The Scope For Real Estate Is Simply Unlimited
Smart Company reports from Australia. “Outspoken economist and consistent housing bubble denier Rory Robertson says those who continue to rent in the hope that prices will crash are backing the wrong horse. He says many of the ‘doomsters don’t actually know very much about local housing and home lending markets, don’t own their own home or – commonly – both. Ask the dopey bubblemen about how much of their old-age pensions will be left for living expenses (including tasty dog food?) once (expensive) rent is paid.’”
The Sydney Morning Herald in Australia. “Foreign developers have grabbed a 30 per cent share of Australia’s apartment market, a trend not seen since the Japanese office and hotel development boom of the late 1980s. ‘Asian developers, predominantly from Singapore, are leading the pack, accounting for 92 per cent of all apartments being proposed or developed by foreign companies,’ CBRE executive director Kevin Stanley said. ‘Development activity in Australia involving foreign companies has reached levels not seen in more than two decades.’”
“Releasing the Australian Property Monitors’ property market outlook, senior economist Andrew Wilson tipped 3 to 5 per cent growth in median house prices nationally and for Sydney. Monique Sasson Wakelin, managing director of Wakelin Property Advisory, said the two recent interest rate cuts would be the catalyst for growth and agreed with the APM forecast for Sydney and Melbourne. ‘I think that would be about right, precluding anything terrible happening overseas.’”
TODAYonline from China. “The luxury apartments of Versailles Residentiel de Luxe La Grand Maison, located next to a polluted river in the third-tier coastal city of Wenzhou, have not yet been built but are already on sale for as much as 70,000 yuan (S$14,415) a square metre. That is more than double the annual income of the average Wenzhou resident, who would have to save every penny for 350 years to buy a 150 sq m home in this development.”
“But even the few who can afford it seem to be having second thoughts. ‘We have been told to say publicly that everything is going very well and our apartments are selling even though none of the other developments in the city can sell theirs,’ says one sales assistant who asks not to be named for fear of losing his job. Prospective owners have paid deposits on only a dozen or so of the 198 apartments on sale at La Grand Maison. ‘Prices are dropping fast and everyone is waiting for them to fall further before they think about buying,’ says the sales assistant.”
Bloomberg on China. “A two-year lending binge and the government’s plan to transform Hainan, in the South China Sea, into an international tourism destination helped fuel a 48 percent surge in Sanya’s home prices last year, making it the nation’s best-performing property market. As China in 2011 switched gears with policies such as increased deposit requirements designed to curb speculation, Sanya’s home prices have dropped 28 percent since last December.”
“Zhu Lei, a property agent for the Serenity Coast luxury residential and hotel complex in Sanya, recalls clients carrying suitcases of cash to shop for holiday apartments last year. ‘We didn’t even have time for toilet breaks because there were just too many clients,’ Zhu said.”
“I differ with Mr Conrad Raj, in his commentary ‘A lack of foresight?’ (Dec 16), on the timing of the Government’s latest property measures. Except for the brief pullback after the sub-prime mortgage bubble in the United States had burst and the subsequent Lehman Brothers collapse, Singapore’s housing prices have been not only rising but have exceeded the previous high.”
“Cash-rich foreigners and permanent residents, especially from China and the region, are capitalising on our low interest rate as well as stable economy and currency to snap up property for investment or family stay. Our land scarcity has also triggered the en bloc phenomenon, whereby another cash-rich group enters the market to buy replacement and investment properties. And they are less price sensitive, often willing to offer/accept higher prices.”
“This scenario, together with the increasing demand from first-time buyers, has created a fear that ‘if I don’t get in now, prices will go higher’, despite unit sizes getting smaller. Every new project is either fully or nearly fully sold. Like the Americans prior to their housing collapse, Singaporeans still think that one can never get it wrong when buying property.”
The Khaleej Times. “The largest and most diverse exhibition of Indian Properties — Indian Property Show opens at Airport Expo Dubai today and will run until Saturday. Sponsored by Citibank UAE and Investors Clinic — India’s leading real estate consultancy, this year’s show will have more than 70 developers participating from across India.”
“‘The scope for Indian real estate market is simply unlimited. It does not resemble a bubble that will burst. An unhindered growth for the next two decades is almost sure because outsourcing business in the country entails a huge demand for commercial buildings and urban housing, besides improvement in infrastructure across the country’ said, Sunil Jaiswal, CEO — Sumansa Exhibitions — organisers of Indian Property Show.”
