View Full Version : Home prices may fall this year: Leng Beng
http://www.businesstimes.com.sg/sub/news/story/0,4574,427771,00.html?
Published February 25, 2011
Home prices may fall this year: Leng Beng
He sees 3-5% dip in private home prices, says sales are down
By UMA SHANKARI
(SINGAPORE) City Developments, Singapore's second- largest property developer by market capitalisation, expects private home prices to fall 3-5 per cent this year on account of the chill from recent government cooling measures.
Home prices may decline after hitting a new record in 2010, executive chairman Kwek Leng Beng said yesterday. He also said that sales volumes have already fallen.
But prices are unlikely to plunge as there is still strong demand for homes in Singapore from overseas buyers, Mr Kwek said.
In addition to the traditional market of Indonesian and Chinese buyers, more money from the Middle East is flowing into Singapore in the wake of the unrest in the region, he said.
Mr Kwek was speaking at CityDev's results announcement. The group's Q4 2010 net profit climbed 41 per cent year-on-year to $249.2 million
'Residential volumes have started to go down somewhat, but prices are still not down yet,' he said. 'Usually it's the volume that is the precursor to prices going up or down.'
Unless there is a spike in demand from overseas buyers, 'prices will go down 3 to 5 per cent', Mr Kwek said. He also warned that the government may impose more curbs if the market 'improves a lot' and prices don't fall.
Analysts have similarly said that further policy risk remains a persistent overhang, and that residential prices could fall by 5-10 per cent in 2011.
In a Feb 23 report, UBS Investment Research analyst Adrian Chua said that further policy measures cannot be ruled out if the market regains its exuberance. Future measures will focus on the initial purchase stage by 'raising the level of equity required upfront', he said.
Meanwhile, CityDev said yesterday it will buy Dubai World's entire one-third stake in the South Beach project for $155 million.
CityDev, Dubai World and US-based Elad Group teamed up to buy the 99-year leasehold landmark Beach Road site opposite Raffles Hotel from the state for $1.69 billion in 2007. Each of the partners has an equal stake in the consortium developing the project.
The group also confirmed that it will boost its stake in the consortium developing the South Beach project, following a report in The Business Times yesterday that the company has exercised its right of first refusal to acquire Dubai World's stake in the project. The move comes after Dubai World unit Istithmar Beach Road informed City- Dev that it is looking to sell its entire stake in the consortium developing the project. CityDev then exercised its right to acquire the Istithmar shares and has entered into a conditional sale and purchase agreement to acquire the shares for $155 million. The two parties have started the process for the fulfilment of the conditions precedent.
'The company will make a further announcement upon completion of the proposed acquisition following satisfaction of all conditions precedent,' CityDev said in a statement.
Mr Kwek said CityDev would eventually like to own more than 50 per cent of the project - although the company remains open to welcoming new investors.
CityDev plans to market 580 homes in four projects in the first half of 2011.
The group's home sales rose 13 per cent to $2.1 billion in 2010, when it sold 1,559 homes. In 2009, CityDev sold 1,508 homes worth $1.9 billion in total.
Looking ahead, CityDev is still bullish about the high-end and luxury market segments. It noted in its results announcement that the high-end residential segment 'could see increased activity as current prices are still below the previous peak'.
Backing up this assertion, the group will launch two high-end projects in H1 2011 - the joint venture project with Wing Tai at the former Anderson 18 site (now called Jean Nouvel Residences), and another project at Buckley Road.
http://www.straitstimes.com/Money/Story/STIStory_638614.html
Feb 25, 2011
CDL expects up to 5% fall in home prices
Prices not down yet but drop in transactions seen as a precursor
By Esther Teo, Property Reporter
HOME prices could fall by up to 5 per cent this year if sales volumes keep dropping, according to City Developments (CDL) executive chairman Kwek Leng Beng yesterday.
Mr Kwek said at CDL's full-year results briefing at Orchard Hotel that transaction numbers have already started to fall, but prices will not plunge.
'Prices are not down yet but usually it's the volume that is the precursor to the rise and fall (of prices), and I believe that unless we have a lot of people coming from overseas to buy... prices will go down a maximum of 5 per cent.'
He added that developers had a very strong balance sheet and were not in dire need to sell homes.
CapitaLand chief executive Liew Mun Leong made a similar prediction last month, saying he expected sales volume and home prices to fall in all segments except at the top end.
Mr Kwek said the property cooling measures last month would not prompt CDL to drop launch prices, which depend more on the project's location and product offering. 'I think in certain places we will keep them steady and in others we will... see what is transacted in the surroundings and be in line with that,' he said. 'But if we have some special features or special location, I don't see why we should reduce prices.'
