Knight Frank global report: Asia rising

Property prices have increased in 69 per cent of worldwide locations, says the latest Knight Frank Global Housing Price Index. This is a rise of 19 per cent compared to 2009.

Asia – especially Singapore, Hong Kong, and China – is leading the property price boom. China so much so that the government has recently had to introduce cooling measures like ordering banks to enforce a 30 per cent deposit on home loans and halting lending for buyers of third properties.

Asia’s economies have grown alongside their property prices. According the IMF’s projected growth rates, China will grow 10.5 per cent in 2010, India 9.7 per cent, Indonesia 6 per cent, and Japan 2.8 per cent.

“Each quarter we are presented with further evidence that the impact of the global recession on the world’s housing markets is diminishing,” said Liam Bailey, head of residential research at Knight Frank. “A slight convergence is occurring with the disparity between the top and bottom of the table being less pronounced than a year earlier. On the one hand, government intervention, particularly in the heated Asian economies, is starting to have the desired cooling effect as indicated by the latest quarterly results.”

“On the other hand, economic stimulus measures put in place by many western governments such as ultra-low interest rates, first time buyer concessions and targeted support for banks have encouraged house buyers and this increase in demand has helped push prices higher, albeit moderately so,” he added.

Bailey also said that sub-divisions were beginning to emerge in Asia, where the housing markets of Singapore, China, and Hong King are far outperforming those of India, Indonesia, and Japan.

SunCity, 3rd ranking of The Edge Property Developers Award Winner 2010 mulls over new projects for REIT

PETALING JAYA: Sunway City Bhd (SunCity) is mulling over office and retail projects to be nurtured into yield-accretive assets which can later be injected into the Sunway real estate investment trust (REIT).

The listing of Sunway REIT on July 8 involved the injection of eight assets – Sunway Pyramid Shopping Mall, Sunway Carnival, SunCity Ipoh Hypermarket, Sunway Resort Hotel & Spa, Pyramid Tower Hotel, Sunway Hotel Seberang Jaya, Menara Sunway and Sunway Tower.

The listing exercise raised some RM520mil for SunCity’s project development activities, including land purchase.


Ngeow ... ‘We want to build up Bandar Sunway into a location of choice for quality offices.’

SunCity property investment managing director Ngeow Voon Yean said the divestment and unlocking of the value of the assets marked a new chapter for SunCity.

“We are now looking for opportunities in property development or investment to venture into. In the last two years, the ratio of earnings between investment and development property was about 60:40, but post-REIT, it should be around 50:50,” Ngeow told StarBiz.

Besides distribution income from its 37% stake in Sunway REIT, SunCity can also channel the funds raised from its assets divestment to other income-generating activities.

It recently paid RM129mil to acquire an additional 45% stake in its 51%-owned unit, Sunway Lagoon Sdn Bhd.

Ngeow also said the funds would be used to develop more office blocks and retail-related projects. There are 100 acres still undeveloped in the 800-acre Bandar Sunway Integrated Resort, and SunCity also has other smaller parcels of land in Kuala Lumpur.

He said the first project kicked off The Pinnacle in Bandar Sunway, a 25-storey corporate office block with net lettable area of 560,000 sq ft that was scheduled for completion by 2013.

Next up would be the development of a parcel of land beside Sunway Pyramid Shopping Mall. Currently referred to as SP3, this would be a retail and serviced apartments development with vehicular and pedestrian links to the mall.

“The supply of Grade A and international standard office and commercial space in this part of the Klang Valley is still in short supply. We want to build up Bandar Sunway into a location of choice for quality offices to attract blue chip office tenants here,” Ngeow added.

He said the new state-of-the-art office and commercial buildings would qualify as green and sustainable buildings. “The aim is to integrate and link all the office and retail complexes in Bandar Sunway with covered walkways to make them pedestrian-friendly and promote more walking instead of driving within the township. This will lower the carbon footprint of the township and is also in line with the LOHAS philosophy that Sunway has embraced from the start, ” he added.

LOHAS (Lifestyles of Health and Sustainability) is a term that describes the market and lifestyle of consumers interested in issues of health and fitness, personal development, the environment, sustainable living and social justice.

