Demand for serviced apartments has picked up as companies continue to grow their operations in China, said Savills in a recent report on the forecast of the China real estate market. The report further added that international companies are still cost conscious when it comes to budgets only increasing them as much as is necessary to maintain accommodation levels.
Although the market has largely been dominated by first-tier cities, increasing interest – especially for short term rentals – is being witnessed in second-tier markets. Growing interest from wealthy Chinese business men and women has been noted as they become increasingly mobile and look to enjoy the comforts of home on the road.
The report said a slowing residential sales market has encouraged landlords to place their units onto the leasing market and thereby increased supply and competition in the strata residential market. However, the residential leasing market should remain fairly stable going forward, with Shanghai remaining a focus for many international companies. The pace of growth in demand should be large enough to absorb a significant amount of the new supply coming to the market.
For residential sales, the report stated that government measures to cool the market continue to dampen demand from end-users and investors, as potential buyers take a wait-and-see attitude toward the market.
The slower market means developer finances have been hit by falling transaction volumes and a tighter monetary policy framework putting pressure on many to start lowering their asking prices and scale back their expansion plans, potentially resulting in a supply shortage two to three years down the road.
New supply is increasingly coming to decentralised locations as developable land is core locations becomes limited, metro networks expand and prices in downtown locations become increasingly unaffordable, said the report.
The government’s regulations designed to cool the residential market are having a bigger impact on the mass market than the high-end market as buyers in the high-end market require less less leverage, concluded the report.
Tuesday, December 13, 2011
Saturday, December 3, 2011
China's Ordos property bust offers warning sign
ORDOS, China |
(Reuters) - The monumental, neo-Mongolian sculptures, empty plazas and hulking concrete shells of buildings in Ordos district, deep in the steppes of Inner Mongolia, are a potent symbol of how China's property boom can turn to bust.
Off the back of a thriving coal industry, the local government has been building a new city for one million people called Kangbashi. It sits virtually empty and property prices are falling.
Even in the old city of Dongsheng where people live and work, some 45 minutes drive away, a wave of investment has backfired. Cranes sit idle over unfinished skyscrapers and migrant workers are fleeing.
The swing in fortune -- residents and property agents say prices have dropped by up to a third -- is a severe example of what is happening in cities across China, including Shanghai and Beijing.
After a housing bubble that doubled values in 35 cities between 2004 and 2009, prices are now falling nationwide. The central bank said on Friday property prices had reached a turning point while banks are worried a price slide of 20 percent could trigger panic selling.
"People are worried. Especially if they have bought two or three apartments," said Yu Mingjun, a worker sitting in a down jacket at a ramshackle office of a half-completed project in the old town.
Beside him, a colleague played video games while outside, the few construction workers left on site chatted over a card game.
"Actually I am worried too. I can't decide what to do. I'm thinking of leaving here."
Top Chinese leaders have vowed to keep in place measures aimed at clamping down on the country's property inflation until prices return to reasonable levels.
But prices in Ordos have already fallen below the level that analysts say would cause serious problems if mirrored nationally.
Prices have plummeted 20-30 percent in certain property developments in Beijing and Shanghai.
Nationwide, the decline is so far more modest. Home prices fell slightly in October from September for the first time this year, official data showed, but private surveys indicated prices began falling in September and continued through November.
With local governments often dependent on land sales to fund payments on a staggering 10.7 trillion yuan of debt, Beijing worries that a collapsing property market will trigger a wave of defaults that in turn will hit the banks.
"If society demonises the property sector, especially if buyers think prices will fall, creating a sharp cooling of for instance 30-40 percent, I think that's very serious," said Hui Jianqiang, head of research for consultancy E-House China.
More worrisome, the property market, which contributes about 10 percent of Chinese growth and drives activity in 50 other sectors, could drag the real economy to a hard landing.
A pair of purchasing managers' surveys last week showed China's factory output shrank in November to the lowest level in three years, feeding worries about whether Chinese growth can keep powering the global economy.
A "SENSITIVE" PLACE
In empty showrooms of Dongsheng, Ordos' old city, saleswomen immediately offer 30 percent price discounts if a buyer is willing to pay for a property upfront and in cash.
Chinese and foreign media seized on Ordos as the prime example of wasteful and pointless government projects after the government built the sprawling new city of Kangbashi.
Investors view ghost towns like Kangbashi as an example of the sort of excesses that could pull hard on the reins of the country's growth.
On Thursday, a policeman shooed a Reuters cameraman away from the Wenming ("Culture") property development right near government buildings in Kangbashi, as workers bearing shovels walked in to demand their last payment before heading home.
"Kangbashi is a sensitive place now," he said.
