Another Property Boom Could Soon Turn To Bust
Blomberg reports on the UK. “Investors betting on making a quick profit on luxury apartments in south London’s Nine Elms district, Europe’s largest project for prime new homes, are facing long waits for buyers. Almost 30 percent of new properties in the district have languished on the market for more than a year, according to real estate data provider Lonres, who didn’t include sales by developers. Investors who made down payments two or three years ago need to sell the contracts before taking delivery to avoid paying sales tax, said Mayad Rassam, a real estate finance broker at Mutual Finance Ltd., who advises developers. The so- called stamp duty on a 1 million-pound home is 43,750 pounds.”
“‘Owner-occupiers don’t buy a property now for completion in two years time,’ said Anthony Payne, managing director at Lonres. ‘The people who’ve bought these properties are gambling on prices rising.’”
“London’s housing market is ‘a bubble unlike any other bubble because it’s being driven by international capital, whereas previously London property bubbles were driven by mortgage lending,’ said Peter Rees, a professor at University College London and former City of London planning officer. ‘I have no idea how this bubble is going to end.’”
Bloomberg on Dubai. “Dubai’s housing market is in the doldrums as falling oil prices, weaker currencies in Europe and Russia and an abundance of properties on the market damp demand. Home prices dropped by 12.2 percent in the 12 months through June, the biggest decline among 56 residential markets tracked by broker Knight Frank. ‘Gone are the days where we see queues of potential investors lining the streets waiting for their opportunity to buy,’ Matthew Green, the Dubai-based head of United Arab Emirates research at CBRE.”
The Guardian. “In the mining town of Port Hedland, 1,500km north of Perth, modest prefabricated homes called fibro shacks, which were changing hands for more than A$1m four years ago, are now failing to find a buyer at a third of the price. Pilbara boasted salaries two-thirds higher than the national average and almost 80% of workers were flown into their jobs from Australia’s big cities. Now, mortgaged to the hilt on homes that lost value almost before the paint had dried, the mineworkers that remain are accepting longer hours and lower wages in an effort to keep up with the repayments.”
“Their plight resonates thousands of miles away in Calgary, Canada. Oil, not iron ore, has been the foundation of that city’s prosperity. But fears that China’s appetite for natural resources is waning are sapping confidence; and as oil prices have plunged, another property boom could soon turn to bust. ‘There’s a lot of people here that have been losing their jobs from the energy sector,’ says Ann-Marie Lurie, chief economist at local estate agency CREB.”
“Official figures showed last week that Canada’s economy has now slipped into recession. Herbert Emery, a professor of economics for the school of public policy at the University of Calgary says: ‘Politicians have been trying to keep us at ease to avoid a downturn in spending. The sensitivity is, now that this is official, it will make things worse.”
The Daily Telegraph on Australia. “Home loan king John Symond has a stark warning for investors: Sydney is in danger of a crash in apartment prices. The business buccaneer whose Aussie Home Loans shook up the big banks is worried too many apartments are being built, which could spark price drops of up to 20 per cent over the next three years. ‘If half of these apartments within a 5km range (of the CBD) hit the market, there’ll be a huge glut,’ he told me. ‘I’d say be very, very cautious in buying apartments off the plan because you can’t control the future.’”
The South China Morning Post. “A slumping stock market halved Shanghai’s luxury home sales last month and threw into doubt prospects for the traditional September-October peak season. As trillions of paper wealth were wiped out in the stock plunge, the once sizzling luxury housing market in Shanghai has bit dust. Sun Hongbin, chairman of luxury home builder Sunac China, said during an interim result briefing: ‘There will be some impact,’ but quickly added, ‘no matter whether you lose or win (in a casino), you’ll still buy homes.’”
“The Tianjin-based developer has nine high-end projects in Beijing at different stages of development and is rolling out more launches. ‘We are not in a hurry,’ Sun said. ‘If you want profits, you cannot sell (at the moment),’ he added.”
The Globe & Mail in Canada. “Some Canadian banks allow wealthy Asian investors to skirt Chinese law by helping them bring in large amounts of money that is often used to buy real estate in Vancouver. Financial institutions in the area have flagged more than 8,200 suspicious transactions since January, 2012, the year China began cracking down on citizens they suspect of corruption. Ninety-six per cent of those transactions were also facilitated by the banks, however, even though the vast majority of that business involved suspected money laundering, according to FinTRAC, the federal agency responsible for tracking money laundering.”
“A recent B.C. court case heard that CIBC regularly helped wealthy clients move large amounts of money out of China – using several transactions and multiple third parties – even though the bank is familiar with Chinese law. That testimony came in an ongoing wrongful dismissal suit by Guiyun Ogden, who was a top-tier financial adviser with CIBC’s Imperial Service unit. Ms. Ogden managed a $233-million (Canadian) portfolio for wealthy Chinese clients in Vancouver. She helped a client move $500,000 (U.S.) out of China by using friends and relatives to send 10 wire transfers into 10 different CIBC accounts overnight. Ms. Ogden then transferred the money into another account for her client to use as a down payment on a $5.7-million (Canadian) Vancouver mansion.”