He noted that prices at the recently launched NV Residences in Pasir Ris were raised slightly only once and have held steady since despite the measures, yet buyers were still picking up units.
CDL plans to launch up to seven projects this year. In the first half of the year, it plans to launch 580 units in projects including H2O Residences in Sengkang and a Segar Road executive condominium.
CDL group general manager Chia Ngiang Hong said interest from genuine buyers was still quite strong as seen from recent launches.
But Mr Kwek said if Singapore's market and economic output continue to grow at the rate expected, the firm has 'no choice but to bid higher' for land.
He added that CDL does not plan to launch any more units at The Residences at W Singapore in Sentosa Cove. It has sold only 21 of the 56 units released so far in the 228-unit project.
CDL said construction on the South Beach project between Raffles Hotel and Suntec City will start next month. It was scheduled to be finished by next year at a total cost of about $2.5 billion, but the global financial crisis forced the firm to put off construction. It is now expected to be completed in 2015.
CDL also confirmed media reports that it has exercised its rights to acquire Dubai World's one-third stake in the project for $155 million. This will double its holding to two-thirds with the remaining third held by El-Ad Group. A further announcement will be made once the deal has been completed.
CDL's fourth-quarter net profit rose 41 per cent to $249 million while revenue for the three months ended Dec 31 was $691 million. Full-year profit increased 26 per cent to a record $749 million from a year earlier but revenue dipped 4 per cent to $3.1 billion.
Quarterly earnings per share were 26.7 cents, up from 18.7 cents in 2009. Net asset value per share was $7.03 as of Dec 31, up from $6.57 a year earlier.
A dividend of 18 cents a share, inclusive of a special dividend of 10 cents a share, was proposed, up from eight cents a share in the previous year. CDL shares rose 22 cents to $10.92 yesterday.
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Geylang OKT
26-02-11, 06:04
Huat Ahhhhh! :D
CDL ran out of land in OCR is it? trying to talk down mass market?:beats-me-man:
rattydrama
26-02-11, 08:10
Today there are more than 20 projects published on straits times and some even willing to absorb stamp duty and give discount to clear. Developers not very optimistic? Hoho Christmas coming early.
I think location also plays a part meaning those near amenities the demand still exists..btw, the bishan land that is near MRT still tendered very high leh by one of the developers......;)
Geylang OKT
26-02-11, 08:31
Honest mistake, let's move on :D
Ah Beng seldom talk, this time he talk drop, Ah Liew wacked even harder, daring Ah Beng to outbid him the next round...
Regulators
26-02-11, 09:27
I think ah beng afraid of more cooling measures, so he is saying this to appease the government. I know these developers just too well
I think ah beng afraid of more cooling measures, so he is saying this to appease the government. I know these developers just too well
Ya, believe so....Ah Beng worry how to do better for 2011 and answer to shareholders..., appease MBT. Ah Liew fed up as he fail to get capitol and tanjong pager plots, so wack tis time
phantom_opera
26-02-11, 09:58
price already corrected 5% wat, FEO is giving out 5% voucher + lots of kitchen stuff + marble everywhere in WFI, also giving out 3% for rest of projects
so Ah Beng stating the fact only
Ya, believe so....Ah Beng worry how to do better for 2011 and answer to shareholders..., appease MBT. Ah Liew fed up as he fail to get capitol and tanjong pager plots, so wack tis time
Funds ready but no where to invest. If $$$ keep parking without investing, jialat.
Since cannot win then spoil market lol.:tsk-tsk:
Who knows maybe ah beng is a CCR activist in this forum....:D
Look at other perspective, He is encouraging buyers to decide and buy now if there is any suitable unit, even if buyer wait, the price can only drops to the most is 5%...:D indirectly he is still bullish about the market...:D
a message can be deciphered either way depending 0n reader thinking and their current situation on whether to buy, sell or hold...:)
Funds ready but no where to invest. If $$$ keep parking without investing, jialat.
Since cannot win then spoil market lol.:tsk-tsk:
Who knows maybe ah beng is a CCR activist in this forum....:D
More like their PA are members of this forum, maybe tasked to do a summary report everyday on interesting remarks and comments...:D
Is this the first time he sounds bearish? Trying to talk down the other developers from overbidding?
Is this the first time he sounds bearish? Trying to talk down the other developers from overbidding?
Am surprise why he is so bearish. Most often, developers/agent will tell you "buy, don't wait cos market is good!"
Beside ah beng, does anyone know :2cents: who else is bearish?
Regulators
26-02-11, 13:10
what is the evidence to site that prices have come down? Developer can launch at 1400psf and tell people the prices have come down to 1200psf, right? It is like launching the cape at 2200psf and later tell people the price has dropped to 1900psf, has the price really come down? If I want to sell a pair of shoes for $150, I will mark it up to $200 and tell people I am offering a $50 discount.
