IN CALIFORNIA
Buy one house, get one free
The US housing slump is driving some developers to take desperate measures
CAN you imagine a developer giving you this sales pitch: Buy a 4,000 sq ft bungalow in Katong and I'll throw in a 2000 sq ft terrace house for free.
16 August 2008
CAN you imagine a developer giving you this sales pitch: Buy a 4,000 sq ft bungalow in Katong and I'll throw in a 2000 sq ft terrace house for free.
In the US, where the housing market has taken a nose dive, one San Diego developer is doing just that.
If you buy one upmarket Royal View Estate home in San Pasqual Valley area starting at US$1.6 million ($2.3 million), you'll get another less luxurious home in Escondido area worth worth US$400,000 for free.
'We thought, 'Why does it just have to be on Pop Tarts and restaurants? Why not buy one home, get one free,' Ms Dawn Berry of Michael Crews Development told radio station 10 News in San Diego.
'You know it's a straight-up legit deal; no prices have been increased, there are no hidden costs. Michael is just giving away a free home for people that buy at Royal View,' said Ms Berry.
Mr Michael Crews, owner and president of the residential building company, told the radio that the target was the niche market.
'We are targeting a niche market of investors who are interested in the opportunity to buy a new home for themselves and get a free rental property or second home for family members,' he said
Mr Adam Rossman of Michael Crews Development said they have getting good response.
'People have been coming in saying, 'How can you do this?' Well, it's our way of dealing with current market conditions to move some inventory,' he said.
The houses are not dumps.
Located in Escondido's San Pasqual Valley (approximately 56km north of San Diego), the Royal View neighbourhood offers estate homes in a gated neighbourhood.
These upscale, luxury homes range from 3,487 to 4,164 sq ft with 4 bedrooms, 4 baths and up to 6-car garages. Each home is on a minimum of 2-acres and feature swimming pools and RV garages.
The terrace house that comes for free includes 3-4 bedrooms , 2 bathrooms and a two-car garage.
'We're aware that this promotion isn't for everyone,' Mr Crews said.
'Our intent is to get people talking, instigate some action.'
But things may be taking a turn for the better for developers.
US home sales contracts signed in June unexpectedly rose, boosting an index of pending sales to the highest level since October, though it was well below the year-ago level, a real estate trade group told Reuters yesterday.
Some analysts said the main reason for the June improvement might be that banks were aggressively marking down prices on foreclosed properties to get them off their books. But even that is a sign that housing markets are being brought into order.
'There are some bottom feeders coming in to buy some of these homes in distressed situations,' said Mr Andrew Richman, managing director for SunTrust's personal asset management division in West Palm Beach, Florida.
The pick-up in June signing sharply contrasted with forecasts by economists polled by Reuters, who had expected contract signing to decline 1per cent.
Mr Pierre Ells, senior global economist for Decision Economics in New York, noted that there were still huge inventories of unsold homes on the market, so the pending sales data had to be treated with some caution.
'This is telling us that sales have stabilised,' Mr Ells said. 'This raises some hope that we've flattened out, which doesn't mean the problem is solved.'
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Sunday, August 17, 2008
No respite for battered Malaysia property stocks: analysts
Business Times - 16 Aug 2008
No respite for battered Malaysia property stocks: analysts
More pain to come from imminent interest rate hike, slowing economy
(KUALA LUMPUR) Malaysian property stocks have fallen more than 30 per cent this year due to domestic politics and inflation, but an imminent increase in interest rates is dashing any hopes of bargain hunting.
The country's property sector has also underperformed peers across South-east Asia, themselves hit by rising interest rates that have stemmed the flow of cheap money to finance a boom in the region's fast-growing economies.
'If the (regional) interest rate is still going up there's still some downside risk,' said Jason Chong, chief investment officer of Kuala Lumpur-based OSK-UOB Unit Trust Management, which manages the equivalent of US$1.15 billion. 'Right now we are underweight property stocks. We want to wait until we think the interest rate (cycle) is about to turn.'
Every central bank in South-east Asia, with the exception of Malaysia, has hiked rates in recent months.
Malaysia's inflation hit a 27-year high of 7.7 per cent in June and was expected to remain above 7 per cent in July and August. The country, a net exporter of petroleum, slashed fuel subsidies in June, causing a 41 per cent rise in retail petrol prices and a 63 per cent jump in diesel prices.
Malaysian politics has also been pretty turbulent in recent months, following the ruling coalition's worst ever performance in a general election in March, which hit local markets. Also, higher steel and building material costs have forced developers to put new projects on hold. Even the relaxation of foreign ownership rules and a flood of money for upscale office and residential projects in the central business district in Kuala Lumpur has failed to dispel the gloom.