“‘I have seen the bank transaction forms, where $50,000 has been wired out multiple times by several people at one bank in China,’ said lawyer Christine Duhaime, an internationally accredited expert on money laundering who has testified before parliamentary committees. ‘There is so much money that is being made out of immigrants coming from China to Canada, I suspect no one wants to rattle that cage too much.’”
“…a down payment on a $5.7-million (Canadian) Vancouver mansion.”
They will have to violate the capital controls every year going forward just to keep up with the payments. I wonder if the CMHC is on the hook for the other 90% when the Chinese get serious about keeping money from leaving the country.
‘I have no idea how this bubble is going to end.’
Woody finds out what rockets do:
http://m.youtube.com/watch?v=BU9uAby6gqk
‘I have no idea how this bubble is going to end.’
Prices will go up and up and up reaching heights unimagined until one day the single richest person on the whole planet can only afford the cheapest house on the whole planet. Then it won’t go up.
Indeed. A true fools Nirvana. Welcome To Planet Donkey.
‘There will be some impact,’ but quickly added, ‘no matter whether you lose or win (in a casino), you’ll still buy homes.’
The mania lives on in China.
‘A year ago, India’s diamond capital hit the headlines when one of the largest polishing companies in the western city of Surat treated hundreds of employees to bonuses in the form of Fiat cars, apartments and jewellery.’
‘This year, there’s no sign of a repeat bonanza in a city that by some estimates polishes about 80 per cent of the world’s diamonds.’
‘More than 5,000 Surat polishers have lost their jobs since June and thousands more could be left without work, as Chinese consumers pull back from luxury purchases, leaving jewellers with stocks of unsold jewellery and gems. Polishers say Chinese jewellers have defaulted on deals worth millions of dollars.’
‘Nearly half a dozen large diamond companies in the city have closed down: a significant hit for an industry that employs nearly a million people in India, two-thirds of them in Surat.’
“I am ready to work even at half the salary I was getting in my previous job, but no one will listen,” says Rajput, 45, speaking in a quiet side street of Surat.’
‘Distress in Surat’s warren of polishing houses comes at a time of unrest across Gujarat, where hundreds of thousands of members of the Patidar, or Patel, community have held protests to demand changes to India’s affirmative action policies, which they say hurt them.’
‘Like many of Gujarat’s largest industries, diamond polishing is dominated by Patels, who make up 14 per cent of the state and a nascent but disgruntled middle class.Hiren Patel, 35, says his salary has halved since June: “We have work only for three days a week.”
‘China represents roughly a fifth of the world polished diamond market — less than half of the United States in value terms — and accounts for the same proportion of India’s $23 billion of annual exports. But its growth has fuelled the diamond industry in recent years, as jewellery stores expanded at breakneck pace to cater for luxury hungry consumers.’
‘At the peak, between 2008 and 2013, diamond jewellery sales in China grew at a compound annual rate of 18 percent.’
Interesting how this “non-growth” in China is having such an effect on the global economy.
‘M M Ramachandran has been a banker, a jewellery tycoon and a film star. Now, the 74-year-old Dubai-based businessman is behind bars.’
‘On Aug. 23, the Dubai police arrested Ramachandran, founder of $1.1 billion Atlas group, on charges of default on loans worth over Rs1,000 crore ($150 million). The Atlas group has businesses in real estate, jewellery and healthcare.’
‘The non-payment of loans by the Indian businessman would affect at least 15 banks, including the Bank of Baroda and the State Bank of India (SBI), according to media reports.’
‘Since Aug. 31, when the news of Ramachandran’s arrest surfaced, Atlas Jewellery India’s shares have tanked around 35% on the BSE. There have also been allegations that Ramachandran diverted funds borrowed from banks to other businesses like real estate, and that the current inventory of gold at his stores is abysmally low—less than five kilograms.’
‘The China bubble that helped India’s diamond capital hit the headlines with at least one major exporter treating its employees to bonuses that include apartments, cars and jewellery, now seems to have burst.’
‘Also, a crackdown on corruption has meant that the rich are fearful of any ostentatious signs of wealth, and among luxury goods, jewellery has taken a big hit. Surat also caters to China’s demand for cheaper diamonds of below a carat, also known as solitaires.’
‘Jobs are a critical for India’s inclusive growth as the government struggles to revive economic growth to a rate that will create employment for millions joining the workforce every year.’
Defaults. Perhaps cascading defaults.
Hold on to any dollars that you might have saved, and stay out of debt.
and stay out of debt ??
If I borrow a million but have a million in the bank am I in or out of debt ??
Some find even the simplest things in life completely confounding!
Thats not a answer dude…Thats avoiding an answer….
If you’re on the hook for a million dollars for a depreciating asset like a house that’s only worth 20% of that amount, you’re deep in debt.
There’s your answer my friend.
‘If I borrow a million but have a million in the bank’
I had a conversation with a friend the other day along these lines. It was partly about what’s causing global deflation. I explained what I call the Dry-cleaner Effect, or DCE. (I don’t know if I’ve mentioned this before but I’m going to save this so I don’t have to type it again).