Ngeow said a new commercial project now underway was Sunway Velocity in Cheras, comprising office towers, serviced apartments, shoplots and a shopping mall. The RM1.5bil project on 22 acres will be completed in 2015. It will have a total net lettable area of 850,000 sq ft and gross development value of RM1.5bil.

SunCity also plans to build a 27-storey office building with a net lettable area of 350,000 sq ft, Sunway Tower, in Jalan Ampang, Kuala Lumpur. Plans for the project on a one-acre site are still being firmed up. “We have a couple of other projects on the drawing board and will keep our project pipeline going for synergistic growth between the various divisions of SunCity,” Ngeow said.

SP Setia Bhd to launch four residential projects worth RM546mi

The Show Village of Setia Pearl Island

GEORGE TOWN: SP Setia Bhd plans to launch four new residential projects with an estimated gross sales value RM546mil on the island beginning this December and next year.

SP Setia property (North) general manager S. Rajoo told StarBiz that the projects comprised the RM175mil Setia Greens, RM60.5mil Brook Residences, RM170mil Setia V Residences, and the RM139mil Pearl Villas in the Setia Pearl Island scheme.

Setia Greens, comprising 149 three-storey terraces and 18 semi-detached houses with dual frontage in Sungai Ara, would be launched in December.

“The selling price starts from RM918,000 onwards for terraced units with built-up areas ranging from 2,400sq ft and 3,200sq ft.

“The selling price for the semi-detached units, with built-up areas of around 3,300sq ft, is around RM1.6mil onwards,” he said.

Subsequently the group would launch Brook Residences in February 2011 and the Pearl Villas in April, and Setia V Residences in the second half of next year, Rajoo said.

“The Brook Residences in Brook Road, a prime residential area near Jesselton Road, comprises 11 luxurious bungalows priced from RM5.8mil onwards, while the Pearl Villas comprise 35 bungalows priced from RM2.8mil onwards.

“The Setia V Residences project in Kelawei near Gurney Drive, comprising 67 luxurious condominiums, tentatively priced from RM2.8mil onwards,” he said.

Rajoo said Setia Greens would be the northern region’s first Green Building Index-rated project.

“What makes the project unique are the environmental features such as solar water heater, rain-water harvesting system, water efficient fittings, and cool roof system for each unit.

“We are using a special low-volatile organic compound paint for the project,” he said.

Rajoo said these new projects were targeted at the executives working in the south-west district of the island as well as investors.

For the nine months of SP Setia’s fiscal year ended July 31, 2010, the group’s projects from Penang contributed close to RM150mil or about 10% of the RM1.95bil revenue posted for the nine month period.

“We are confident that the contribution from Penang this fiscal year closing Oct 31, 2010 will hit over 10% of the targeted RM2bil revenue of the group.

“Setia Vista, Reflections condominium, and the new semi-detached launches in Setia Pearl Island contributed significantly from Penang,” he said.

Rajoo said Penang would continue to play an important revenue generating role in the group’s property development business.

“We will continue to look for land in prime locations either to develop on our own or on a joint-venture basis,” he added.

Meanwhile, Henry Butcher (Malaysia) Penang director Dr Teoh Poh Huat said high-end properties were still sustainable in Penang, as there were now overseas Malaysians investing in the island’s property market.

“These are overseas Malaysians earning pounds and US dollars, who are buying high-end properties with the view to come home to stay one day.

“This segment is playing an increasingly important role in the Penang high-end property market developed by branded developers,” he said.

House prices to rise Down Under

Australia's robust economy will mean a rise in house prices for the next few years, say some experts.

As interest rates rise and unemployment numbers fall, the big risk could be housing affordability. "[T]here's a whole set of factors that have acted to reduce housing affordability from a cash flow perspective," says Commonwealth Bank chief economist Michael Blythe. However, he adds, the country is far from the state it was in in 2003, when when debt servicing ratios were high while the cash rate hovered at about 5%.

"Affordability will deteriorate as we go to a higher interest rate environment by 2013," says Rob Mellor, managing director of research firm BIS Shrapnel. "In terms of mortgage repayments as a percentage of income, affordability will be a critical issue over a three-year period … and we expect interest rates to rise in 2011/12 to around 8.3% or so by June 2012 and more like 9.1% by June 2013." 

