Thailand property

The Bank of Thailand has played down concerns over the country’s record foreign direct investment fuelling a property bubble.

“Many foreign investors still choose to invest in the stock market while some choose to invest in bonds,” Bank of Thailand’s domestic economy department director Methee Supapong said on Monday according to the Bangkok Post.

The amount of foreign investment in the country’s real estate remains small, due to strict foreign ownership laws in Thailand that largely forbid foreigners from freeholds and restricts leases to 30 year periods. Investors have long called for these restrictions to be eased, but, Thailand, in contrast to some of its larger neighbours, Singapore and Hong Kong, has not become a speculators market. Bangkok property prices rose over 4 per cent over the last year, but Thailand has enjoyed relatively stable market prices since its recovery from the 1997 crash.

The Bank’s comments come several days after Supavud Saicheua, managing director and head of research of investment brokerage Phatra Securities warned Thailand’s property and stock markets run a risk of facing a bubble burst if foreign capital continues flowing into Asia.

With further liquidity expected in the market, partly due to US Federal Reserve measures, some Asian economies are expected to grow 7.7 per cent on average this year. Anticipating this drive for investment and in an attempt to slow the Baht’s meteoric rise the Thai Government has recently introduced capital inflow taxes that have deflected some investment.

However, with market forces exceeding the government’s own, inflationary pressure is still strong in the region, heightened further by the US dollar’s expected weakening against the Baht with the injection of USD 600 billion by the Federal Reserve.

They said prices and rental rates for residential and commercial properties could fluctuate if the problem continues for another three months. This may force businesses to move out.

Landlords may have to lower rent or take measures to prevent flooding to attract tenants.

Some buyers are now asking about the risk of flooding when they check out a property, including those that are not directly hit.

Executive director of Residential Projects, Orange Tee, Steven Tan, said: “In the past, this was never an issue. Now we can see that they are starting to have a concern whether the condominium or house that they want to buy will encounter this problem.”

Nicholas Mak, Real Estate lecturer at Ngee Ann Polytechnic, said: “Even if the property is not prone to flooding, but just because it is near another property that often suffers flooding whenever it rains, it could be guilty by association and its value could also be adversely affected.”

Source: Channel NewsAsia

Singapore property

The Shin Min Daily newspaper reported that despite the recent boom in the property sector, some older condominiums – more than 10 years old in most cases – are priced about 20 per cent cheaper than newly built ones. Many of these were built and purchased around 1996 when property prices were at their height, and some are now on sale at below their 1996 price tags.

Property agents told the newspaper that for about 20 per cent of the houses that were built in that period, the resale price is still lower than what the owners paid in 1996/7 – even for those in good locations and close to transport links and local amenities.

One of these under-valued condominiums, the newspaper highlighted, is Bishan 8. Attracting long queues of interested buyers when it debuted in 1997, units were priced at around S$1,100 (US$800) per sq ft. In June, one of the units was sold for S$912 (S$663) per sq ft. For an average sized unit the owner would be realising a loss of about S$220,000 (US$160,000)

PropNex Chief Executive Officer Mohd Ismail told the newspaper that with new developments being pushed out all the time, home buyers have more than enough choice and many prefer the new apartments, while Ngee Ann Polytechnic real estate lecturer Nicholas Mak felt that buyers may find the older condominium’s design and facilities outdated.

SOURCE: Property-Report.com

Bangkok Real Estate

The report noted that activity in Bangkok’s Central Business District (CBD) residential property sector waned with the disruption from the political riots which took place during the quarter. The majority of real estate activity was concentrated in peripheral fringe and suburban locations near to the mass transit lines.

Demand for smaller one- and two-bedroom (40 sqm to 70 sqm) affordable units, which are usually priced below THB80,000 (US$2,470) per sqm, remained upbeat despite the political woes.

CBD condominium rents averaged THB452 (US$13.97) per sqm per month in Q2 2010, reflecting no change quarter-on-quarter. The overall average capital value for the CBD condominium market was also stable, registering no change over the quarter to stand at THB82,740 (US$2,548) per sqm.

