners to sell
(LONDON) Luxury-home prices in central London declined in July for the first time in 16 months as the recovery persuaded more owners to sell, broker Knight Frank LLP said.
Prices of properties costing at least £1 million (S$2.1 million) fell 0.5 per cent from June, the London-based real estate adviser said in an e-mailed report yesterday. They rose 17 per cent from a year earlier, the smallest gain since February.
Values have climbed more than 23 per cent since a yearlong price slump ended in March 2009, boosted chiefly by overseas buyers encouraged by a weaker pound. The British currency's 6.3 per cent appreciation against the euro this year has reduced demand from Europeans, while owners are becoming too optimistic about the prices their homes will fetch, the broker said.
'Expectations of vendors are still very high after the rise in prices,' said Andrew Giller, who heads London property searches for The Buying Solution, an arm of Knight Frank that advises and acts for wealthy buyers. 'People have been rejoicing slightly too early.'
The luxury slowdown mirrors the broader UK housing market. Liam Bailey, Knight Frank's head of residential research, predicts that a drop in the second half will cut the 2010 gain for luxury homes in central London to 5 per cent.
Sale prices of residential property in England and Wales rose 8.4 per cent in June from a year earlier, down from the 9.7 per cent annual gain in the previous month, according to Land Registry figures released on July 28.
Mr Bailey estimates that some sellers are overpricing luxury homes by as much as 10 per cent. Another sign of 'over-ambitious pricing' is that sales are achieved at 95 per cent of the asking price, down from 97 per cent in May, he said.
The number of luxury properties for sale has increased by 7 per cent since May, while the higher costs of purchasing a home in neighbourhoods such as Chelsea, Belgravia and Kensington caused the number of buyers to fall 8 per cent, the broker said.
Some potential purchasers have chosen to rent instead, lifting rents for prime homes in central London by 9.2 per cent in the second quarter from a year earlier. The number of prime rental homes fell 64 per cent in the past two years as owners decided to sell, Knight Frank research shows.
Properties priced at £3 million to £5 million were most affected by July's drop in values after they had the biggest gains in the past 15 months.
Overall, values are still 6.1 per cent below the March 2008 peak, the broker said.
Knight Frank compiles its luxury-homes index from estimated values of properties in the Mayfair, St John's Wood, Regent's Park, Kensington, Notting Hill, Chelsea, Knightsbridge, Belgravia and South Bank neighbourhoods of London. -- Bloomberg
Source: Business Times, 3 Aug 2010
(LONDON) Luxury-home prices in central London declined in July for the first time in 16 months as the recovery persuaded more owners to sell, broker Knight Frank LLP said.
Prices of properties costing at least £1 million (S$2.1 million) fell 0.5 per cent from June, the London-based real estate adviser said in an e-mailed report yesterday. They rose 17 per cent from a year earlier, the smallest gain since February.
Values have climbed more than 23 per cent since a yearlong price slump ended in March 2009, boosted chiefly by overseas buyers encouraged by a weaker pound. The British currency's 6.3 per cent appreciation against the euro this year has reduced demand from Europeans, while owners are becoming too optimistic about the prices their homes will fetch, the broker said.
'Expectations of vendors are still very high after the rise in prices,' said Andrew Giller, who heads London property searches for The Buying Solution, an arm of Knight Frank that advises and acts for wealthy buyers. 'People have been rejoicing slightly too early.'
The luxury slowdown mirrors the broader UK housing market. Liam Bailey, Knight Frank's head of residential research, predicts that a drop in the second half will cut the 2010 gain for luxury homes in central London to 5 per cent.
Sale prices of residential property in England and Wales rose 8.4 per cent in June from a year earlier, down from the 9.7 per cent annual gain in the previous month, according to Land Registry figures released on July 28.
Mr Bailey estimates that some sellers are overpricing luxury homes by as much as 10 per cent. Another sign of 'over-ambitious pricing' is that sales are achieved at 95 per cent of the asking price, down from 97 per cent in May, he said.
The number of luxury properties for sale has increased by 7 per cent since May, while the higher costs of purchasing a home in neighbourhoods such as Chelsea, Belgravia and Kensington caused the number of buyers to fall 8 per cent, the broker said.
Some potential purchasers have chosen to rent instead, lifting rents for prime homes in central London by 9.2 per cent in the second quarter from a year earlier. The number of prime rental homes fell 64 per cent in the past two years as owners decided to sell, Knight Frank research shows.
Properties priced at £3 million to £5 million were most affected by July's drop in values after they had the biggest gains in the past 15 months.
Overall, values are still 6.1 per cent below the March 2008 peak, the broker said.
Knight Frank compiles its luxury-homes index from estimated values of properties in the Mayfair, St John's Wood, Regent's Park, Kensington, Notting Hill, Chelsea, Knightsbridge, Belgravia and South Bank neighbourhoods of London. -- Bloomberg
Source: Business Times, 3 Aug 2010
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