Am surprise why he is so bearish. Most often, developers/agent will tell you "buy, don't wait cos market is good!"
Beside ah beng, does anyone know :2cents: who else is bearish?
Wild Falcon
26-02-11, 13:14
No. He's more worried about his Sentosa project. That's why sounds so desperate talking up Sentosa, and to make his poor-performing Sentosa project look more appealing, he has to talk down everything else. You realise he keep asking people to invest in Sentosa?
CDL ran out of land in OCR is it? trying to talk down mass market?:beats-me-man:
Regulators
26-02-11, 13:15
The article is just paying lip service to appease the government, I think future launches will not drop in price. New condos coming in punggol will be launched at 1200psf and vaughan 1300psf. Few years from now, will be very hard to get a new condo for anything less than 1k psf.
Punggol at 1200psf? That'll really take the cake. But I've never heard Kwek leng beng sounding bearish especially when they have the most land bank before all this GLS.
Regulators
26-02-11, 14:14
Feo bidded punggol for a whopping 1.02 billion, averagely 7xxpsf, so I won't be surprised if launching price will be 1.2k psf. I can definitely bet on that, just look at feo's pricing for tennery
Punggol at 1200psf? That'll really take the cake. But I've never heard Kwek leng beng sounding bearish especially when they have the most land bank before all this GLS.
But that's a mixed development. The psf for the commercial component would be higher and drag up the aggregate.
Gahmen trying very hard to curb prices and GE is coming along. Developers and analyst may have been gently nudged to pay a little bit of lip service.
;)
thomastansb
26-02-11, 15:42
Agree. If going to drop 5%, why buy sentosa now? Might as well buy after dropping 5%?
This kind of people, really :doh::doh::doh: Serve his own interest only.
No. He's more worried about his Sentosa project. That's why sounds so desperate talking up Sentosa, and to make his poor-performing Sentosa project look more appealing, he has to talk down everything else. You realise he keep asking people to invest in Sentosa?
ai yoh, our 'first class' newspaper's journalist how can miss such an important word "mass market" in his speech? (but yet captured by DJ News reporter in below! :doh:)
CDL is 1 of the major developers with most land banks in OCR and yet he said such bearish words on OCR? :(
You missed the word "mass market" from:
"The new rules are likely to push down mass market property prices in the city-state by 3%-5% and moderate volumes this year, Kwek said at a news conference." :p
DJ UPDATE: City Developments 4Q Net Up 41%; To Raise South Beach Stake
24 Feb 2011 19:45
By Chun Han Wong
Of DOW JONES NEWSWIRES
SINGAPORE (Dow Jones)--Singapore's second-largest listed property developer City Developments Ltd. (C09.SG) Thursday announced a 41% rise in fourth-quarter net profit and sounded a cautiously upbeat note about its prospects despite government attempts to cool the local property sector.
City Developments Executive Chairman Kwek Leng Beng said he expects the group to remain profitable in 2011, downplaying concerns that Singapore's property market might be severely hurt by the recent cooling measures.
"The government's proactive approach (in managing the property sector) has ensured that Singapore remains highly sought-after as an ideal place for investments, and fluctuations in property transaction volumes are likely to be temporary and are inevitable," Kwek said in a statement.
Singapore's economy grew at a record 14.5% in 2010, but worries of possible asset price bubbles prompted the government in January to take measures such as making individual buyers with outstanding loans on one or more properties stump up more cash, increasing the holding period for the imposition of seller's stamp duty to four years from three years, and raising the rate of duty for homes sold at various stages during this holding period.
The new rules are likely to push down mass market property prices in the city-state by 3%-5% and moderate volumes this year, Kwek said at a news conference.
"This time the measures they've introduced are more effective than before," he said, noting that residential volumes have started falling and an easing of prices may follow. "If there's a temporary slowdown, so be it. We have to accept the fact that the real estate business is cyclical in nature."
The strength of the local property sector in 2010 was reflected in the company's fourth quarter performance.
Net profit for the three months ended Dec. 31 was S$249.2 million, up from S$176.7 million a year earlier due to one-time gains mostly from property divestments. The result beat the average S$217.4 million estimate of five analysts polled by Dow Jones Newswires.
The rise in the group's net profit came mostly from its other operating income, which was $218.5 million--up from S$2.2 million a year earlier--mainly from sales of certain non-core commercial and industrial properties and management fees.
Revenue was S$691 million, down 25.1% from S$922.4 million a year earlier.
Agree. If going to drop 5%, why buy sentosa now? Might as well buy after dropping 5%?
This kind of people, really :doh::doh::doh: Serve his own interest only.