Low Ming Tze, Senior Manager of DTZ Thailand Research, said: “New launches within the CBD will be very selective. With the uncertain political and economic conditions, developers are more cautious in initiating new projects. More time is being taken to conduct due diligence studies prior to launching a new project.”

She added: “Buying activity over the next quarter will largely be dominated by domestic purchasers – both end users and speculators. Foreign investors are likely to remain off the radar, particularly for luxury projects, until there is more certainty in the political situation.”

Singapore property prices

The Urban Redevelopment Authority said Thursday that private residential property prices rose 5.2 percent in the April-to-June period, the highest since at least 1993. Prices leapt 5.6 percent in the first quarter and 7.4 percent in the fourth, bouncing back strongly after diving 25 percent in the 12 months to mid-2009.

Singapore’s low crime rate, good schools and low personal and corporate taxes have helped the island rank near the top of expatriate global quality-of-life surveys and attract investors to the residential and office property markets. Singapore opened its first two casino-resorts this year, boosting tourist visits.

(SINGAPORE) Latest flash estimates from the National University of Singapore show that its overall price index for non-landed private homes rose 2.6 per cent in May over the preceding month. Since the end of last year, the index has appreciated 8.6 per cent.

The Singapore Residential Price Index (SRPI), compiled by the NUS Institute of Real Estate Studies, covers only completed properties.

Non-landed home prices

The sub-index for the central region, which covers a basket of properties in postal districts 1-4 and 9-11, grew 2.5 per cent in May over the preceding month, and 7.9 per cent year to date.

The sub-index for non-Central region rose at a slightly faster clip, of 2.6 per cent month-on-month in May and 9.1 per cent year to date.

Developers’ sales have slowed since May as Europe’s economic crisis affected financial markets, causing home buyers to withdraw to the sidelines, even ahead of the June school holidays and World Cup season. The market is expected to enter a consolidation phase, marked by slower sales as developers try their best to maintain prices and potential buyers hold back their purchases, hoping for price cuts.

Tomorrow, the Urban Redevelopment Authority will release its second quarter flash estimate for the official private home price index. In Q1, the index climbed 5.6 per cent over the preceding quarter. CB Richard Ellis yesterday predicted a 2-3 per cent quarter-on-quarter rise in this index for Q2. URA’s index covers both completed and uncompleted properties, including the new launches market.

‘The price points of new mass-market projects launched in the second quarter were at similar levels to those launched in the previous quarter, but those in the mid-tier segment (city-fringe locations and landed homes) have inched up slightly,’ the property consultancy said.

Joseph Tan, executive director (residential) at the firm, forecasts that home prices are likely to remain firm despite his prediction that developers’ new private homes sales will slow to about 2,000 units in Q3 from an estimated 4,000 units in Q2 and 4,380 units in Q1. ‘Home prices are likely to stay stable given the positive outlook on the economy and strong boom in manufacturing and exports,’ he added.

CBRE estimates that developers sold about 600-700 private homes in June, compared with 1,078 homes in May and 2,207 units in April.

The developers are estimated to have sold 8,300 units in the first half of this year. They sold 14,688 new homes for the whole of last year.

Commenting on second- quarter sales in the developer sales or primary market, the property consulting group said: ‘The projects that sold well were mostly in the low to mid-tier price range. Sales of new upmarket homes moved at a slower pace in the second quarter as foreign investors held back their purchases due to the weakening of some foreign currencies against the Singapore dollar.’

Based on caveats lodged, HDB upgraders’ share of new private home purchases slipped from 37.9 per cent in Q1 to 33.7 per cent in Q2. ‘The reduction could be attributed to a smaller supply of mass-market type of projects being launched in the second quarter compared to the first quarter,’ it added.

In the resale market, CBRE estimates that some 3,400-3,600 private homes changed hands in Q2, about 15-20 per cent lower than the 4,261 units in Q1. ‘Subsales numbered around 500 in Q2, down from 806 in the preceding quarter, as the market became less bullish and sellers were mindful of the stamp duty payable if they sold their property within a year of purchase,’ it said. Subsales and resales refer to secondary market transactions; subsales involve projects that have yet to receive Certificate of Statutory Completion (CSC), while resales involve projects with CSC.