My parents were dry-cleaners. My Dad would tell me while driving, “see that dry-cleaner re-opening? Some guy with $200,000 bought it after the previous owner closed. Now he’ll start off with low prices, cutting into the business for everyone. Then he’ll run out of money, close down and another guy with $200,000 will buy it and do the same thing,” he complained. We’ve all seen this with restaurants, etc.
I understand this is how the market establishes equilibrium; how many dry-cleaners will exist for a given market. What is the result? Lower returns for all dry-cleaners, lower profits, lower prices. Now consider QE. QE basically hands various business funds to put the DCE into motion. We see it in oil right now; weaker producers are keeping the doors open with junk bond money. I’m not saying this accounts for all deflation, but it causes some part of it, IMO.
It’s made more complicated by fractional reserve banking. If 1 dollar of QE finds it’s way into deposits, then the bank loans out 10 dollars, how much of the 10 bucks is funding the DCE? You could easily see a trillion Yellen bucks causing many trillions to go poof.
Back to my conversation; if the PBOC loans a local government money to build a redundant dry-cleaner, the money does go to someone. But the loan is an asset on someone’s balance sheet and it will go away eventually. So there’s no net gain or loss of money supply in theory. However, the DCE will continue to drive down prices, ROI and profits for all market participants into the future.
ROI and profits for all market participants into the future ??
I agree with everything that you say above Ben…The consequences of all this easy money starting with the FED has lasting consequences although some may be still unknown…
Look at Germany & Swiss interest rates…For gods sake you must pay the bank to hold your money…Europe as a whole is in recession…When do you think the Germans & Swiss will be able to raise rates in the face of that ??
Then there are all the other unknowns…Greece…Syria…Spain…Russia…China….Its all having the deflationary effect…
I don’t know the way out of this to a healthy world market but my instincts say its going to be slow and for a very long time…OR it could implode…I just hope that does not mean a world war that will make us all big time losers assuming we survive it…
“avoiding an answer…”
No. Just get out of debt, so you don’t get taken to the cleaners.
We know Dave…. the universe is going to implode if prices keep falling. You’ve made that clear to us.
‘Citigroup Inc. is sounding the alarm bells for the world economy. In an analysis published late on Tuesday, the New York-based bank’s chief economist, Willem Buiter, said there is a 55 percent chance of some form of global recession in the next couple of years, most likely one of moderate depth and length.’
‘Unlike the U.S.-driven international slumps of the past two decades, this one will be generated by sliding demand from emerging markets, especially China, which has surged in size to become the world’s No. 2 economy.’
‘In the case of China, Buiter reckons it’s facing a “high and rapidly rising risk of a cyclical hard landing” given excess capacity and debts in key sectors as well as corrections in the markets for stocks and real estate.’
‘He worries the policy response to fading demand will fall short with debts limiting the scope for monetary policy to help even as the central bank cuts interest rates and tells banks they can hold less cash.’
http://www.bloomberg.com/news/articles/2015-09-09/citigroup-sees-55-risk-of-a-global-recession-made-in-china?cmpid=yhoo
Way ahead of ya Citi.
‘I don’t know the way out of this to a healthy world market’
Let the dry-cleaner go out of business and ship the equipment to a town that needs a new dry-cleaner. Of course, you can’t do this with everything.
And stop listening to people who tell us digging ditches and filling them in will lead to prosperity.
Your theory assumes that everyone who invests are always irrational and thus there is a constant flow of mal-investment into businesses.
I disagree. I think investors are periodically overconfident (irrational based on current reality, but not irrational based on their perceived future reality), leading to periods of greater mal-investment. As a central banker, you can force rates lower, you can’t force people to take the money.
The phrase that I heard a little while back that I like is “procyclical”, meaning that where you are in the business cycle effects investment attitudes, which tends to push the cycle farther than it should–in both directions.
If we are in a recession, mostly people are backward looking and conservative. This leads to under-investment in new business, and eventually this under-investment in new business benefits existing businesses. In your example, at this point in the cycle, there are relatively fewer people who are putting $200k into a new drycleaning business and engaging in the practice that your father saw.
As the economy picks up, existing businesses do well, and those relatively few new businesses that did invest through the downturn exceed their expectations, and that improves attitudes.
Improved attitudes tend to cause people to look ahead (basing their underwriting on an assumption that current market trends continue into the future), and that tends to cause OVER-investment. This is the point in time where people will invest $200k into a losing business with the expectation that things get better. That over-investment leads to too much supply, which will then harm margins in the industry, and cause people who were over-confident to fail.
Those failures mean that vendors don’t get paid, people get laid off, consumption falls, etc., which leads to the next recession, and cycle of under-investment.
The Fed tries to push around that investment by altering interest rates. QE in the US never actually ended up in the hands of investors–most of it ended up as excess reserves. What QE DID do however was alter the landscape of investment…to nudge people to invest more capital at lower yields. Since the investments were made through the underwriting lens of a weak economy, these investments will probably do just fine–as the economy improves (in part through the increased investment), revenue (investment yields) will likely be better than assumed.
Investments when the economy was terrible targeted a low yield in an environment when revenues were also low. HOWEVER, now people are still assuming they can sell their investments at low yields, but revenues (and assumed revenue growth) are much higher.
