Property Market Sentiments

[specuvestor]

So do you think free market is better or paternalistic governance is better? It's easy to have hindside but do you think currently Singapore is managing the property bubble better or Australia?

The philosophy and principles shapes the policies, but in general policies should be pragmatic rather than utopian either side.

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AN ENVIRONMENT PROTECTION AGENCY FOR FINANCIAL MARKETS

We cannot expect prosecutors alone to police markets and renew our trust in financial institutions. What else can we do to re-establish market confidence and our trust in institutions? The fear and breakdown in trust ultimately arises from other’s greed and fantastic rewards, with the rest of us assuming much of the risk. If this premise was not understood by all before, there is almost a universal understanding following the Credit Crisis and the Global Financial Meltdown. Even Alan Greenspan, the Pharaoh of FREE Markets, recently became the apologist of the Financial Apocalypse. While he maintain a lifelong love affair with free markets, he recently discovered that they are an attractive but illusory ideal.
In his testimony on Thursday, October 23, 2008, before Henry Waxman’s Congressional House Committee on Oversight and Government Reform, Greenspan stated, “Those of us who have looked to the self-interest of lending institutions to protect shareholders’ equity, myself included, are in a state of shocked disbelief…….” When asked whether he still believed that markets are self-correcting and self-regulating, he stated, “The whole intellectual edifice, however collapsed in the summer of last year.” He then went on to admit the role of greed over good public policy.

NB:
How much do you think the US G's financial policies were responsible directly or indirectly for the recent GFC. It's really a "cowboy town's policy."

[Temperament]

i really don't know. It may be too cheem for me. But i only know there is no such thing as self-correcting and self-regulating human beings. So there is no such market. If there is why need the Gs in any country or any civilization? To me it is not hindsight but an American's illusory dream - The Land of Statue of Liberty - "MIAO XIANG TIAN KAI." How can "Bo Cheng Hu" in any thing regarding human beings?

So do you think free market is better or paternalistic governance is better? It's easy to have hindside but do you think currently Singapore is managing the property bubble better or Australia?

The philosophy and principles shapes the policies, but in general policies should be pragmatic rather than utopian either side.

//////////////////////
AN ENVIRONMENT PROTECTION AGENCY FOR FINANCIAL MARKETS

We cannot expect prosecutors alone to police markets and renew our trust in financial institutions. What else can we do to re-establish market confidence and our trust in institutions? The fear and breakdown in trust ultimately arises from other’s greed and fantastic rewards, with the rest of us assuming much of the risk. If this premise was not understood by all before, there is almost a universal understanding following the Credit Crisis and the Global Financial Meltdown. Even Alan Greenspan, the Pharaoh of FREE Markets, recently became the apologist of the Financial Apocalypse. While he maintain a lifelong love affair with free markets, he recently discovered that they are an attractive but illusory ideal.
In his testimony on Thursday, October 23, 2008, before Henry Waxman’s Congressional House Committee on Oversight and Government Reform, Greenspan stated, “Those of us who have looked to the self-interest of lending institutions to protect shareholders’ equity, myself included, are in a state of shocked disbelief…….” When asked whether he still believed that markets are self-correcting and self-regulating, he stated, “The whole intellectual edifice, however collapsed in the summer of last year.” He then went on to admit the role of greed over good public policy.

NB:
How much do you think the US G's financial policies were responsible directly or indirectly for the recent GFC. It's really a "cowboy town's policy."

[greengiraffe]

http://www.cnbc.com/id/101938959

REAL ESTATE
Is Singapore driving away property investors?

Leslie Shaffer | Writer for CNBC.com
20 Hours Ago
CNBC.com


Roslan Rahman | AFP | Getty Images
Property plays are near and dear to Singapore's heart, but at least one manager doesn't think the city-state is particularly friendly to real-estate investors.

"For Singapore, which is one of the most business friendly countries in the world, it's possibly one of the least real estate investor friendly countries because of constant policy changes," said Andrew Jackson, head of real estate funds at Standard Life Investments, which has around $318 billion under management.

Read More Should yield chasers worry about Singapore REITs?
While the policy changes are designed to keep Singapore competitive by lowering property prices, which is a key factor in economic production, that also puts a lot of real estate investors off, Jackson said. His Select Property Fund is underweight the Singapore property market, with just 0.1 percent of its assets invested there.

Explicit property plays make up 20 percent of the constituents of the benchmark Straits Times Index, while some of the other index members, such as Singapore Press Holdings, also have significant earnings from their property holdings.
Of the Singapore stock exchange's around $845 billion market capitalization, around $166 billion is classified as related to property,according to data from SGX.

Read More Slump in Singapore prime property worst globally
Others also see some drawbacks to investing in Singapore's property market.

"It's not that it's not friendly, but there's very little space available," said Peter Churchouse, publisher of the Asia Hard Assets Report. "It's all very tightly held by the big property companies and the REITs."