NUS’s overall SRPI is now 36.1 per cent above the post-financial crisis low in March last year. Over the same period, the growth for the central region has been 41.7 per cent and that for the non-central region, 33.2 per cent.

Despite the stronger increase in the central region, the flash estimate index for May for the location was still 3.7 per cent shy of the pre-financial crisis peak in November 2007. In contrast, for the non-central region, the latest index has already exceeded its respective January 2008 pre-crisis peak by 11.1 per cent. As a result, the overall SRPI flash estimate index for May is 5.5 per cent above its November 2007 high.

SOURCE: Business Times

Property Market slowing down?

The political instability in the past two months partially affected the market. The number of new build units in Bangkok dropped but the market in the outskirt areas of the capital and upcountry continuously grew during the first half of 2010. However, according to the report, the market value is expected to grow only 3-5 per cent, lower than the previous expectation of 5-8 per cent.

PD House’s research and business development department also conducted an online survey of 2,548 people on consumer attitudes nationwide on the preferred financial source for new home building. The survey showed that almost 80 per cent of the target group would get a loan from banks rather than use their own savings. This is quite the opposite to the results conducted 5-6 years ago where over 60 per cent preferred using their own savings to build a new house.

Sitthiporn Suwannasut, Chairman and Director-General of PD House Home Builder Centre, said that over 70 percent of its clients would apply for a mortgage to build their new home during the past 5-6 months.

“This is a growing trend. In the past, consumers thought that it was difficult and complicated to get a home loan from the banks. Some didn’t even realise that they were allowed to do that. But now it’s something different,” said Sitthiporn. “Most people believe that their dreams of having a new house could become true more easily once they manage to get a loan while some don’t think they can save enough money to keep up with the increasing house prices”.

SOURCE: Property-Report.com

Property market slowing down?

SINGAPORE : There’s been more signs of a slowdown in the private property market here in the second quarter.

Property consultant CB Richard Ellis (CBRE) forecasts some 4,000 new homes were sold in the second quarter, lower than the previous quarter’s figure of 4,380.

In the resale market, CBRE estimates some 3,400 to 3,600 resale homes were sold in the second quarter.

If confirmed, that would be 15 to 20 percent lower than the 4,261 resale homes sold in the previous quarter.

Sub-sales numbered around 500, down from 806 in the previous quarter as the market became less bullish.

Sellers were also mindful of the stamp duty payable if they sold their property within a year of purchase.

In addition, the number of HDB upgraders buying private homes slipped.

About 33.7 per cent of new home buyers in the second quarter this year had HDB addresses. That’s lower than the 37.9 per cent of HDB upgraders making up the buyers of new homes in the previous quarter.

CBRE said the reduction could be attributed to a smaller supply of mass-market type of projects being launched in the second quarter.

Nevertheless, CBRE forecasts about 8,300 new homes were sold in the first half of this year. This is about 56.5 per cent of the 14,688 new homes sold for all of last year.

The projects that sold well in the second quarter were mostly in the low- to mid- tier price range projects like the Tree House condominium in Chestnut Avenue and The Minton in Hougang.

CBRE predicts that overall home prices in the second quarter could reflect a rise of between 2 and 3 per cent on-quarter. – CNA /ls

Thailand property market transparency

9 out of 15 fastest improvers are in Europe and 6 are in Asia Pacific. Turkey is the best improver. Australia is the most transparent real estate market. A third of countries are static or declining. 89% of countries received a score of “semi-transparent” or below in relation to the transparency of their real estate debt market data.
Over the past two years, the average improvement in real estate transparency across the 81 markets covered by GRETI has halved, when compared to both the 2006-2008 and 2004-2006 periods.

Of the key components of real estate transparency, the transaction process appears to have been compromised most by the more challenging real estate market conditions of the past two years. More surprising is the evidence of a slowdown of progress in the transparency of real estate regulatory and legal environments. Nonetheless, the quality and depth of information on market fundamentals continues to improve, helping to boost this dimension of transparency in most markets across the globe.

In contrast to previous Indices, a number of markets have seen declining or static levels of transparency with one-third (27 markets out of 81) recording either deterioration or no improvement between 2008 and 2010. Deterioration has been registered in markets such as Pakistan, Kuwait, Venezuela, Dubai and Bahrain. Although the levels of decline have been modest, the reversal of their past gains is notable.

