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HKMC Shenzhen venture to only offer bridging guarantees

Redaksi — Sat, 09 May 2009 23:36:44 +0000

HONG KONG (May 8, 2009): The Hong Kong Mortgage Corporation said its Shenzhen joint venture will begin business by acting as guarantor for the unsecured mortgage loans of mainland banks, with fees as its main income.The business is expected to break even in 18 months, HKMC chief executive James Lau said.Lau shrugged off expectations that the firm will enter the mortgage insurance business soon because Beijing does not allow any top-up financing for mortgages.”The company will only offer high loan-to-value ratio mortgage insurance to mainland individuals when government policy allows,” he said.HKMC holds a 90 percent stake in the Shenzhen joint venture, set up last month with the clearing house run by the Shenzhen branch of the People’s Bank of China.The Hong Kong Mortgage Corporation said its Shenzhen joint venture will begin business by acting as guarantor for the unsecured mortgage loans of mainland banks, with fees as its main income.The business is expected to break even in 18 months, HKMC chief executive James Lau said.Lau shrugged off expectations that the firm will enter the mortgage insurance business soon because Beijing does not allow any top-up financing for mortgages.”The company will only offer high loan-to-value ratio mortgage insurance to mainland individuals when government policy allows,” he said.HKMC holds a 90 percent stake in the Shenzhen joint venture, set up last month with the clearing house run by the Shenzhen branch of the People’s Bank of China. (source: www.thestandard.com)

CapitaLand collects payment for 98% of sold RiverGate apartments

Redaksi — Sat, 09 May 2009 23:31:41 +0000

SINGAPORE (May 7, 2009): Property developer CapitaLand has collected payment for 98 per cent of the 542 units of RiverGate apartments which have been sold since it obtained the Temporary Occupation Permit in March 2009. CapitaLand said the progress payments and deferred payment receivables for the sold units were securitised through special purpose vehicle Okeanos Investment Corporation. Okeanos issued US$477 million (S$731 million) of floating rate notes in January 2007.

The notes are due in 2011 and CapitaLand expects to fully redeem them by the maturity date in June 2009 with the proceeds collected for RiverGate to date. RiverGate is a joint venture project by CapitaLand and Hwa Hong Corporation. The development comprises 545 freehold residential units and is located in Singapore’s Robertson Quay area. (Source: www.channelasianews.com)

Roxy-Pacific reports 53% rise in Q1 net profit to S$6.4m

Redaksi — Sat, 09 May 2009 23:28:59 +0000

SINGAPORE (May 8, 2009) : Property developer Roxy-Pacific has posted a 53 per cent on-year rise in its first quarter net profit, to S$6.4 million. Revenue increased by nearly two-thirds to S$38 million. The jump was mainly due to the progressive recognition of revenue from five development projects in the quarter.

The firm also saw an increase in rental yield from the renewal lease for some of the shop units at its Roxy Square Shopping Centre since the second half of last year. But looking ahead, Roxy-Pacific said it expects its property development segment to be affected by cautious buying sentiments, which is expected to persist for the rest of the year.

Still, the firm said the balance amount of pre-sale revenue of approximately S$315 million from its development projects is expected to contribute positively to its performance from 2009 to 2011. (Source: www.channelnewsasia.com)

Damac announces Dh2bn worth construction contracts for 2009

Redaksi — Thu, 07 May 2009 03:59:58 +0000

DUBA (May 6, 2009): Damac Properties has announced plans to award Dh.2bn worth construction contract this year, with an aim to deliver an additional 7100 units by the end of next year. Damac also announced successful completion of 500 storey across all its projects in Dubai.

The Chairman of Damac Holding, Hussain Sajwani, said “Our focus for 2009 and 2010 is construction and delivery. We plan to give away Dh.2bn worth contracts for construction of ten new projects. Damac has already achieved a milestone by completing 500 floors of residential, commercial and retail units so far, and we plan to double this number soon.”

Last year, the company had awarded Dh.2.5bn worth of contracts. This year, majority of the contracts awarded will be main contracts. Damac has already delivered about 2300 units during the past six months and is considering an aggressive delivery plan during the next two years. This includes plan to deliver 25 towers by the end of 2009.

The developer is currently focussing on full-fledged construction. Damac has already completed enabling works at the Lincoln Park at Arjan, Dubailand. The XL Tower at Business Bay has reached the third storey, while the Smart Heights has reached half-way point of construction at 15 floors. External cladding and painting has already begun at Emirates Garden in Jumeirah Village, while the company has completed the enabling works for Executive Bay development at Business Bay. (Source: www.estatesdubai.com)

Qatar’s Fund to Invest in Asian Property, U.S. Assets

Redaksi — Wed, 06 May 2009 03:14:16 +0000

ABU DHABI (May 6, 2009): Qatar Investment Authority, the Persian Gulf country’s $60 billion sovereign wealth fund, plans to invest in real-estate projects in Asian cities and said it’s considering buying distressed U.S. property assets.