But Churchouse doesn't believe Singapore's policies have been particularly anti-investment, noting that governments across Asia put measures in place to deflate potential bubbles as developed market central banks flooded markets with liquidity.

Residential property prices in Singapore have surged over 60 percent since 2009, propelled by rock-bottom global interest rates and quantitative easing in developed economies, even as the city-state's government enacted a series of cooling measures.

Read More Analysts slash forecasts for Singapore 2014 growth
"Many would argue that those policies are very sensible. Mr. [Alan] Greenspan [the former U.S. Federal Reserve chief] refused and it led to a disaster," Churchouse said.
To be sure, Standard Life's Jackson sees a number of dampeners for investing in Singapore property, beyond just a fickle policy framework.


"We're also aware of a pretty large pipeline in commercial space -- both and retail and office space. There's a lot being constructed," he said. "That will put downward pressure on rents and returns for real estate investors."

He's also concerned about the government's recent curbs on immigration.

Read More Singapore economy outpaces growth expectations
"Population growth is expected to be fairly anemic over the next few years. That is not good for real estate," Jackson said.

But Churchouse also noted that despite all the seeming headwinds, Singapore's property market performance over the long term has been one of massive appreciation.

"It's been a way better price appreciation than you've seen in America or most parts of Europe, the U.K., Australia and New Zealand," Churchouse said. "The markets [Hong Kong and Singapore] have been way more volatile, but if you pick your points, you've done very well. The shares of Singapore property companies reflect that reality."

—By CNBC.Com's Leslie Shaffer; Follow her on Twitter @LeslieShaffer1

[specuvestor]

Frankly I don' think any sensible (non-populist) governments should encourage "property investors" or specifically real estate investors that are not either staying in them locally or producing goods or services. Land/ property being one of the main factors of production has its own natural demand if the economy progresses. The policy making logic should be to add long term value to the economy rather than add asset inflation to the economy.

Car engine becoming hot after running miles is one thing, making the engine hot by pouring hot water over it is quite another.

[brattzz]

for a land-constraint country like singapore, focus should NOT be on the invesment of properties, but, on how the country can prosper & survive WITHOUT these properties investments....!

That is my humble opinion of cos..

[Contrarian]

>>> on how the country can prosper & survive WITHOUT these properties investments....!

WELL SAID!!!

ALmost every listed company has become a developer of sorts - Breadtalk, Freight Links (Vibrant), GSH, Food Empire, Popular, Noel Gifts...

End up no deep value-creation industries... 40-45% of loans come from real estate or construction related...

[Porkbelly]

Frankly I don' think any sensible (non-populist) governments should encourage "property investors" or specifically real estate investors that are not either staying in them locally or producing goods or services. Land/ property being one of the main factors of production has its own natural demand if the economy progresses. The policy making logic should be to add long term value to the economy rather than add asset inflation to the economy.

Car engine becoming hot after running miles is one thing, making the engine hot by pouring hot water over it is quite another.

Flipping property is certainly one way to make a quick buck. It is neither production or services being created. In this case, Government must enter and regulate. Free markets can cause great damage as seen in the Global Financial Crisis.

And a little ranting here:

Products vs Services

Both require labour, land and capital to operate. In Singapore's case, it seems that services is a major activity. Trouble is most of these services are of the type that needs just arms & legs: F&B, hotels, sales.

These are low paying jobs.
We should have moved into higher value and knowldege based services. This should be more stable and sustainable.

Without doubt the entrepruneur seeks immediate returns on his capital, and with easy money from banks, low rates, investments in knowledge & higher value service ( or products ) ranks low in priorities.

And of all the factors of production here:
Labour, Land, Capital,

2 out of the 3 is cheap (Labour & Capital)

[specuvestor]

Labour is not exactly cheap in Singapore. Cost of capital globally is cheap but SGD appreciation bites both ways for a business investor.

Simplistically it is a function of how we value add in our production of goods & services (which includes productivity that has been declining) as our GDP per capita crosses US$60k, ie on average we need to produce >US$60k value for average salary of SGD60k to remain competitive. Closing of the gap due to FX or productivity loss etc will hurt our competitiveness.

[greengiraffe]

http://www.businesstimes.com.sg/premium/...s-20140903

PUBLISHED SEPTEMBER 03, 2014
Margins 'halved' for new condo launches
Knight Frank study says profit margins on GLS sites dived to 5-10.3% this year
BY
LYNETTE KHOO
LYNKHOO@SPH.COM.SG @LynetteKhooBT