Investment bank UBS said that it was far from clear that falling commodity prices would feed through to lower inflation and allow central banks to pause or even cut rates and thus stimulate the region's economies.
'It may be wrong to peg hope on the current downtrend in commodity prices sustaining and bringing inflation lower,' UBS said in a report published last week.
Malaysia's economy is officially projected to grow 5 per cent this year, slowing from 6.3 per cent last year, mirroring weakness across South-east Asia.
Malaysian property stocks have taken a beating and analysts warn of more pain for investors.
IOI Properties, Malaysia's top property firm by market value, has fallen 30 per cent this year and second-ranked SP Setia has dropped about 34 per cent, underperforming a 23 per cent loss on the benchmark index .
The two stocks could see more downside based on their valuations in previous crises such as the September 2001 attacks and the 2003 Sars crisis, Credit Suisse said in a research note.
IOI Properties trades at 10.7 times 2009 earnings, which is 22-26 per cent higher than the lows recorded in 2001 and 2003, while SP Setia's current PE of 12 times 2009 earnings is much higher than the seven times and 8.4 times in the crisis periods, Credit Suisse said\. \-- Reuters
Copyright © 2007 Singapore Press Holdings Ltd. All rights reserved.
No respite for battered Malaysia property stocks: analysts
More pain to come from imminent interest rate hike, slowing economy
(KUALA LUMPUR) Malaysian property stocks have fallen more than 30 per cent this year due to domestic politics and inflation, but an imminent increase in interest rates is dashing any hopes of bargain hunting.
The country's property sector has also underperformed peers across South-east Asia, themselves hit by rising interest rates that have stemmed the flow of cheap money to finance a boom in the region's fast-growing economies.
'If the (regional) interest rate is still going up there's still some downside risk,' said Jason Chong, chief investment officer of Kuala Lumpur-based OSK-UOB Unit Trust Management, which manages the equivalent of US$1.15 billion. 'Right now we are underweight property stocks. We want to wait until we think the interest rate (cycle) is about to turn.'
Every central bank in South-east Asia, with the exception of Malaysia, has hiked rates in recent months.
Malaysia's inflation hit a 27-year high of 7.7 per cent in June and was expected to remain above 7 per cent in July and August. The country, a net exporter of petroleum, slashed fuel subsidies in June, causing a 41 per cent rise in retail petrol prices and a 63 per cent jump in diesel prices.
Malaysian politics has also been pretty turbulent in recent months, following the ruling coalition's worst ever performance in a general election in March, which hit local markets. Also, higher steel and building material costs have forced developers to put new projects on hold. Even the relaxation of foreign ownership rules and a flood of money for upscale office and residential projects in the central business district in Kuala Lumpur has failed to dispel the gloom.
Investment bank UBS said that it was far from clear that falling commodity prices would feed through to lower inflation and allow central banks to pause or even cut rates and thus stimulate the region's economies.
'It may be wrong to peg hope on the current downtrend in commodity prices sustaining and bringing inflation lower,' UBS said in a report published last week.
Malaysia's economy is officially projected to grow 5 per cent this year, slowing from 6.3 per cent last year, mirroring weakness across South-east Asia.
Malaysian property stocks have taken a beating and analysts warn of more pain for investors.
IOI Properties, Malaysia's top property firm by market value, has fallen 30 per cent this year and second-ranked SP Setia has dropped about 34 per cent, underperforming a 23 per cent loss on the benchmark index .
The two stocks could see more downside based on their valuations in previous crises such as the September 2001 attacks and the 2003 Sars crisis, Credit Suisse said in a research note.
IOI Properties trades at 10.7 times 2009 earnings, which is 22-26 per cent higher than the lows recorded in 2001 and 2003, while SP Setia's current PE of 12 times 2009 earnings is much higher than the seven times and 8.4 times in the crisis periods, Credit Suisse said\. \-- Reuters
Copyright © 2007 Singapore Press Holdings Ltd. All rights reserved.
'Expect more layoffs this year'
Aug 16, 2008
'Expect more layoffs this year'
But figure will be lower than annual average of 10,000, says labour chief
By Sue-Ann Chia
LABOUR chief Lim Swee Say expects retrenchment this year to be higher than last year's, but still below the historical average.
Low-skilled manufacturing workers will bear the brunt of job losses.
These workers, typically categorised as plant and machine operators and assemblers, form almost 10 per cent of Singapore's workforce of 1.8 million.