Some economists believe that residential property prices in big cities such as Perth, Adelaide and Sydney could rise by as much as 20% in the next three years. However, National Australia Bank forecasts more modest growth  --  5.0% for Canberra, 3.3% for Adelaide, 2.7% in Sydney, 1.6% for Perth, and 1.3% for Melbourne, while the Brisbane market should remain flat -- for a national average growth of 1.5%.

Properties priced at less than A$500,000 are expected to have the biggest gains in prices.

Source: Overseas Property Professional

What is REITS and how to get monthly dividend payments from it

A lot of investors, especially senior citizens, are hoping to get consistent and regular dividend payments from stocks.

In this article, we will look into constructing an investment portfolio, which consists of real estate investment trusts (REITs), to get monthly dividend payments.

A REIT is a real estate company that pool investor funds to purchase a portfolio of properties. Normally, it has two unique characteristics: investment in income-producing properties, with almost all of its profits distributed to investors as dividends.

From the table, based on the latest stock price (as at Oct 18) and on assumption that the same dividend payments will be paid over the next 12-month period, almost all REITs will provide about 7%-8% dividend yields. Based on our observations, most of the REITs will try to pay higher dividends over the years. Hence, if the overall economy continues to recover, some REITs may pay even higher dividends for the coming few years.

Due to them only listing at the middle of this year, we have excluded CMMT and Sunreit.

As mentioned earlier, a lot of retirees would like to invest in investment assets that can provide a consistent and regular dividend income. Therefore, we think that REITs can provide a good alternative to the retirees. From the table, except for Arreit, Atrium, Axreit and Hektar, all other REITs will make dividend payments twice per year. Most of them will pay their dividends in the month of February and August. Hence, if an investor would like to receive his dividends other than the above two months, he may need to diversify their REITs into holding many types of REITs.

Based on the list of REITs in the table, we can see that, except for the month of January and April, dividend payments were being made at different months throughout the year, thus investors can receive a stream of dividend income by buying into different types of REITs.

Investors can build a REIT portfolio consisting of a few REITs which make dividend payments at different months of the year. The following is just one of selection options available for consideration.

Based on the current price dated on Oct 18, assuming that the same dividends will be paid in the next 12 months, a portfolio with AMfirst, Arreit, Atrium and Hektar can generate a dividend yield of more than 8% (see table). Besides, by buying with equal amount into these four REITs, investors can get dividend payments for almost every month, except for the month of January, April, July and October.

Nevertheless, investors need to understand that the above selections are solely based on the assumption that these REITs will reward investors with the same dividends and pay during the same month as shown in the table above.

We also understand that apart from the above four REITs, some other REITs may reward investors with even higher dividend payments.

Luxury expert: Asia’s unstoppable real estate

So, what has changed since the Singapore government slapped the market with new cooling measures? In general, not much when it comes to the high end and luxury real estate sectors. As predicted here just a few months ago, the highest end of the market will continue to rise, if slowly, because the highest end never really fully recovered. Also, more people in Singapore have more money, and they will buy more luxury properties. That’s evident by the fact that prices of good class bungalows are 20 per cent up during the past year, and with 24 out of the 75 sold so far this year achieving prices of more than S$20 million (US$14.93 million). On the other hand, development charges are up, foreign labour numbers down while their licensing prices are up. All this means properties will cost more.

For signs of things to come, we need to look at some macro and micro data.

To summarise Singapore’s situation, the government is acting to protect the mass market from overheating, sending a clear signal ahead of next year’s elections that the mass market won’t be left to boil over. But not all is rosy on the real estate horizon. Singapore reported more than 5 million residents last month, a handsome growth of population which is very much behind the demand for the property and rise in prices. Should the government limit inflows of foreign talent and tighten PR numbers, there will be softening of demand for property across the board. Hence, these inflow numbers should be watched.

Now we will look at a few recent macro economic factors.

The Singapore dollar is strong versus many currencies, and is considered a safe heaven currency by many investors. At the time of writing JP Morgan Asset Management announced it is establishing a regional headquarters in Singapore. JPMAM chose Singapore because of its close links with India and Australia, and its membership of ASEAN which is seeking to form an economic community with free movement of capital by 2015. This means Singapore is further strengthening its position as a regional hub.