“We are focusing on prime cities in India, China, Singapore, Korea, Vietnam and Malaysia, cities around the world where there is strong GDP growth and fundamental unmet demand for high quality real estate,” Navid Chamdia, head of real estate at Qatar Investment, said in an interview at a wealth funds conference in Abu Dhabi late yesterday. “About 40 percent of our real-estate investments will be in Asia.”

The Qatar Investment Authority has been investing in property in the past 2 1/2 years to diversity its holdings. The investments, either in developing new property or renovating existing buildings, will be made mainly through joint ventures with local partners, and they will have a long-term holding period of at least seven to 10 years, Chamdia said.

With a population of less than 1 million, Qatar owns the world’s third-biggest natural-gas reserves and 1.3 percent of global crude-oil reserves. The emirate’s sovereign wealth fund manages $60 billion for the state, Citigroup analysts including Carsten Stendevad estimated in an October report. It holds stakes in the London Stock Exchange and Credit Suisse Group.

Qatar Investment Authority last week bought a 27 percent stake in a Vietnamese property fund, Dragon Capital, which will buy into offices and serviced apartments in Ho Chi Min City. It may also look to invest in individual projects with the fund.

The Qatari fund in February bought a 15 percent stake in an Indian office complex being built at the Bandra Kurla complex in Mumbai by the Chatterjee Group and U.S. firm Starwood Capital. It also owns 49 percent of one of one of the largest shopping malls in Malaysia, Pavilion Kuala Lumpur. The fund is evaluating buying commercial properties in the U.S. that are financially distressed. (Source: Bloomberg)

ADB forecasts mild Asia recovery in 2010

Redaksi — Wed, 06 May 2009 02:17:28 +0000

BALI (May 6, 2009): The Asian Development Bank (ADB) called yesterday for a fundamental “rebalancing” of regional economies in response to the global crisis, as regional markets soared amid hopes of recovery.

Bank president Haruhiko Kuroda said the region would record only 3.4 percent growth this year but could expect a “mild recovery” of around 6 percent growth in 2010.

“With strong national and regional efforts and a mild recovery expected in the global economy next year, developing Asia and the Pacific should bounce back to about 6 percent growth in 2010,” he said. “These are positive signs, therefore this should not be a time of despair,” he added as he opened the ADB’s board of governors annual meeting in Bali.

Asian share markets rallied strongly yesterday on the back of improving indicators across the region and gains on Wall Street suggesting the US economy may be turning the corner.

“Our economist thinks that Asia has passed the worst of the economic contraction,” DBS Vickers strategist Yeo Kee Yan told Dow Jones Newswires in Singapore, where shares approached seven-month highs.

Kuroda outlined a huge expansion in the ADB’s lending plans after shareholders agreed last week to triple the bank’s capital base in response to the global downturn.

The bank will increase its overall lending assistance to the region’s poorest countries by more than US$10 billion (US$1 = RM3.53) in 2009 and 2010, including US$3 billion to meet “urgent needs stemming from the crisis,” he said.

Some of that new lending would aim to help Asian economies adjust to plunging demand for their exports to markets such as Europe and the US.

“The transfer of savings from one part of the world to another worked well when advanced economies could absorb production from developing economies, but the current state of the global economy suggests that era has passed,” Kuroda said.

“By rebalancing export-driven growth with a greater reliance on domestic demand and consumption, Asia can lead the way in charting a new, globally beneficial development course.” (Source: The Business Times)

Office rents in Asia slump 7.9% in Q1: CBRE

Redaksi — Wed, 06 May 2009 02:09:30 +0000

SINGAPORE (May 5, 2009): Office rents across Asia sank in the first quarter of this year - with Singapore and Hong Kong suffering the sharpest declines - a report by CB Richard Ellis (CBRE) shows.

Overall office rents in Asia fell 7.9 per cent quarter-on-quarter in Q1, after a 7.3 per cent decline in Q4 2008, according to the CBRE Asia Office Rental Index. Rents have now declined 18.5 per cent from their peak in Q2 2008.

Asia’s major financial centres - Singapore and Hong Kong - continued to see the biggest falls. Rents in Singapore dropped 18.6 per cent, while those in Hong Kong declined 14 per cent. On an annualised basis, corrections in Singapore and Hong Kong have now exceeded 34 per cent, CBRE said.

“The Asian office property market deteriorated further during the first quarter of 2009 as companies continued to down-size and cut back on costs,” it said.

Leasing activity remained subdued across the region, with transactions dominated by renewals, although a few deals involving companies relocating to cheaper premises were concluded.