Mr Lim, secretary-general of the National Trades Union Congress, gave his response yesterday when asked for his retrenchment projections following recent official figures showing a slowdown.
He said in an e-mail reply to The Straits Times: 'We expect the number to be higher than last year, but likely to be still below the average level of 10,000.'
On average, about 10,000 workers are laid off each year.
Retrenchments hit a high of almost 30,000 in 1998 during the Asian financial crisis. Last year, however, it dipped to a 10-year low of 7,675 following three years of strong growth and high job creation.
Latest official figures showed 4,174 workers were retrenched in the first half of the year. Most were in manufacturing.
The spectre of rising retrenchment was raised after the Government revised its growth forecast last week: from 4 to 6 per cent to a narrower 4 to 5 per cent.
The Ministry of Trade and Industry also said job losses were on the cards. It singled out export-dependent manufacturers, saying they would suffer a contraction in overseas sales this year, their first since the 2001 dot.com bust.
Later, Minister Mentor Lee Kuan Yew said layoffs were likely in industries exporting to the United States and Europe.
Mr Lim, who is also Minister in the Prime Minister's office, pointed to keen global competition as another factor contributing to retrenchment.
'Manufacturers keep moving to places that are either closer to their consumer markets or offer lower production costs,' he noted.
In his view, layoffs are inevitable and the solution is to retrain workers.
'We cannot try to slow down the pace of upgrading or resist continuous restructuring, as it will make us less competitive and lead to even more retrenchments.'
He said: 'The overall job market is still quite healthy. There are enough jobs for our workers and the key is to be adaptable.'
Economists are divided on how bad the layoff figures will be for the rest of the year.
Citigroup's Chua Hak Bin sees a tougher job market. 'Job growth is exceptionally volatile in an open economy like Singapore's and can turn sharply negative in a severe downturn.'
Standard Chartered Bank's Mr Alvin Liew is more sanguine, saying the slowdown may be a protracted one and its impact less severe than that of the Asian financial crisis.
'The impact will be more benign as we have many buffers. Our economy is more diverse and our workforce is better trained,' he said.
Still, he expects the unemployment rate to rise from 2.3 per cent to 2.5 per cent by year end. 'The real challenge will come in the first half of next year.'
'Expect more layoffs this year'
But figure will be lower than annual average of 10,000, says labour chief
By Sue-Ann Chia
LABOUR chief Lim Swee Say expects retrenchment this year to be higher than last year's, but still below the historical average.
Low-skilled manufacturing workers will bear the brunt of job losses.
These workers, typically categorised as plant and machine operators and assemblers, form almost 10 per cent of Singapore's workforce of 1.8 million.
Mr Lim, secretary-general of the National Trades Union Congress, gave his response yesterday when asked for his retrenchment projections following recent official figures showing a slowdown.
He said in an e-mail reply to The Straits Times: 'We expect the number to be higher than last year, but likely to be still below the average level of 10,000.'
On average, about 10,000 workers are laid off each year.
Retrenchments hit a high of almost 30,000 in 1998 during the Asian financial crisis. Last year, however, it dipped to a 10-year low of 7,675 following three years of strong growth and high job creation.
Latest official figures showed 4,174 workers were retrenched in the first half of the year. Most were in manufacturing.
The spectre of rising retrenchment was raised after the Government revised its growth forecast last week: from 4 to 6 per cent to a narrower 4 to 5 per cent.
The Ministry of Trade and Industry also said job losses were on the cards. It singled out export-dependent manufacturers, saying they would suffer a contraction in overseas sales this year, their first since the 2001 dot.com bust.
Later, Minister Mentor Lee Kuan Yew said layoffs were likely in industries exporting to the United States and Europe.
Mr Lim, who is also Minister in the Prime Minister's office, pointed to keen global competition as another factor contributing to retrenchment.
'Manufacturers keep moving to places that are either closer to their consumer markets or offer lower production costs,' he noted.
In his view, layoffs are inevitable and the solution is to retrain workers.
'We cannot try to slow down the pace of upgrading or resist continuous restructuring, as it will make us less competitive and lead to even more retrenchments.'
He said: 'The overall job market is still quite healthy. There are enough jobs for our workers and the key is to be adaptable.'
Economists are divided on how bad the layoff figures will be for the rest of the year.
Citigroup's Chua Hak Bin sees a tougher job market. 'Job growth is exceptionally volatile in an open economy like Singapore's and can turn sharply negative in a severe downturn.'
Standard Chartered Bank's Mr Alvin Liew is more sanguine, saying the slowdown may be a protracted one and its impact less severe than that of the Asian financial crisis.
