The Housing Bubble

The Daily Star reports from Lebanon. “Lebanese real estate developers dismissed Monday an imminent, drastic fall in property prices in Lebanon, despite the abundant amount of apartments in the country. ‘Real estate prices cannot fall sharply in Lebanon because lands on which real estate developers constructed their projects were purchased at very high prices,’ Fady Jreissati, chief executive of Sakr Real Estate, said on the sidelines of the Dream 2016 exhibition.”

“Ghassan Medawar, sales manager at Conseil et Gestion Immobiliere, noted that most of the high discounts are taking place in the secondary real estate market – where pre-existing units are bought and sold. Real estate developers interviewed by The Daily Star reported a low demand on residential units compared to previous years. Plus Properties CEO George Chehwan explained that resulting in an oversupplied market. ‘Developers start with their plans without having accurate statistics about existing projects which result in an oversupplied market,’ he said. ‘Our market is oversupplied today and this is why demand seems to be low.’”

The Independent on the UK. “Economists have warned the housing market could experience a downturn following UK’s vote to leave the EU. The warning came as Halifax prices showed house price growth cooled ahead of the referendum as buyers lost confidence in making big investments. Jonathan Hopper, managing director of the buying agents Garrington Property Finders, said that the pre-referendum market, in which steady price rises were underpinned by limited supply, now feels like history.”

“‘The Brexit result means all bets are off, and the market’s psychology has fundamentally shifted. While it’s too early to know how much prices have fallen, sellers are already behaving as if a fall is coming. Many of those who have to sell are starting to offer discounts, often big ones,’ Hopper said.”

The Hornsby Advocate in Australia. “The rental market in Ku-ring-gai is ‘dreadful’ for investors and landlords with a glut of new units slowing median rents to the lowest level in Sydney and there’s a thousand new units to come. Chadwick Real Estate — who manage about 1200 rental properties on the north shore — director Benjamin Goben said the ’sheer volume’ of units built recently is to blame. ‘A glut of apartments that have been built up on the highway has contributed,’ Mr Goben said. ‘When you get buildings that cater for the investment market with 50 units all to be rented at the same time, it gives rise to a situation of excess supply. We’ve never had so many apartments in this area.’”

“Senior property manger at Ray White Hornsby Kitty Deng has worked in the area for 12 years and said sales are ‘through the roof’ but rentals have changed. ‘The rental market is dreadful,’ Ms Deng said. ‘All agents (in the area) are struggling to find good tenants for the last six months and it’s getting worse. Sometimes a property will sit on the market for six to eight weeks, it’s shocking and it’s the same at other agencies.’”

From Today Online on Singapore. “The auction floors in the Republic were busier last quarter with auctioneers sealing deals valued at nearly three times that the previous quarter, as more luxury home owners faced difficulties servicing their loans. A condominium unit in Sentosa Cove’s Turquoise was auctioned off at S$2.92 million —almost half the S$5.46 million that the previous owner paid in 2007. A unit at Silversea in Marine Parade was sold at S$3.9 million, lower than the last caveated price of S$4.78 million in 2012, while a One Amber unit within the East Coast vicinity went to a buyer for S$3.7 million versus the purchase price of S$4.4 million back in 2011.”

“These homes were put up for mortgagee sales by banks after their previous owners defaulted on their housing loans. Ms Grace Ng, head of auction and sales of Colliers International, said: ‘Some investors who have bought penthouses off plan also found it difficult to rent or sell their properties upon completion.’ She added: ‘Property owners are finding it increasingly difficult to secure a tenant and, or achieve their desired rents to service their monthly mortgages. Owners who are holding multiple properties, are at greater risk of loan default.’”

NK News on the China/North Korea border. “Nearly five years after construction began on the new $338-million suspension bridge linking Dandong to Sinuiju across the Yalu River, and close to two years after it was due to open, China and North Korea remain silent on what – if anything – will happen to the project. Meanwhile, Dandong’s New District – a multi-billion dollar area built from scratch on the back of promised trade with North Korea – faces economic meltdown.”

“When construction of the bridge began in October 2011, China paid for everything. New development around the bridge had already been planned on a vast scale, according to published details. Fast-forward five years and Dandong’s New District is suffering economic free-fall. The driving factor for this slump remains the city’s New District, a giant building site where huge developments lie abandoned while ‘for sale’ and ‘for rent’ signs dominate almost every building, wiping millions of yuan off investments for each day the new bridge fails to open.”

“The bulky 25-storey Guomen Tower, the first building visiting North Koreans would see if they ever get to drive over the bridge, lies finished but empty. On the opposite side of the street, the enormous New Yalu River Bridge Port Center has held some exhibitions, but mostly lies disused. The entrance was blocked off and manned by a lone security guard on one recent visit.”

“Foreign investors here have seen initial optimism they would be on the front-line of North Korean economic development slowly turn to despair. The South Korean chaebol SK Group has invested in three operations in Dandong’s New District: a logistics unit, another for manufacturing and sales, and a real-estate development. ‘There is the potential that this area could grow as rapidly as Macau,’ an SK source had told South Korea’s Dong-a-Ilbo newspaper back in mid-2012.”

“Today the firm’s 19-storey prime office space SK International Tower remains unoccupied, with the lower floors used to store building equipment and supplies. Eight adjacent apartment buildings are all but empty. Other South Korean investors in Dandong’s New District are understood to have packed up and left months ago.”

From Live Mint on India. “With buyers facing long delays in getting possession of their homes and pressure from lenders building on the developer, what does the recent turn of events in Jaypee Group mean for their real estate business? Jaypee’s real estate arm has also been trying to sell some of its land and other assets for a while now. Executives at property consultants said that the company has been trying to sell large tracts of land in the National Capital Region (NCR) and find buyers or developer partners to take up its incomplete projects, many of which have been stalled for quite some time.”

“‘Exactly how the lenders will address the liquidity issues that the real estate company is facing right now is not clear. Many of the projects are mortgaged to the banks as project cash flows are weak. We have been trying to sell land for them but where are the buyers in the current market conditions?’ said a property consultant, who didn’t wish to be named.”