China cut its required reserve ratio for banks this week, thereby freeing up more cash for lending. Many interpreted that as a sign that China had swung towards easing, although it remains unwilling to cut interest rates.
"The RRR cut is not a timely enough rain to water the developers' drying cash flows. But it signals a policy change and could help boost market confidence," said Zhang Yue, research head of Home Link, a Chinese real estate consultancy.
Many analysts expect Beijing to keep property tightening steps in place, including curbing bank lending to developers. Worried about inflation and a speculative bubble, officials remain wary of relaxing policy.
But local governments may not be able to wait. As developers cut prices, they will see a drop in demand for land sales, which bulk up their budgets. Falling revenues will give them incentive to quietly loosen restrictions on property -- such as rules limiting the number of homes families can buy -- in their areas.
"China's severe tightening measures have already reined in property speculation. They have also hurt healthy demand for first homes and second homes for better living conditions," said
Jiao Qing, president of Beijing Zhongkun Investment Group, a Chinese developer.
"Just like driving, once you have braked hard and brought the car to a sudden standstill, it takes a while to restart the engine."
QUIET LOOSENING
Governments in Beijing, Wuhan, and Hangzhou -- all places with more natural demand than Ordos -- have issued policies to help the housing sector in the past two weeks.
In Ordos, the government announced a bailout fund of between 7.5 billion and 10 billion yuan to support its beleaguered developers.
Still, that may not be enough. A commercial real estate agent, who only gave his surname Li, said that despite the government actions he was planning to return to his native Guangdong Province after six unsuccessful months in Kangbashi.
"There isn't much commercial real estate here. You need private businesses for that, and here it's all government money."
If Beijing can manage to orchestrate an orderly pull back in prices, policymakers need look no further than Dongsheng as an example of the future of the property market.
Typical of Chinese provincial cities, many of its 600,000 residents live in trim, low brick buildings that are dark, cramped and indifferently heated.
Their demand for better housing is likely to sustain China's housing market for decades to come, as long as a hard landing doesn't wreck the economy. But in Dongsheng, the restaurants are already noticing that customers are drifting away.
"The decade of explosive growth in China's real estate industry has gone. Developers must think about a shift in their strategies now and aim for the long term," said Jiao, of Zhongkun Investment.
"China can undertake a home price cut of up to 30 percent. But I'm not sure about what will happen beyond that."
(Additional reporting by Jimmy Guan and Xiaoyi Shao in BEIJING and Royston Chan in Shanghai; Editing by Don Durfee and Neil Fullick)
Thursday, November 24, 2011
Wednesday, November 23, 2011
Sime Darby’s Isola nearly sells out in a day
Sime Darby Property Bhd put up for sale 115 units of its latest offering, Isola, which is located in the renowned and award winning township of Subang Jaya. By the close of business on the first day of the launch 85 units had been sold.
Isola is a freehold development, consisting of two 16 storey tower blocks that house 216 units of centrally located and quality apartments. The units vary in size from 95.04 square metres to 383.96 square metres. The cheapest unit is RM679.888 (US$214,050) according to The Sun Daily.
The popularity of the units did not go unnoticed by Group Chief Operating Officer Datuk Abd Wahab Maskan.
“As we track with optimism the property sector’s outlook for the coming year, Sime Darby is confident its products would continue to match market and consumers’ needs in terms of right prices and sales requirements,” he said
The House Design of Sentosa Cove, Singapore for Reference
Building house on a small area in modern style isn’t as easy task as it could be. One more project by K2Ld Architects shows how to do that. It has everything modern house need: pool, open spaces around the house, 4 sides views from different rooms, a lot of big windows and transparency, marble floors, modern colored walls and so on. Although like other K2Ld houses it’s form differs from usual ones. It uses linear elements like others but they are accompanied by non-traditional elements. That all adds overall impression of uniqueness and diversity.
Read more: http://www.digsdigs.com/modern-house-at-small-area-in-sentosa-cove/#ixzz1eWCEen6n
The Design of the Newly Launched Bungalows in Klang Valley
Avalon II, USJ Heights Bungalow
Built-up: 4979sf, Freehold, RM3.5Mil (Approximately RM703/sf)
The Park @ Bukit Serdang
(Launching Soon)
Tuesday, November 22, 2011
Price Comparison of Bungalow Houses near Bandar Mahkota Cheras as at 22/11/11
The following are the selling prices of bungalow houses in Cheras within 3km radius from Bandar Mahkota Cheras as a guide for those who are sourcing for bungalows within the vicinity. The selling price for a brand new bungalow within this area is no less than RM500/sq.ft. and it's still far below P.J. and Kepong!
China property dip sparks bank fears
By Simon Rabinovitch in Beijing
The number of property transactions in China’s largest cities has fallen to dangerously low levels, according to regulatory documents obtained by the Financial Times.