Many investors today assume that yields will stay low, but revenues will continue to grow at the pace of the prior 3-4 years.
These are two difficult assumptions to combine at this point in the cycle, and in my opinion lead to many poor investments. If indeed they are correct, and revenues continue to rise, then you will see the Fed increase rates faster, making the yield assumptions wrong…and if revenues fail to rise, the Fed will likely keep yields low.
If QE actually makes it into the economy (and not just increased banking reserves), THEN you end up with even more mal-investment (because revenues might improve for longer than they would otherwise–leading to this part of the cycle to continue for even longer), and potentially leading to inflation–if the QE pushing into the system actually results in such a strong economy that wages rise.
‘there is a constant flow of mal-investment into businesses’
I used to be a public accountant. I can say it is true that most businesses fail, because I saw how many are losing money everyday.
Yes, but was the success rate higher for businesses that started in times of a poor economy? Or businesses that started in times of a good economy?
Were more businesses started when things were great? Or when things were bad?
I don’t know. I do know we keep having these jobless recoveries and they are weaker and weaker.
Amazon is a version of the DCE. Jeebus help you if you are in a business Amazon targets because they will lose money forever destroying the profits in your industry. It’s like a deflation machine.
and the deflationary spiral rages on.
‘The art of capital flight’
‘What impact will China’s slowdown have on the red-hot contemporary art market? That might not seem like an obvious question, until one considers that, for emerging-market investors, art has become a critical tool for facilitating capital flight and hiding wealth. These investors have become a major factor in the art market’s spectacular price bubble of the last several years. So, with emerging market economies from Russia to Brazil mired in recession, will the bubble burst?’
‘I am certainly not celebrating the trend. I tend to agree with the philosopher Peter Singer that the obscene sums being spent on premier pieces of modern art are disquieting. We can all agree that these sums are staggering.’
‘For economists, the art bubble raises many fascinating questions, but an especially interesting one is exactly who would pay so much for high-end art. The answer is hard to know, because the art world is extremely opaque. Indeed, art is the last great unregulated investment opportunity.’
‘In fact, emerging-market buyers, including Chinese, have become the swing buyers in many instances, often making purchases anonymously. But doesn’t China have a regime of strict capital controls that limits citizens from taking more than $50,000 per year out of the country? Yes, but there are many ways of moving money in and out of China.’
‘Clearly, the incentives and motives of art investors who are engaged in capital flight, or who want to hide or launder their money, are quite different from those of ordinary investors.’
‘So how, then, will the emerging-market slowdown radiating from China affect contemporary art prices? In the short run, the answer is ambiguous, because more money is leaking out of the country even as the economy slows. In the long run, the outcome is pretty clear, especially if one throws in the coming Fed interest-rate hikes. With core buyers pulling back, and the opportunity cost rising, the end of the art bubble will not be a pretty picture.’
‘With the increase in condominium construction in the Kingdom, Cambodian real estate company CPL merged with Singapore-based Huttons Real Estate Group in order to cash in on prospective condo sales. Sear Chailin, CEO of realty firm Chailin Sear, said that high-rise opportunities are not the primary reason that foreign real estate companies and developers are investing in Cambodia.’
“They come for trading, building malls, housing development, and general building for the public, not just targeting the local people.”
A comment:
‘The market is now full of new condo launches every other week with completion by 3 years down the road. But problem is most of them don’t have proper showroom to show potential buyers the actual materials quality buyers may expect so it’s difficult to make a proper decision. Besides, the supply coming on stream in 3 years down the road would be so many condo units but who are going to stay there (in terms of tenants for those investors who bought with the objective to rent out for income)? Some condo projects are so huge (over 200 to 300 units and more) so it’s going to be a tough time for buyers to rent those units out upon completion of those condo projects few years down the road. Ideally investors should simply buy into real luxurious condos with top notch materials and small developments of not more than 60 units per development. Beware of the typical supply exceed demand. With now over 70% of buyers borrowing money from banks, any property bubble would hit real hard into the local economy compared to 10 years ago when only 30% of buyers borrowed from banks to buy property.’
A reply:
‘Where did you get this numbers? 70% of buyers borrowing money from banks? I heard a lot of project are bought by foreigners which are mainly no loans?
I personally think being able to rent all the condo won’t be possible, but it wont affect much the investors. The local investors buying condo are considered upper middle class in Cambodia. They mainly have businesses and won’t depend on the rent.
It’s like in China where there is a lot of condo towers without anybody living inside.
The only thing that worries me is the speculation of the prices.’
can you get a deal in the killing fields?
‘With the increasing number of people being made bankrupt, changes are needed quickly for Malaysia’s harsh and outdated insolvency law. A TWEET claiming that Malaysia will be bankrupt by September due to the losing value of the ringgit went viral last month.’
‘Purportedly posted by Astro Awani, the claim was attributed to former finance minister Tun Daim Zainuddin. The news channel swiftly issued a clarification urging its followers to ignore the “bogus news” and lodged reports with the police and the Malaysian Communications and Multimedia Commission (MCMC).’