Indirectly he is bullish, 5% drop max after a slew of policy is not significant, he is telling potential buyers even if you wait the most the drop will be 5% max.....5% of OCR psf is not much, take S$1200 psf for 3 rooms at 1250sqft, price is S$1.5million, 5% drops is peanut ha ha (remember the once famour phrase that rock the scene) dont flame me ...:)
I thought prices already dropped 3% to 5%? FEO giving 3% and 5% cash rebate after top and FCL giving free stamp duty? :rolleyes:
nobody asked why he increased his stake in southbeach?
Those condos far away from city center and MRT will fall further. Those condos near to city center and MRT prices should at least continue to hold. Jan trade data is still quite good as QE2 has yet to work its way through the financial system fully.
The government has strangely decided not to act on low interest rate despite the record inflation rate. Perhaps the self-created inflation is advantages to the government e.g. Higher COE prices, higher foreign workers levy, higher tax from more expensive fuel, higher land prices etc. This in turn fund government spending in mega projects such as the Marina Bay financial district, Jurong Lake district and rejuvenation projects in housing estates to prop up property prices.
It is interesting to note that two government-linked local companies bidded very high for the Bishan plot of land. This mirrors the speculative situation in China which started a few years back with state-owned entreprises using cheap $ from the government stimulus to outbid the private developers. I'm not sure how long this will last here but from what I observe at show flats, pretty much of the property demand is due to leverage (current low interest) and good rental market (government's oversight of not building enought HDBs a few years ago). I suppose similar to China, we will see many empty condos in the next 2 years.
http://www.nytimes.com/2010/08/02/business/global/02chinareal.html
Those condos far away from city center and MRT will fall further. Those condos near to city center and MRT prices should at least continue to hold. Jan trade data is still quite good as QE2 has yet to work its way through the financial system fully.
The government has strangely decided not to act on low interest rate despite the record inflation rate. Perhaps the self-created inflation is advantages to the government e.g. Higher COE prices, higher foreign workers levy, higher tax from more expensive fuel, higher land prices etc. This in turn fund government spending in mega projects such as the Marina Bay financial district, Jurong Lake district and rejuvenation projects in housing estates to prop up property prices.
It is interesting to note that two government-linked local companies bidded very high for the Bishan plot of land. This mirrors the speculative situation in China which started a few years back with state-owned entreprises using cheap $ from the government stimulus to outbid the private developers. I'm not sure how long this will last here but from what I observe at show flats, pretty much of the property demand is due to leverage (current low interest) and good rental market (government's oversight of not building enought HDBs a few years ago). I suppose similar to China, we will see many empty condos in the next 2 years.
http://www.nytimes.com/2010/08/02/business/global/02chinareal.html
if this mirrors China a few years back, does it mean this is going to keeping going for a few more years? China's still chucking along regardless what policies are being implemented.:banghead:
In 2008 the property prices were supported by low interest and good resale/high rental. In 2011, recent events made me think that high property prices may be supported by government-linked companies with access to cheap funds from *ahem*. So from 2012 onwards there will still be over-supply of condos but if the interest rate doesn't increase significantly, the high prices will still hold despite increasing number of empty condos.
In 2008 the property prices were supported by low interest and good resale/high rental. In 2011, recent events made me think that high property prices may be supported by government-linked companies with access to cheap funds from *ahem*. So from 2012 onwards there will still be over-supply of condos but if the interest rate doesn't increase significantly, the high prices will still hold despite increasing number of empty condos.
if the developers are not allowed to hoard empty units, then the game will change...
Geylang OKT
26-02-11, 22:24
Huat Ahhhhh!
No one mentioned that maybe high oil prices in MENA may change the tide of risk sentiment, lift inflation expectation and accelarate interest risk rate hike and send everything tumbling? American stock market chong long time liao, time for correction? Beijing more measures, singapore government may want to follow with one more round, just in case they feel left behind? :scared-3:
thomastansb
26-02-11, 23:34
US is just waking up. Repaying debt by printing money, unemployment lower and lower. If there is any country dragging everybody down, it won't be US. US will be strong for the next 5 years. Similar to 2004 to 2008.
No one mentioned that maybe high oil prices in MENA may change the tide of risk sentiment, lift inflation expectation and accelarate interest risk rate hike and send everything tumbling? American stock market chong long time liao, time for correction? Beijing more measures, singapore government may want to follow with one more round, just in case they feel left behind? :scared-3:
The next crisis is likely to originate from Asia unless US screws it up big time.
The next crisis is likely to originate from Asia unless US screws it up big time.
Can only think of China who can affect the rest of the world...
Can only think of China who can affect the rest of the world...
yes, because it's centralised control, they could keep the music playing for a lot longer than most people with a capitalist mindset are expecting.
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