Across many markets, landlords were forced to offer more concessions to retain and attract tenants, CBRE noted: “In some major Asian office markets, they are displaying a new willingness to negotiate lease restructuring with tenants they desire to retain.”

In Singapore and Hong Kong, the rise in vacancies was ‘less than what might have been expected and availability remains tight’, CBRE said. But the amount of shadow space due to sub-letting activity continued to rise. (Source: The Business Times)

Not the perfect time to invest in residential property- experts

Redaksi — Wed, 06 May 2009 02:02:11 +0000

MUMBAI (May 5, 2009): That the property market has undergone a significant correction is well known. Real estate experts are now talking about prices bottoming out is well known too. But contrary to conventional wisdom, experts are of the view that this may not be the right time to invest in residential property. And, their advice is for both first and second-time home buyers.

Consider this: a report from PropEquity, a firm that maintains data on real estate, said that in the first quarter of the current financial year, the Mumbai market saw an average correction of 42.84 per cent compared to the corresponding quarter last year. According to another report by Centrum Broking on Maharashtra Chamber of Housing Industry’s exhibition, prominent developers such as Kalpataru, Lodha, Rustomjee and Acme Group were quoting prices 20 per cent lower than their card rate six months ago. Godrej Properties had dropped the quoted price of its Mahalaxmi project (Planet Godrej) by 34 per cent.

Prices in other major metros too have seen a significant correction in the past six months, according to the PropEquity report. These include Gurgaon (24 per cent correction), Chennai (13 per cent) and Hyderabad (10 per cent) for the same time period. “To begin with, the yields of residential properties are low. They are between 3-5 per cent only,” says Hitungshu Debnath, executive director, distribution and wealth management, Angel Broking. If you take a loan from a bank and expect the rent income to help you pay the equated monthly instalment (EMI), you will need to rethink the math, he adds. “The rent income along with property appreciation will not be able to cover even the interest that the investor will pay for the home loan in the first few years. This is called as opportunity cost in real estate. To get good returns, the buyer will need to hold on to the property for a long time, probably till the loan is repaid,” says a property expert. (Source: Indian Realty News)

Chinese property market regains breath

Redaksi — Sat, 02 May 2009 15:56:02 +0000

China is now like someone whose heart stops for a while before returning tonormal. In March, such a sign oflife was visible in China. Housing prices picked up for the first time after the global financial crisisreached China. But, although housing prices rose, the commercial property saleswere small. Government support was expected to boost housing sales.

Dataat the national statistics bureau shows that average prices in 70 cities inChina rose 0.2 percent in March. The monthly increase is viewed as signalingthe recovery of the Chinese property industry after seven months of decline dueto the global financial crisis. Despite price hikes, property price indiceswere still 1.3 percent lower than in March of last year.

Inthe first quarter of this year, the total value of property at the nationallevel reached US$74.5 billion, up 23.1 percent from last year. Real estatesales rose 8.2 percent from last year to 113.09 sqm, equivalent to around135.71 square yards. Also, residential housing prices also picked up 8.7percent. Unfortunately, commercial property sales were not as good as thehousing sector. Commercial property sales relatively remained weak. Officespace sales declined 13.1 percent.

Overall,property sales in China dropped during 2008. Early 2009 was expected to be aturning point for the property market to improve. That expectation began tomaterialize. Above data shows that property prices in China remain low ascompared with the levels before the crisis hit China. But, prices tend tobecome stable at the moment.

MichaelKlibaner, head of China research at Jones Lang LaSalle, said that the markethad got better because of government support. “The government measures toimprove affordability have had a very big impact. Between lower interest rates,lower transaction costs and lower down-payment requirements, affordability hasimproved enough that the number of people that can participate in the markethas increased a lot. To us, that means that this recovery can last more than amonth or two and will be more sustainable,” he said.

Lastyear, the government gave support to improve the real-estate market includingthe reduction of the percentage of down-payment from 30 percent to 20 percentof property prices.

InJanuary and February, total property sales throughout China rose 1.1 percentfrom the previous year. Property consulting firm, Soufun, said that in largecities property transactions also rose over the past several weeks. This is anencouraging development considering that in 2008 sales declined 20.3 percent.Mei Jainping, a professor of finance at the Cheung Kong Graduate School ofBusiness in Beijing, said, “The Chinese housing market may have a good chanceto be among the first ones to see real signs of picking up”.

Don’tbe too optimistic

Althoughthe Chinese property market is showing signs of recovery, several experts warnthat the present condition is temporary because the value of real-estate assetsmay further decline 40-50 percent within the next two years, due to oversupply.“Property sales are in an early recovery in major Chinese cities as prices dropto an acceptable range for some buyers. However, property prices may need todrop another 5 to 10 percent to ensure a sustainable recovery in both sales andproperty investment,” said Xing Ziqiang, an economist at China InternationalCapital in Beijing.