‘But with the growing trust deficit and the ceaseless slide of our currency, which plunged to yet another new low of RM4.34 to the US dollar yesterday, rumours of such a scenario have continued to spread.’
‘According to the Consumers Association of Penang, Malaysians are using up to 44% of their incomes to pay their debts. Sure, the country might not go bankrupt anytime soon but the number of people being ruined financially has been rising steadily.’
‘Based on 2013 estimates, between 50 and 60 people are made bankrupt daily and the number could be much higher today. Based on the breakdown, 25% are defaulters of car loans, 16% from business loans and the rest comprises housing or personal loans.’
Defaults popping up all over the place.
‘The Hong Kong securities watchdog is investigating whether brokers and hedge funds in the financial centre violated their operating licences in creating and trading China investment products, three people with direct knowledge of the matter said.’
‘The investigation began about two weeks ago and is focussed on how international brokers and Hong Kong subsidiaries of Chinese brokers used more than $100 billion (65.1 billion pounds) in China investment quotas to create products allowing hedge funds to trade stocks and bonds in mainland markets.’
‘The CSRC has been cracking down on what it has called “malicious” trading activities blamed by Chinese authorities for a 40 percent slump in the mainland’s stock markets since June. “They are basically clutching at straws,” one executive at a foreign institutional broker in Hong Kong said of the SFC investigation. “They have to be seen doing something and it is an extension of the crackdown on hedge funds in the mainland.”
“RUNNING SCARED”
Wait until Alibaba investors find out that they don’t actually own anything.
Actually, I believe they don’t, since Alibaba is a VIE (variable interest entity) and those are against Chinese law. Search for VIE on chinalawblog.com for details.
Definition of a debt slave:
“the mineworkers that remain are accepting longer hours and lower wages in an effort to keep up with the repayments”
It’s an old theme!
Tennessee Ernie Ford Sixteen Tons:
https://www.youtube.com/watch?v=L2tWwHOXMhI
‘Why is the government risking an asset price crash?’
‘If you look at the chart above, you will see that in the last 10 years (2005-2014) of rapid population growth, Singapore’s total population soared by 1.3million. During this time, the total number of residential units completed (HDB, EC and private) increased by 151,475.’
‘Meanwhile, according to the National Development Ministry, in the construction pipeline are 177,710 residential units which will be completed from 2015 to 2018.’
‘And according to URA’s data for the second quarter of 2015, there are already more than 25,071 vacant private residence units and 2,391 vacant EC units. Put all these numbers together and we have enough homes on the market and in the pipeline to cater for an additional 1.5 million people (which, coincidentally, takes us to that 6.9 million population target) without the government having to sell any more land until 2030.’
‘What we need to discuss is the danger that the recent income cap revisions for ECs and BTOs will trigger an asset price crash we don’t need.’
‘Encouraging more families to buy ECs and BTOs by raising the annual income caps to $168,000 and $144,000 respectively will surely widen the pool of buyers. Also, HDB advertises that for some families, mortgages need not be paid with cash (i.e. full CPF usage is possible). This means even more CPF money will flow in for HDB – even more of our CPF money will be locked up!’
‘More critically, an enlarged pool of newly eligible buyers will prompt developers to tender at Government Land Sales programmes.’
‘This latest revision would just force private developers to continue their price discounting. Some may be driven to the brink, and even go under. And for the people fortunate enough to be still able to make buying decisions, this discounting will induce them to wait for even more discounts, thus precipitating a “deflationary death spiral”.
‘China is slowing down, our regional economies are suffering severely devalued currencies, and our own exports and economy won’t be able to escape these negative impacts. Here’s the conundrum: Harakiri Khaw already knows we have this supply of built-up units with more in the pipeline – enough supply for a population of 6.9 million by 2030.’
‘With the regional and global economic prognosis forecasting dark days ahead, why risk an asset price collapse by pushing ahead with policy revisions that could well lead to increased land sales? The implications of even more land sales in an oversupply market are not in ordinary Singaporeans’ favour. There is only one beneficiary – our National Reserves.’
‘Private home prices in Singapore registered the second-largest drop among its Asian counterparts in the last quarter, coming behind only China, according to Knight Frank’s Global House Price Index.’
‘The continual fall in non-landed private home prices demonstrates persistent weakness of the market with prospective buyers remaining cautious against the backdrop of existing cooling measures and in anticipation of further price correction, said Alice Tan, director and head of consultancy and research at Knight Frank Singapore.’
“Looking ahead towards the end of this year, Singapore’s private homes market is expected to face downward pressure both in price and rental performance, with the combination of factors including the rising completed supply of private homes, impending hike in interest rates, macroeconomic uncertainties and continual slowdown in Singapore’s economy,” she added.’
‘Meanwhile, China, which supplants Greece as the world’s key economic concern, saw prices fall 5.7 per cent year on year.’
‘Has the tepid property market created a new impetus for real estate agents to enter politics? Mr Andy Zhu, 32, an agent from Vestor Realty who is standing in West Coast GRC under the Reform Party, said he hopes to focus on the elderly and healthcare. He also believes that CPF money should be returned to Singaporeans at the age of 55, without the need for the minimum sum.’