According to the documents, the China Banking Regulatory Commission earlier this year ordered domestic banks to weigh the impact of a 30 per cent decline in housing transactions in “stress tests” aimed at determining the health of the Chinese financial system.
While the government has been trying to rein in sky-high property prices, a Chinese real estate slump would have a significant ripple effect on the global economy. Property construction accounted for more than 13 per cent of China’s economy last year.
In April the CBRC told banks to test their loan books against a 50 per cent fall in prices, and also a 30 per cent fall in transaction volumes.
In October, however, property transactions fell 39 per cent year-on-year in China’s 15 biggest cities , according to government data. Nationwide, transactions dropped 11.6 per cent, accelerating from a 7 per cent fall in September.
The fall-off in transactions has affected developers’ cash flows and, in some cases, their ability to repay bank loans. Rising defaults after a lending surge in 2009 and 2010, much of which ended up in the property sector, were cited by the International Monetary Fund this month as one of the Chinese financial sector’s biggest risks.
The CBRC has not released the results and declined to comment. But one analyst who reviewed the stress-test documents said they did not take into account the impact that fewer transactions and lower property prices would have on bank collateral.
“If developers can’t sell property and local governments can’t sell land, it’s hard to see why banks would be any better at either task under such conditions,” the analyst said.
Chinese regulatory officials admit privately that the tests need to be improved. One senior official said banks were often unaware that loans to big state-owned enterprises had been funnelled to real estate subsidiaries, and acknowledged that the impact on collateral had not been fully taken into account.
The weaknesses in the Chinese scenarios echo earlier problems with stress testing in the European Union, where regulators underestimated the potential impact of a sovereign debt crisis.
The fear is that the impact of a bursting of the Chinese property bubble could yield a crisis just as dramatic as the one now unfolding in Europe. Rising defaults after a lending surge in 2009 and 2010, much of which ended up in the property sector, were flagged by the International Monetary Fund this month as one of the major risks hanging over the Chinese financial sector.
While Beijing’s campaign to cool the property market has had its intended effect, some analysts worry that the government has underestimated the impact its measures are having.
The measures, including higher downpayments and restrictions on home purchases, have taken nearly two years to gain traction. But the concern is that the government will have trouble shifting gears quickly to respond if necessary. The fall in the number of in buyers is also beginning to weigh on construction, which could deal a blow to the wider economy.
Those knock-on effects were barely tested in the stress analysis. Banks were told to catalogue a series of property-related loans: to developers, for mortgages and to upstream industries like cement and downstream industries like furnishings. But the methodology imagines that while house prices drop, overall economic growth remains more or less unimpaired.
“Before property prices drop 30 per cent, one needs to think how much sales are down and, more importantly, how much construction is down. Not only will that impact on steel and cement, but it also would mean a drop in industrial production, investment and jobs,” one analyst told the FT.
Another Newly Completed Commercial Property in Bandar Mahkota Cheras - Mahkota Square
Mahkota Square, a stylish commercial project in Bandar Mahkota Cheras is now completed. It is located right next to Jusco. The original selling price was from RM1.47 million to RM3.3 million.
Visit the official site for more information.
http://mahkotasquare.com.my/
Monday, November 21, 2011
A Change of Perception of Today's Cheras
Today's Cheras is totally different from the Cheras we used to know 10 years ago. The younger generations here now are much more knowledgeable in terms of buying houses. They know exactly what a nice house is. Simply a bare big house concept doesn't work in Cheras anymore. They want modern design, practical layout and also neighbourhood.
Bandar Mahkota Cheras is one of the up and coming townships in Cheras. We have received a lot of inquiries on bungalow houses in Bandar Mahkota Cheras but there are no supply at all. Old fashioned houses with small layout and low ceiling are not in favoured. No matter how you renovate it, you will never achieve what today's modern design can give you. Moreover, the renovation cost is so expensive nowadays.
The modern contemporary and minimalist design with single pitch roof, high ceiling and full height glass panels are the design they are looking for. This is the trend in Cheras today. Just take a look at the newly launched projects like One Lagenda by Mah Sing, Taming Mutiara 2 (by Tanming) and Eastpark 72 (by Lion). Also, take a look at the design of the multi-million house in Singapore's Sentosa Cove, then you know what we mean...
(Left) This is one of the old houses available in Cheras. Be prepared to spend couple of hundred thousand to renovate it. If you solely renovate it, you can also never achieve the high ceilingeffect as given by the new design unless you demolish it and rebuild. If so, it definitely will cost you more! (Below) This is one of the modern bungalow designs that are in demand now. A simple and neat design that give you a lot of natural lighting and comfort.
Subscribe to:
Posts (Atom)