China could become the world’s biggest economy within a matter of years, and its real estate will soar no matter what cooling measure are introduced. Chinese will invest vigorously overseas, and Singapore is one of the potential hotspots on their radars.

Just three years ago Asia was just a major emerging market, one that supplied and manufactured goods for the West. But after the economic meltdown the picture has changed. The West is still in the grip of recession and everybody is expecting more bad news from Europe and the U.S. At the same time Asia is booming, leading many to realise the world’s economic centre of gravity is shifting from West to East. This also means a bigger flow of money from the West to Asian financial markets and properties, with Singapore likely to take a good share of higher end real estate money.

In Hong Kong, despite the cooling measures by the government, Li Ka-shing’s Cheung Kong Holdings paid a combined US$976 million for land plots, which was well above market expectations. A plot in Ho Man Tin covering 78,857 sq ft sold for US$526 million, way above analysts’ estimates of $479 million. Another site in Hong Hom, some 81,279 sq ft, went for $451 million, significantly above estimates of $312 million.

Throughout the region’s major markets, developers, investors and regular folk aren’t buying into the ‘cooling measures’ of their governments. Real estate in Asia retains its attractiveness for Asians themselves, and especially for Mainland Chinese. A few months ago I wrote in my article ‘China: A long term buy’ that the real estate market there is still performing strongly, simply because people there are in love with real estate and do not trust financial markets any more. And in fact, the Chinese real estate market is still performing strongly despite the aggressive cooling measures introduced by the government.

Governments in the region will probably have to intervene further and more aggressively, especially in China, so strong is the desire of people to buy more real estate. And on the back of that, rich Chinese will definitely continue buying property outside their home country, still prioritising Hong Kong and, to a lesser extent, the Singapore market.

Source Selected From :
Alex Shlaen an economist and holds an Executive MBA from Kellogg School of Management and HKUST. He is the founder of Panache Management Pte Ltd and represents ultra luxury branded products, furnishings and interiors by Tonino Lamborghini and Formitalia in South East Asia. He is also a serial real estate investor.

Malaysia, Singapore & Utd Kingdom Housing Statistics

Malaysia 

     House price change

     % change over a year earlier

	Q1	Q2	Q3	Q4
2009	0.25	1.69	1.09	0.24
2008	1.85	-0.13	2.33	-1.51
2007	-0.20	-0.04	1.55	0.89
2006	0.37	0.35	0.58	3.65
2005	0.56	1.47	-0.34	0.99
% change over a quarter

Source: Bank Negara Malaysia

Malaysia.

The Central Bank of Malaysia releases quarterly house price indicators covering the following types of houses: terraced, semi-detached, detached and high-rise unit. There are time series by area as well. Areas include Kuala Lumpur, Selangor, Johor, Pulau Pinang, Negeri Sembilan and Perak.

House price index (2000=100)

Singapore 

     House price change

     % change over a year earlier

	Q1	Q2	Q3	Q4
2010	5.61	5.26
2009	-14.07	-4.72	15.75	7.39
2008	3.75	0.17	-2.37	-5.19
2007	4.84	8.28	8.25	6.75
2006	1.52	1.75	2.70	3.83
2005	0.70	0.44	1.30	1.37
% change over a quarter

Source: Urban Redevelopment Authority

Singapore.

The Urban Redevelopment Authority release has various property price indices which differ by the type of residential units covered. These residential units are classified as follows: detached, semi-detached, terrace, apartment and condominium.

Residential property price index (Q4 1998=100)

Utd Kingdom 

    House price change

    % change over a year earlier

	Q1	Q2	Q3	Q4
2010	0.48	3.58
2009	-4.54	2.91	3.95	1.22
2008	-2.5	-2.70	-5.34	-5.06
2007	2.03	3.56	1.28	-0.09
2006	1.86	2.94	2.08	2.14
2005	0.21	3.08	0.08	-0.15
% change over a quarter

Source: Nationwide

United-Kingdom.

Nationwide is arguably the most reliable source of British house price data. Various time-series can be sourced from this agency such as regional house price series, quarterly and monthly indices, inflation adjusted prices, prices by type of dwellings. Data stretch back to as early as 1952.

Average house price