‘Mr Eugene Yeo, 39, associate director at Real Estate Alliance, said it is “purely coincidental” that this many property agents are standing for election - not because property transactions have come down.’
‘Still, the National Solidarity Party (NSP) candidate hopes to flag housing issues in Parliament if he is elected. He said: “Being in the election is not a cheap affair, it is pretty costly. It is not because the property market is bad that agents want to have an MP’s (Member of Parliament) salary.”
‘The People’s Power Party candidate in Chua Chu Kang GRC, Mr Augustine Lee, 42, said he has a beef with what he sees as policy flip-flopping. Said the property agent with PropNex: “At one time, they loosen up the policies to make property prices so high. Now, they use cooling measures to revise it back. That’s very bad planning and quite disruptive.”
“Property can be a mother of all problems because it affects everyone. You have to buy or rent - everyone needs the physical space, so that is a cost to everyone and these costs translate into prices in goods and services.”
‘Dubai property developers are still turning out some larger-than-life projects even though prices are heading south again after clawing back a good chunk of their losses in the 2008 crash.’
‘The Gulf emirate’s annual Cityscape property fair opened Tuesday with developers foreseeing price declines of about 15 per cent this year, yet confident there would be no return to the days when huge projects were abandoned half finished.’
‘Scale models of new skyscrapers, sprawling villa compounds and leisure centres, including a new indoor ski slope, were rolled out by several companies.’
‘”Residential prices have fallen maybe nine or 10 per cent this year,” said Craig Plumb, Middle East and North Africa research director for Chicago-based investment management company Jones Lang LaSalle.’
“We expect prices to go down further over the rest of the year,” saying the decline has “more to do with what is going on globally. Things like (falling) oil prices and the global nervousness with the Chinese economy slowing.” “The Dubai residential market is very much affected by what’s going on in the rest of the world because a large number of people buying here are investors coming from overseas,” said Mr Plumb.’
“There is a negative sentiment largely driven by oil prices… It pushed stock prices down and pushed sentiment against the residential market as well.”
‘Cluttons, another London consultancy, expects villa prices to lose up to seven percent in the second half of the year after dropping five percent in the first six months. Cluttons said more than 40,000 units have been announced this year, with in excess of 20,000 to be delivered by 2017.’
‘Ziad Chaar, managing director of Dubai developer DAMAC Properties, said “with 53 billion dirham (US$14 billion) recorded transactions in the first six months… we are sure that this market is a good market.”
“If we did not know that this market is strong, and that there is a very strong demand, we would not have launched these projects,” he said, pointing to scale models of various luxurious projects.’
‘One of the projects on display at Cityscape is Meydan One, which includes plans for the world’s highest residential tower, at 711m high.’
‘Fancy living with a supercar in your living room or watching fish swim past your bedroom window? On the eve of Dubai’s annual property exhibition, Cityscape Global, developers are showcasing some of their more novel housing proposals for the city – undeterred by a marked decline in home sales across the city.’
‘Yesterday Damac Properties unveiled the world’s first homes designed around the Bugatti sports car…glass panels between the living room and garage will mean that owners can admire their cars from the comfort of their own sofa.’
‘Prices for the villas, which will overlook the planned Tiger Woods-designed Trump World Golf Club and will be showcased at the Cityscape Global property show this week, will be in the region of Dh36 million. “With hundreds of other projects out there all competing, developers have to think how can they make them stand out from the crowd, and that’s where the creativity comes in,” said Sean McCauley, the director of agency at Asteco.’
“What we have been seeing is a slowdown in transactional activity just at a time when there has been a huge influx of new entrants into the market.”
Click!
“plans to build 42 so- called Floating Seahorses – a cross between a villa and a boat – to be located off the World Islands in Dubai.
– with a completely submerged master bedroom and bathroom.”
Underwater house? Underwater house.
‘China’s government this year has bought up stocks to stem an equities rout, orchestrated a debt swap for local government to switch loans into bonds, and spent reserves to support the yuan. Now, a provincial government is stepping in to the property market to snap up unsold homes.’
‘An eastern coastal province will buy small and medium-sized residential properties and convert them into public rental homes, according to a Shandong government statement dated Sept. 1 and posted to its website on Monday. The government will also purchase or lease commercial buildings that can’t be sold for a long time and convert them into kindergartens and schools.’
‘The move highlights efforts to prop up the property market, which with related sectors accounts for about a quarter of the nation’s economy.’
“The real estate sector is the pillar industry of our national economy,” Shandong’s government said in the statement. The province has accumulated 160 million square meters of unsold properties, which would take 27.3 months to sell at the current pace, according to the statement.’
‘Got a discount on your new flat? Before popping up that champagne bottle, check out the carpet area. You are not actually paying anything less. What developers are doing is that they reduce the carpet area and increase the super built-up space.’
‘Property experts say many developers have increased the super built-up area by 60-70%. In real-estate parlance, this is called loading. In effect, it means that if a person is buying a 1,000 sq ft apartment, his carpet area will only be 40-30%. So, though you get a discount for your carpet area, since you are paying for the entire 1,000 sq ft, you don’t actually gain anything. Earlier, there used to be only 20-30% loading in Mumbai.’