CaoJianhai, a professor at the Chinese Academy of Social Sciences, agrees withXing. He said that the present condition is not yet stable and has beeninfluenced by liquidity flows and not by real demand. Cao also noted that thepresent condition may not last longer and that prices may go down further nextyear before stagnating for a number of years.

Caoalso stressed that averaged propertyprices in China were 10-20 times the averaged income of the Chinese people. Asa result, around 60 percent of buyers have to seek money at pawn houses. Vanke,Cina’s largest property developer, agrees that, despite the positive signals ofrecovery in large cities, the general condition of the Chinese property marketremains weak.

Indeed,real-estate prices still shows signs of recovery, but several other activitiesare not yet picking up. At the national level, property project developmentdeclined 14.8 percent in the first two months of 2009. Also, developers’ landownership is still low. Several economists predict that the Chinese propertycondition will pick up in the second semester of this year. But, propertybusiness players said the market will weaken even further. Hingyin Lee,Colliers’ director of research and advisory for east China, said that at thistime property buyers are influenced by government policies.

Hesaid, “Despite the fact that some pent-up demand was released by the encouragingpolicies, most home buyers still maintain a wait-and-see attitude. Thus, it hasyet to (be concluded) whether the residential property market has stabilized.”Maybe it is better to maintain a wait-and-see stance before deciding to buyproperty in China. All the positive signals that are actually temporary couldbe an euphoria only. As the present market condition is still unstable, buyersneed to be wise enough in making investment.

Are banks traumatic or paranoid?

Redaksi — Sat, 02 May 2009 15:26:05 +0000

By Deddy H. Pakpahan

Although property developers in Indonesia are still optimistic about the future of the property market amidst the jitters caused by the global economic crisis, at this time they still appear not feeling relieved. The reason is that—

as acknowledged by the general chairman of Real Estate Indonesia, Teguh Satria—at this time developers still find it difficult to obtain bank loans including credits for property development projects that are quite in high demand like housing projects.

Beside the difficulties in obtaining credits because banks are so strict in selecting developers and projects that they consider to finance, high interests of bank loans are also felt to be so worrying developers in Indonesia. In fact, recently Bank Indonesia cut BI rates to 7.5 percent. Still, credit interest rates remain high.

When comparing the current banking condition in the 1998 Asian crisis with the 2008 condition, these days banks should not feel traumatic in channeling credits to the real sector, notably the property sector, considering that the national banking is now in a healthy condition. Data at Bank Indonesia shows that in 1998 national bank assets were only IDR896 trillion while last year they rose drastically to IDR2,311 trillion. And their non-performing loans (NPL) in 1998 totaled 53 percent while at the end of last year they were only 3.2 percent. Similarly, their capital adequacy ratio (CAR) dropped -15.7 percent, while in 2008 it rose to 16.8 percent. Loan to deposit ratio (LDR) rose to 74.6 percent at the end of 2008 due to a rise in credits to third parties.

In the early months of 2009, the national banking industry still shows good performance, although the government liquidated Bank IFI in April and Bank Century in February. But, banks seemed to put on the breaks in credit provision. Even, on the whole, significant growth in credit channeling is still not visible. In 2008 credit growth could be pushed up to 30 percent, according to banks’ business plans submitted by banks, until the end of this year credit growth is set at 16 percent at the highest.

Also, banks remain reluctant to reduce interest rates for the property sector. It is fair to say that the banks have taken a wrong policy considering that the capital structure of developers at this time differ from the capital structure of developers in the 1998 Asian crisis. If this condition is maintained until the end of this year, it is almost certain that the Indonesian property industry will “stagnate”.

The banks’ move of slowing down credit provision is not only directed to large developers that build megaprojects due to fears of possible bigger credit defaults, but is also directed to to developers of middle and low-scale developers. This is against the fact that the potentials of housing demand in Indonesia that reach 800,000 units per year—while supply is only 200,000 units on average—should not be the reason for banks not to channel credits to the housing sector. In addition, bank interest rates must also be reduced considering that BI rates have been reduced to 7.5 percent.

But why have not bank interest rates been reduced? The answer is clear: Banks are still traumatic with the 2008 Asian crisis. Added with the current global economic crisis, the banking industry now become even more paranoid, without any clear reasons. Indeed, this situation is really harmful to the existence of the real sector, which is the generator of any state’s economy.

While keeping interest rates high, banks surely gain big profits. And banks use them as back-up funds to face possible drastic increase in credit defaults. As matter of fact, the rise in NPL is still at the normal level and accordingly there is no reason for banks to remain “paranoid”. If banks wish to look at things clearly, the logic of minimizing credits is by reducing credit interest rates, which will surely push forward the real sector including the property sector.