Mississauga.com on Canada. “It sits at the very top of Mississauga’s already iconic tower, comes with four parking spots and priority use of the elevator — and it can be yours for $3.2 million. In a deal likely to generate a lot of international interest, the owner of the penthouse suite is putting the unit up for sale. ‘It will be the most expensive condo ever sold in this city,’ said Mississauga ReMax agent Sam McDadi, who’s handling the transaction for the anonymous Argentinean owner.”
“For the past two years, he was No. 1 on the Toronto Real Estate Board for total dollar volume, beating out some 30,000 agents. ‘I’ve already had several serious enquiries from abroad, from places like China and Brazil,’ said McDadi, whose marketing includes taking out ads in international publications.”
The National Post in Canada. “If their New Year’s resolutions involved selling more suites, Toronto’s condominium developers got that and more in 2011. While the final sales numbers for the year are still to be determined, the Greater Toronto Area’s condo market has already reached record highs this year, beating out 2007’s former record of approximately 22,500 condo sales.”
“Investors are coming out to the sales centres in droves; in fact, some buildings have been 90% to 100% investor purchased. ‘It really reflects Toronto’s place in the global economy,’ says Joe Vaccaro, acting president of Building Industry and Land Development Association. ‘It has been recognized as a safe place to invest, and we’re seeing that internationally — money is making its way into Toronto. And real estate is a hard asset that foreign investors support and have an appreciation for.’”
The Globe & Mail in Canada. “Investors rushed to buy Toronto condos in the good times, now there is a worry that they will rush for the exits as the economy weakens and they realize that profits are hard to come by in an overbuilt market. A record number of condos were built in the past year in the Greater Toronto Area, with some 43,000 units under construction. Anecdotal evidence suggests many of the units were sold to investors who plan to rent them out.”
“‘As an industry, we’re getting pretty accustomed to people telling us that things are out of control and unsustainable,’ said Tridel Group of Companies senior VP Jim Ritchie, whose company plans to build eight new condo towers next year. ‘If this market had sprung up overnight, then maybe I’d understand. But this has been a solid contributor since 1967, and has been doing well for the last 10 years. This is not a blip.’”
The Star in Canada. “Millions in deals could be on the verge of unravelling at the exclusive Trump tower with just a few weeks to go until Toronto’s newest luxe hotel and condo development is slated to open its doors. A number of condo purchasers — including Irish investors who reportedly bought a whole floor of the five-star project being built by Talon International Development Inc. — have tried to back out of deals inked pre-recession.”
“‘The lesson here is that developers have to be very careful to set a realistic (completion) date or unhappy purchasers may take advantage of the failure to complete and successfully terminate,’ says Toronto lawyer Bob Aaron, who is representing a U.K. couple refusing to make final payments on an $830,588 Trump condo/hotel unit.”
“Second thoughts are ‘very normal’ in condo projects, says Talon chairman Alex Shnaider, a Russian-born steel-industry magnate who raised eyebrows back in 2005 when he announced Canada’s first Trump tower at condo prices more than double everything else being built in Toronto. ‘It’s up to purchasers to make an informed decision. They aren’t buying cupcakes.’”
“The doubling of real estate prices across the GTA over the last decade, coupled with the hottest condo construction market in the world, has created a get-rich-quick mentality, say lawyers and realtors. Many buyers aren’t even running the complex contracts past lawyers first, as seems to have happened here. ‘I have no doubt that the magic of the Trump name and the pictures of this fabulous tower in downtown Toronto had a certain appeal. People thought they could make a lot of money,’ says Aaron.”
“One Toronto realtor has been working behind the scenes to help a ‘distraught’ client who put $160,000 down on a 578 square foot unit in Trump and still owes more than $450,000 but can’t get bank financing. The agent has considered rallying other buyers in a ‘mass walkaway’ from deals.”
The Edmonton Journal in Canada. “With a gloomy outlook for the Canadian housing market, which they see as over-valued and flooded with supply, economists at Bank of America Merrill Lynch are warning that home prices are likely to drop between five and 10 per cent in the first half of 2012. In 1982, for example, for every $1 of income available for borrowing, the average household could borrow $6; now, that same $1 can be levered up to $20, the authors noted. They also pointed to longer maximum amortization periods as a factor in inflated valuations.”
“‘Lower interest rates explain a significant portion of elevated household leverage ratios,’ noted Ryan Bohren and Sheryl King, Canadian economists at the bank. ‘If mortgage rules were reverted back to where they were in 2000 and the maximum amortization for an insured mortgage was 25 years, instead of the current 30 years, we believe home prices would almost 20 per cent over-valued,’ the authors said. ‘If we removed both of these effects (low rates and longer amortization periods) on our fair value model, home prices would look about 35 per cent overvalued,’ they said.”