‘From what Kapoor says there seems to be no hope in sight for prospective customers. “Cidco was recently selling apartments with almost 65% loading. If a government body like Cidco is not hesitating to cheat buyers, it is better not to talk about private developers,” he said.’
‘The banking sector’s prospects do not look all that good with a majority of lenders expecting the bad loan situation to worsen in coming years. There is lack of faith in stressed borrowers who, bankers believe, are misusing the restructuring facility and are responsible for the problem in bank loans.’
‘Describing the bad loan situation as a ‘crisis’, management consultancy firm Ernst & Young said that 72% of the respondents in a lender survey feel the situation was set to get worse, while only 15% feel that the slippage of loans into default category would get arrested due to measures taken by the Reserve Bank of India.’
‘The findings gain significance considering that the total size of bad loans in the country is estimated to be over Rs 2.6 lakh crore with the top 30 defaulters accounting for close to Rs 95,000 crore. This does not take into account restructured loans. Stressed loans, which are a combination of bad loans and restructured loans, now account for over 11.1% of all bank advances.’
‘Speaking to TOI, Vikram Babbar, executive director (fraud investigation & dispute services) at Ernst & Young, said that in 87% of the cases where the loans had gone bad, the borrower had diverted funds. “In diversion, there are two situations. One where the borrower’s business has turned unviable because of the global situation and he has to change his line to stay as a going concern. There are other borrowers with aggressive growth aspirations who start looking at alternate businesses like stocks and real estate to make a quick buck. In both cases, banks are not involved and it can be an issue even if bets made by the promoter pays off because it is not the intent of the banker to pick up an exposure in a new area.”
‘An overwhelming 91% of lenders are unwilling to take stressed borrowers at face value and feel that an forensic audit is needed to ascertain the intent of the borrower. “The defaulter always blames the global situation and slowdown for stress in the business, yet until the banker does a ‘deep dive’ and investigates the account, he cannot ascertain whether the default was on account of global situation or the borrower using leveraged funds for speculative activity,” said Babbar.’
The global situation.
oh my, expert scammers those builders..
“Carpet area is the actual usable area of an apartment, office unit, showroom, etc minus wall thickness. Carpet area is the area enclosed within the walls, actual area to lay the carpet.
This area does not include the thickness of the inner walls.
Built-up area is the carpet area plus the thickness of outer walls and the balcony.
Super built-up area is the built up area plus proportionate area of common areas such as the lobby, lifts shaft, stairs, etc. The plinth area along with a share of all common areas proportionately divided amongst all unit owners makes up the super built-up area.
- See more at:
http://flame.org.in/KnowledgeCenter/Whatiscarpetareabuiltupareasuperbuiltuparea.aspx#sthash.NYY5dzNj.dpuf
‘A 3D investigation has uncovered a whole range of practices in the building industry keeping New Zealand prices high, from perk trips for builders to exclusive stocking deals at hardware chains.’
‘By 2020 the value of building in New Zealand will top $200 billion, with hundreds of thousands of new homes and apartments.’
‘Tony Sewall, head of Ngai Tahu Property, the biggest developer in the South Island, has sent teams around the world to investigate building material prices. “We’d be paying around 30 percent more than in Australia, probably 60 percent more than the United States,” he says. “And the United States’ product is better.”
‘Bunnings New Zealand blames transport costs and our small population, but there’s a myriad of things industry insiders say are pushing up prices.’
‘There are exclusive deals between some suppliers and big hardware chains to stock only one brand of product, so there’s no choice for the consumer. And then there are also kickbacks and rebates – rewards designed to keep builders loyal to a particular type of product.’
“We have to ask some questions around some of the businesses that go on in terms of rebates and discounts that go on within the industry,” said Housing Minister Nick Smith two years ago.’
‘When he says rebates he’s talking about anything from trips overseas to cash-back loyalty bonuses. Confidential briefing notes given to the minister show the practice is “widespread” and give the example of “a trip to Fiji as a reward”.
For CIBC to be violating any laws they are subject to without them being prosecuted means that Canada is willing to change from a strictly law abiding country to an opportunist without moral principles.
I prefer the way we were.
CIBC and their staff should be charged.
I posted a Business in Vancouver interview months ago. An anonymous Vancouver broker laid it all out. He said they all know this is going on and don’t care because everybody is raking in tons of loot.
In 2001 I was driving back from Alaska and spent the night in Haines Junction. That night someone clipped my truck in the parking lot. The next morning I called the authorities to report it and after a while a Mountie showed up. She was dressed like a Leave it to Beaver housewife and apologized for it saying she had been cleaning. Anyway, she said, “it couldn’t have been a Canadian that did this because they would have waited and told you this morning.” I thought about that. It was almost certainly a Canadian that did it, there were hardly any USAians around. I came to see it as a Canadian conceit. “Our banks are superior, we never make subprime loans.” Oh baloney, you do too. Canadians are just as greedy and corrupt as anyone. And they’ll hit your car in the parking lot and drive off laughing.