Developers' profit margins for new condominium launches have halved from a year ago, a focused study by Knight Frank suggests - PHOTO: WORLD CLASS LAND
Taking a hit
[SINGAPORE] Developers' profit margins for new condominium launches have halved from a year ago, a focused study by Knight Frank suggests.
Looking at condominium launches on 99-year leasehold sites acquired through the government land sales (GLS) programme, the global consultancy estimated that new launches this year could have seen margins dive to 5-10.3 per cent.
This came on the back of a slew of government cooling measures that have subdued an otherwise hot market last year when record prices allowed developers to churn margins of 15.6-22.5 per cent for new launches.
Knight Frank studied a total of 24 project launches on GLS sites, but excluded freehold sites. Of these projects, four condominium projects were launched this year, 12 last year, and eight in 2012. They are all located outside the core central region (CCR).
The average take-up rate in condominium launches has also fallen to 32.3 per cent this year, down from 67.2 per cent in 2013 and 96.9 per cent in 2012, based on the study.
Alice Tan, head of research and consultancy at Knight Frank, noted that further margins compressions could occur if the selling prices at these new launches are further reduced to boost sales amid rising construction and financing costs.
"Offering attractive deals such as setting more palatable price quantum for various unit sizes, combined with unique design innovation, could be the current strategy for developers to quickly clear their units, before further competition sets in with upcoming project launches," she added.
"Moving forward, we are likely to see limited margin compression for the rest of 2014 and 2015, particularly for sites purchased after the implementation of the total debt servicing ratio (TDSR), as developers would have taken the impact of the TDSR into consideration," Ms Tan said.
The margins estimates assumed a range of construction costs depending on the condominium type, full gross development value for each project, and an average transacted price for all units in each project based on caveats lodged till end-July.
Ms Tan explained that only GLS sites are examined as they are the most competitively sought after and offer price transparency. The development costs for GLS sites are also more predictable than sites bought through private treaty, which will involve costs such as brokerage fees, development charge and legal liabilities.
The Panorama is among the four projects launched this year on GLS sites - the others being The Santorini at Tampines, Lakeville in Jurong and Waterfront@Faber at Sungei Ulu Pandan.
After Wheelock cut prices for the Ang Mo Kio project by as much as 10 per cent during its re-launch in May, units moved at a median S$1,240 per square foot (psf), down from the earlier median price of S$1,342.5 psf. There are still some 496 unsold units for the 698-unit project as at end-June.
Alan Cheong, Savills senior director for research and consultancy, said he expects margins to come down further for new launches this year if developers decide to offer further discounts to move unsold units.
"It is not just an issue of margins but also the pace of sales. If the pace of sales is slow, the developer needs a higher margin because it cannot use the sales proceeds to fund the development," Mr Cheong said.
He noted that a 10 per cent margin on development sales translates to a return on equity of 5-6 per cent per annum - a level deemed too low for the risks that developers bear.
Ong Teck Hui, the national research director at JLL, reckoned that developers will likely moderate their land bids to ensure a bigger buffer for their margins. But bids for very attractive sites could still be competitive, he said.
Meanwhile, developers are split over the strategy of price-cutting to move sales.
Tuan Sing group chief financial officer Chong Chou Yuen said that while the group is not under pressure to cut prices, "it can be more flexible in pricing for genuine buyers who are buying to stay".
There are some 31 units left unsold in Sennett Residence, 35 units at Cluny Park Residence and 13 units in Seletar Park Residence as at end-June. Mr Chong said there is sufficient margin buffer given that the land sites were acquired three to four years ago when the prices were not as high as now.
Roxy-Pacific executive chairman Teo Hong Lim said the group has yet to decide on whether to trim prices for its freehold project Trilive in Kovan, which so far moved only 19 units. The 222-unit project sits on the former Yi Mei Garden that was bought in a collective sale last year.
But Roxy is "refreshing" the showflat. Mr Teo felt that there are other ways to differentiate the project, such as a freehold versus a leasehold status. Roxy's new condominium launches this year have seen gross margins hovering around 13-14 per cent.
As at end-June, there are some 28,436 unsold private homes. They include 1,412 in completed projects and 27,024 in uncompleted projects, of which 20,713 units are not launched for sale yet, according to Knight Frank.

[greengiraffe]

http://www.businesstimes.com.sg/premium/...e-20140903

PUBLISHED SEPTEMBER 03, 2014
Asia investments in global real estate soar 40% in H1: CBRE
Singapore overtakes China as top source of capital from Asia
BYLYNETTE KHOO
lynkhoo@sph.com.sg @LynetteKhooBT

Asian investors have ploughed more capital into global real estate this year, going by transactions valued at US$10 million and above, with Singapore overtaking China as the top source of Asian capital - PHOTO: REUTERS
[SINGAPORE] Asian investors have ploughed more capital into global real estate this year, going by transactions valued at US$10 million and above, with Singapore overtaking China as the top source of Asian capital.
According to global real estate consultancy CBRE, Asian outbound investments surged 40 per cent year-on-year to US$16.2 billion in the first half of this year.
Among the most active sources of Asian capital, Singapore accounted for 29 per cent, followed by Hong Kong at 25 per cent, China at 23 per cent and Malaysia at 5 per cent. Last year, Singapore was in second place behind China.
Singapore's outbound investments in real estate have been driven by a surge in overseas ventures by developers, as yields in the domestic market are compressed following a slew of cooling measures.