However, there are a number of bright spots, and transparency continues to improve, albeit moderately, in the majority of markets. Of the top 15 improvers, nine are in Europe and six are in Asia Pacific. Turkey tops the league table of transparency improvers, and progress has been made in China, India, Poland, Portugal, Romania, Greece and Hungary. A number of more advanced markets, such as Germany, Ireland and Denmark, have also moved up the transparency league.

As in previous years, Thailand continued to score in the ‘semi-transparent’, however, the country has gradually improved its level of real estate transparency with its real estate market ranking 39th out of 81 markets covered in the 2010 index, compared to the 45th ranking in 2008.

The change in Thailand’s ranking is a result of the relative improvement in the country’s overall transparency score. The scores in the Global Real Estate Transparency Index range between one and five, with one being the highest level of transparency and five being opaque. Thailand’s real estate transparency score has improved to 3.02 in 2010 from 3.16 and 3.40 in 2008 and 2006, respectively.

The improved score is primarily a reflection of more transparency in the capital markets, specifically as they relate to real estate. Currently there are 60 firms listed under the Property Development sector on the Stock Exchange of Thailand. There are also 26 property funds which trade on the Stock Exchange of Thailand, holding assets of various real estate types. These listed vehicles are subject to higher governance and regulation, as well as regular and standardized reporting, thus providing more transparency to Thailand’s real estate markets.

This is in contrast with the past when Thailand suffered badly from a lack of information about real estate transactions in the market. Major sale transactions in particular tended to be kept confidential by the sellers and/or the purchasers. As a result, actual transacted values against which to benchmark were scarce.

Real estate transparency levels vary widely across the region. It has two of the world’s most transparent markets, Australia and New Zealand, which rank first and fourth respectively in GRETI 2010. Singapore and Hong Kong, two other mature economies, also rank relatively highly, on a par with most European countries. However, at the other end of the spectrum, Asia Pacific also contains some of the world’s least transparent markets, such as China’s tertiary cities (ranked 65th) and Vietnam (ranked 76th).

The most notable improvers in terms of global rankings are China and India, which have seen the largest jumps up the transparency ladder amongst Asia Pacific countries. Comparing across time, most countries have registered improvements in overall transparency scores, though with the exception of China and India, these changes have generally been relatively modest. Three markets in the region have moved up into a higher transparency tier: the Chinese secondary cities, Indian tertiary cities and Indonesia, all of which have shifted from the Low-Transparency (Tier 4) to Semi-Transparent (Tier 3) level.

The last two years certainly demonstrate how high levels of transparency do not eliminate risks for investors or occupiers. Free flows of information and consistent enforcement of local property laws did not prevent values from falling or produce better access to credit at a time when liquidity dried up. The real value of transparency, though, should become evident when comparing how quickly markets are able to open up again after a financial crisis. The recapitalisation of real estate in many countries is being helped by the free flow of information and the protection of property rights. However, these rights apply to both the equity and the debt sides in the capital structure of real estate, and sorting them out in a complex, securitised capital structure will take time. Occupiers benefit when landlord defaults are resolved quickly and efficiently. Investors benefit when bankruptcy laws are administered fairly and efficiently. This process is unfolding now. In two years time, when our next Index is released, we will be able to report about the role of transparency in the aftermath of a financial crisis.