In my experience, they will also cut your boat lose from the dock upriver from a dam while you are asleep and run off laughing. Also the Constable will say these things “never happen here”. Thank God for the GPS anchor drag alarm.
The other 29,999,999 are quite friendly and helpful.
Ben and Blue Sky
The Alaska highway is well travelled by Canadians and Americans, but I would think you are right about it being a local. Haines isn’t a really small town - lots of drinking.
Blue Sky, we had kids run amok in our marina and severely damaged half a dozen boats.
We are not superior to anyone as we are made up of all of the nations of the world - equal would be nice.
Our banks are smug, arrogant, and generally wrong. Our banks helped the Canadian manufacturers finance their production in China ! Even lent the money to the Chinese to purchase equipment - in their country ! Co-signed of course.
Ben - I envy you and all that beautiful scenery along that highway. I would like to travel all of it as well some day. Blue, the parts that I have seen are nicer than the 1,000 and 30,000 islands ! But just !
I didn’t go all the way to Fairbanks, turned south after Tok (means mosquito I think) for Anchorage. (Saw a lynx there big as a greyhound). But I tell everybody do it once in your life if you can. I studied the Milepost and knew what to look for every day. I wrote a journal about it. I drove from the very southern tip of Texas to Anchorage and back. The three days across BC were amazing.
I do have a tip; driving back, turn down the Stewart-Cassiar Highway. I say down because it seemed like it dropped the whole time. I wouldn’t want to drive up it. It’s a little edgy, but the scenery is unbelievable. Plus by then you’ve already seen the Al-Can. I highly recommend the trip; in a good vehicle with good tires.
I have done a very small part of the Stewart (37) around Terrace and sort of know what you mean. I guess you would go over to Prince George from there.
Yes, I love the views but often tremble at the driving part when on some of the logging trails in BC (even a lot of their roads).
It sounds like you drove it all the way down - if so, you drove thru one of the most prolific new gas finds on the planet. That area is loaded with natural gas.
My job only allows me snippets of the areas that I visit - but yes, someday I will do all of the Alaska highway. Two weeks from now I am doing a drive from Vancouver to Calgary via the Crows Nest Pass. In about 15 hours.
Another nice drive in Canada is the Cabot Trail on Cape Breton Island - a lot like US 1 in California.
Thanks for the tips. Here’s Crows Nest Pass:
https://www.youtube.com/watch?v=ayPuA06ks5w
Cassiar Hwy to Stewart-Hyder
https://www.youtube.com/watch?v=7ggTarIX-iI
Cabot Trail on Cape Breton Island
https://www.youtube.com/watch?v=NinCq7bjb54
It sounds wonderful. I’ve only been over that way once years ago, driving to Kenai. I read Bradford Angier when I was young and always dreamed of that part of the country.
A couple of weeks ago I was on the worst road in Canada, the QEW, returning to NY from Temagami towing a V-hull. Traffic was stop and go past Hamilton. I particularly hate this road because I remember what it was 50 years ago. Anyway, a nice Canadian pulls up along side and says he is going to show some fellow fishermen the way around the traffic. So he did.
BTW, my son caught the biggest Pickerel of his life that week. We didn’t worry at all about the “economy”.
http://d.gr-assets.com/books/1288215198l/1169121.jpg
How to live in the woods on pennies a day!
Also see “Home in your Pack”. I’m pretty sure I still have it.
A study in how to make a living writing about not making a living.
Somehow this morphed into me living on a boat for dollars a day. It’s a pretty big backpack.
“I didn’t go all the way to Fairbanks, turned south after Tok (means mosquito I think) for Anchorage.”
A friend and I drove up to the Arctic Circle from the San Francisco bay area. We carried a 6′ long pipe cutter with us to bring home the arctic circle sign. When we got up there we were faced with a huge billboard sized sign. Carried that dirty fugg’n thing for nothing!
Thank you Ben. First time I have seen the Crows video. I wish I could send you some pictures of the logging trails that I have driven on. That Stewart video is amazing; but the Cabot one was not the way I remember the trail.
Blue Skye. I live close to there - I know what you mean. Where in Temagami did you stay? Tamar ?
RMS - that is funny. If you were successful did you think of how you would have declared it at the border?
Ben, I think I will be in Whitehorse before the end of October. I could take the Stewart to Terrace and then go over to Prince Rupert and catch the overnight ferry to Port Hardy - something I have always wanted to do, but -
Drop charges will be thru the roof !
Is there anyway that I could send you a picture of one of my logging trail excursions - going up we had to remove a boulder, going down an hour later we had to remove a boulder ! Neither the driver or passenger could open their doors a lot of the way - too narrow a road.
Dublin, CA Housing Prices Crater 11% YoY
http://www.movoto.com/dublin-ca/market-trends/
It is 104 in Dublin today.
Not what they are set up for.
With regards to your comment about new homes in Nine Elms, it should be remembered that this area of London has been called Europe’s largest building site. About 20,000 luxury apartments are being built here, which is a huge number considering the population of the city of Ely is only 18,000. Battersea estate agent reports that when the project centred around Battersea Power Station is finally complete in 2019 (and the American Embassy is open for business) the whole area will be transformed. However, this will take a few years to achieve.