'The impact will be more benign as we have many buffers. Our economy is more diverse and our workforce is better trained,' he said.
Still, he expects the unemployment rate to rise from 2.3 per cent to 2.5 per cent by year end. 'The real challenge will come in the first half of next year.'
End to guidelines a double-edged sword
Aug 16, 2008
End to guidelines a double-edged sword
I REFER to the article, 'Property fee guidelines must go, says watchdog' (Aug 6). As the first chairman of the legislation committee of the Institute of Estate Agents (IEA) that was responsible for the IEA code of ethics and conduct, and commission guidelines, I would like to clarify that the guidelines were not mandatory. They were crafted as a basis for consumers and agents to collaborate and achieve win-win results.
The removal of guidelines will provide consumers with choices. However, with choices come great responsibilities to choose the right professional agent who will represent the consumer's best interests and not one who quotes a lower commission.
Ultimately, it is not the commission but profit that counts. The commission is a small percentage compared with the potential gain or loss as a result of appointing the right or wrong agent.
Consumers need to work with established, reputable and successful real estate companies. These organisations should subscribe to a published code of ethics and conduct.
In addition, as reputable companies need to protect their image, they are more inclined to train their agents vigorously, empower them with better technologies and equip them with a more comprehensive range of marketing tools.
If they are worth their salt, they should also be able to provide consumers with unconditional guarantees to assure them of a high standard of performance, service and results. If agents can do all of these things, they will have justifiably earned their commission.
Patrick Liew
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'Is the procedure for an HDB resale so much more complex than a private property deal?'
MR TAI MENG KIAN: 'The recent move by the Competition Commission of Singapore to scrap the property fee guidelines did not address the issue of collecting commissions from HDB flat buyers. The guideline stipulates a 1per cent commission to be paid by the buyer. Shouldn't the commission paid by the flat seller encompass all the necessary paperwork, as in private property deals? Is the procedure for an HDB resale so much more complex than a private property deal?'
Copyright © 2007 Singapore Press Holdings. All rights reserved. Privacy Statement & Condition of Access
End to guidelines a double-edged sword
I REFER to the article, 'Property fee guidelines must go, says watchdog' (Aug 6). As the first chairman of the legislation committee of the Institute of Estate Agents (IEA) that was responsible for the IEA code of ethics and conduct, and commission guidelines, I would like to clarify that the guidelines were not mandatory. They were crafted as a basis for consumers and agents to collaborate and achieve win-win results.
The removal of guidelines will provide consumers with choices. However, with choices come great responsibilities to choose the right professional agent who will represent the consumer's best interests and not one who quotes a lower commission.
Ultimately, it is not the commission but profit that counts. The commission is a small percentage compared with the potential gain or loss as a result of appointing the right or wrong agent.
Consumers need to work with established, reputable and successful real estate companies. These organisations should subscribe to a published code of ethics and conduct.
In addition, as reputable companies need to protect their image, they are more inclined to train their agents vigorously, empower them with better technologies and equip them with a more comprehensive range of marketing tools.
If they are worth their salt, they should also be able to provide consumers with unconditional guarantees to assure them of a high standard of performance, service and results. If agents can do all of these things, they will have justifiably earned their commission.
Patrick Liew
--------------------------------------------------------------------------------
'Is the procedure for an HDB resale so much more complex than a private property deal?'
MR TAI MENG KIAN: 'The recent move by the Competition Commission of Singapore to scrap the property fee guidelines did not address the issue of collecting commissions from HDB flat buyers. The guideline stipulates a 1per cent commission to be paid by the buyer. Shouldn't the commission paid by the flat seller encompass all the necessary paperwork, as in private property deals? Is the procedure for an HDB resale so much more complex than a private property deal?'
Copyright © 2007 Singapore Press Holdings. All rights reserved. Privacy Statement & Condition of Access
July boost for private home sales
July boost for private home sales
But sector’s outlook still cloudy on slower growth
Weekend • August 16, 2008
ESTHER FUNG
esther@mediacorp.com.sg
DEVELOPERS sold 897 private homes out of the 1,322 launched last month, the highest number since last August, according to monthly data released on Friday by the Urban Redevelopment Authority (URA). This represents a 68-per-cent take-up rate.
While the sales were a modest increase from June, when 1,069 units were launched and 801 sold, there was little to suggest that the property sector would see a sustained pick-up in the coming months. The take up rate then was 75 per cent. The rise was also not as significant compared to the surge in June from May, when launches and sales more than doubled.
Most of last month’s transactions came from projects outside the core central region, such as Livia in Pasir Ris, Clover by the Park in Bishan and Kovan Residences, that catered to mid-range to mass-market home buyers.