2010
Rank Market 2010
Score 2010
Tier
1 Australia 1.22 1
2 Canada 1.23 1
3 United Kingdom 1.24 1
4 New Zealand 1.25 1
4 Sweden 1.25 1
6 United States 1.25 1
7 Ireland 1.27 1
8 France 1.28 1
9 Netherlands 1.38 1
10 Germany 1.38 1
11 Belgium 1.46 1
12 Denmark 1.50 1
13 Finland 1.53 2
14 Spain 1.58 2
15 Austria 1.71 2
16 Singapore 1.73 2
17 Norway 1.75 2
18 Hong Kong 1.76 2
19 Portugal 1.82 2
20 Switzerland 1.87 2
21 Italy 1.89 2
22 Poland 1.99 2
23 South Africa 2.09 2
24 Czech Republic 2.15 2
25 Malaysia 2.30 2
26 Japan 2.30 2
27 Hungary 2.33 2
28 Israel 2.38 2
29 Greece 2.60 3
30 Slovakia 2.61 3
31 Russia Tier 1 Cities 2.64 3
32 Romania 2.68 3
33 Taiwan 2.71 3
34 Chile 2.72 3
35 Russia Tier 2 Cities 2.86 3
36 Turkey 2.90 3
37 UAE – Dubai 2.93 3
38 Brazil 2.95 3
39 Thailand 3.02 3
40 Bulgaria 3.03 3
41 India Tier 1 Cities 3.11 3
42 South Korea 3.11 3
43 Russia Tier 3 Cities 3.12 3
44 Macau 3.13 3
45 China Tier 1 Cities 3.14 3
46 Mexico 3.14 3
46 Ukraine 3.14 3
48 Philippines 3.15 3
49 India Tier 2 Cities 3.17 3
50 Bahrain 3.28 3
51 Argentina 3.30 3
52 Costa Rica 3.32 3
53 Slovenia* 3.33 3
54 China Tier 2 Cities 3.38 3
55 India Tier 3 Cities 3.39 3
56 UAE – Abu Dhabi 3.45 3
57 Indonesia 3.46 3
58 Jordan* 3.46 3
59 Oman 3.50 4
60 Morocco 3.58 4
61 Croatia 3.59 4
62 Egypt 3.62 4
63 Saudi Arabia 3.66 4
64 Qatar 3.70 4
65 China Tier 3 Cities 3.73 4
66 Lebanon* 3.78 4
67 Panama 3.85 4
68 Kuwait 3.90 4
69 Uruguay 3.92 4
70 Kazakhstan 3.93 4
71 Colombia 3.96 4
72 Peru 4.00 4
73 Pakistan 4.18 4
74 Venezuela 4.18 4
75 Tunisia* 4.24 4
76 Vietnam 4.25 4
77 Dominican Republic 4.28 4
78 Belarus 4.48 4
79 Syria 4.65 5
80 Sudan 4.68 5
81 Algeria 4.74 5

Singapore housing prices

It said resistance to the high asking prices and the uncertainty in the stock market sidelined buying interest in the property market.

The only exception was in the mass market segment where prices of secondary condominiums and apartments went up further compared to the previous quarter.

Resale prices of leasehold homes in the suburban areas rose by 4 per cent quarter-on-quarter to S$648 per sq ft, compared to the 2.1 per cent increase in Q1 2010.

DTZ said the comparatively higher prices of new developments and aggressive bids for government land sales (GLS) sites in the suburban areas had a cumulative effect on raising the prices of homes in the secondary market.

Ms Chua Chor Hoon, Head of DTZ South-east Asia Research, noted that developers are likely to tone down their land bids in view of the unprecedented high number of suburban sites to be sold in the GLS in the second half. She said this will keep a check on prices of mass market homes going forward.

Within the prime districts of 9, 10 and 11, average resale prices of freehold non-landed homes rose 2.6 per cent quarter-on-quarter to a new high of S$1,493 per sq ft. This is 0.7 per cent higher than the previous record of S$1,483 per sq ft in the fourth quarter of 2007.

Meanwhile, prices of freehold non-landed resale homes outside the prime districts climbed by 2.9 per cent to reach its previous peak of S$747 per sq ft achieved in the fourth quarter of 2007.

Average prices for luxury non-landed homes rose 3.5 per cent on-quarter to reach S$2,588 per sq ft. However, they are still 7.6 per cent below the record level of S$2,800 per sq ft hit in Q4 2007.

Although sales activity has slowed down in May and June, DTZ’s executive director for residential, Margaret Thean, said: “The slower take-up rate for new developments is more sustainable. There is still buying interest and more new developments are being planned to be launched in the coming months.”

She added that if the developments were well-taken up, that would motivate more developers to launch other projects, thus stimulating buying interest.

With the total sales of new homes by developers between January to May 2010 already at 7,666 units, DTZ estimated that the total take-up for the whole year would fall between 13,000 and 15,000 units, based on the average monthly take-up of 900 new units in the last 5 years.

SOURCE: Channel NewsAsia