Livia, which was priced at an average of $671 per square foot, accounted for a large chunk of the sales in July, with 301 units in the Pasir Ris Grove condominium sold. Prospective buyers were still largely holding out, as developers launched many more residential units for sale than they were able to sell, said Mr Nicholas Mak, consultancy and research director of property firm Knight Frank.
“The stock of unsold homes in the developers’ inventory will gradually increase,” said Mr Mak.
The outlook for the property sector is likely to stay cloudy due to worries that the limping United States economy would lead to slowing growth here. Just last week, the Government cut its forecast for Singapore’s growth rate to 4 to 5 per cent from its earlier forecast of 4 to 6 per cent.
“Since the end of July, there has been a slowdown in launch activity and take-up momentum due to more dismal news of the US sub-prime debacle being released,” said Mr Li Hiaw Ho, executive director of CBRE Research.
There may also be fewer launches and sales this month as superstitious buyers generally avoid buying a home duringthe Hungry Ghost Month, which lasts from Aug 1 to Aug 30 this year.
There are concerns that rising interest rates may weigh on property market sentiment. With the Singapore dollar heading into its fourth week of decline, the reduced expectations for currency strength should see the Singapore interbank offered rate (Sibor) start to rise. Housing loans in Singapore are typically pegged to Sibor.
But analysts said that with interest rates at the current low levels — Sibor at slightly more than 1 per cent — a gradual rise would not affect the behaviour of prospective home buyers, especially with banks keen on pricing their mortgages competitively to maintain or increase their market share.
“Property transactions are long-term investments and most investors hold on to their property for about five to seven years,” said Mr Donald Han, the managing director of property consultancy Cushman and Wakefield.
“Most owner-occupiers are more affected by fundamentals than anything else,” he added, saying that speculators are more affected by changes in interest rates.
Copyright MediaCorp Press Ltd. All rights reserved.
But sector’s outlook still cloudy on slower growth
Weekend • August 16, 2008
ESTHER FUNG
esther@mediacorp.com.sg
DEVELOPERS sold 897 private homes out of the 1,322 launched last month, the highest number since last August, according to monthly data released on Friday by the Urban Redevelopment Authority (URA). This represents a 68-per-cent take-up rate.
While the sales were a modest increase from June, when 1,069 units were launched and 801 sold, there was little to suggest that the property sector would see a sustained pick-up in the coming months. The take up rate then was 75 per cent. The rise was also not as significant compared to the surge in June from May, when launches and sales more than doubled.
Most of last month’s transactions came from projects outside the core central region, such as Livia in Pasir Ris, Clover by the Park in Bishan and Kovan Residences, that catered to mid-range to mass-market home buyers.
Livia, which was priced at an average of $671 per square foot, accounted for a large chunk of the sales in July, with 301 units in the Pasir Ris Grove condominium sold. Prospective buyers were still largely holding out, as developers launched many more residential units for sale than they were able to sell, said Mr Nicholas Mak, consultancy and research director of property firm Knight Frank.
“The stock of unsold homes in the developers’ inventory will gradually increase,” said Mr Mak.
The outlook for the property sector is likely to stay cloudy due to worries that the limping United States economy would lead to slowing growth here. Just last week, the Government cut its forecast for Singapore’s growth rate to 4 to 5 per cent from its earlier forecast of 4 to 6 per cent.
“Since the end of July, there has been a slowdown in launch activity and take-up momentum due to more dismal news of the US sub-prime debacle being released,” said Mr Li Hiaw Ho, executive director of CBRE Research.
There may also be fewer launches and sales this month as superstitious buyers generally avoid buying a home duringthe Hungry Ghost Month, which lasts from Aug 1 to Aug 30 this year.
There are concerns that rising interest rates may weigh on property market sentiment. With the Singapore dollar heading into its fourth week of decline, the reduced expectations for currency strength should see the Singapore interbank offered rate (Sibor) start to rise. Housing loans in Singapore are typically pegged to Sibor.
But analysts said that with interest rates at the current low levels — Sibor at slightly more than 1 per cent — a gradual rise would not affect the behaviour of prospective home buyers, especially with banks keen on pricing their mortgages competitively to maintain or increase their market share.
“Property transactions are long-term investments and most investors hold on to their property for about five to seven years,” said Mr Donald Han, the managing director of property consultancy Cushman and Wakefield.
“Most owner-occupiers are more affected by fundamentals than anything else,” he added, saying that speculators are more affected by changes in interest rates.
Copyright MediaCorp Press Ltd. All rights reserved.
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