Property prices around the world continue to decline as the financial crisis continues its way through the system. I don’t think anyone is under any illusions any more that we have not yet reached bottom. These are some headlines, although where bottom is is becoming more and more difficult to predict. With governments in disarray and it becoming clear that the banks have continued to disguise their true losses - even now. Available credit still presents a problem, and mortgage approvals are still extremely low.

Home prices in Ireland fell 1.1% in March, bringing prices down below 2004 levels.

Prices fell 3.1 percent in the first quarter and are down 10 percent from a year earlier, according to an index published today by Irish Life & Permanent. The average house price is now €253,546, the lowest since November 2004. The Independent

UK mortgage approvals fell 25.3% in the last year.

Hopes of a revival in Britain’s battered housing market were undermined today by data showing the number of mortgages approved for house purchase fell by 25.3 per cent in the 12 months to March. Figures from the British Bankers Association (BBA) showed 26,097 mortgages were approved in March, down from 34,920 a year ago. The Times

Property prices in Singapore fell for the third consecutive quarter. Developers are scrambling to bring their capital positions up to scratch. Singapore is facing the worst recession on record and even with stronger positions, future earnings are very much in doubt.

As property prices in Singapore continue to tumble, one of the country’s biggest developers posted disappointing earnings while another said it will raise capital to protect itself against the downturn. CapitaLand Ltd., Southeast Asia’s largest developer by market capitalization, reported first-quarter net profit of 42.9 million Singapore dollars (US$28.8 million), an 83% fall from S$247.5 million a year earlier, when the company recorded divestment gains of S$141.4 million. Revenue for the period fell 23% to S$487 million from S$631.3 million. Wall Street Journal

Property prices in Qatar have fallen a massive 70% since September last year.

Real estate prices in Qatar have retreated by 40 per cent to 70 per cent from their levels before the outbreak of the financial crisis in September 2008, said a recent survey. A state of stagnation and anticipation prevails, the survey showed. Business 24/7

Much the same as Dubai, the Qatar market has all but collapsed. Real estate prices in Dubai have fallen a similar amount and Deyaar is setting up a distressed property fund. Deyaar are now predicting no recovery for 3-4 years in Dubai which is rather at odds with the continuing flow of press releases stating a recovery this year.

Prices in Bulgaria are also declining and have reached 2006/2007 levels.

A recent report suggested that prices for property in Bulgaria had now dropped to the same level as it was back in 2007. There are no official statistics for this and the noticeable drop is simply based on listed selling prices between 2006 and 2007 and the fact that sale transactions have fallen drastically towards the end of 2008 and in the first few months of 2009. Bulgarian property

This is overly optimistic I feel, given that listed prices and sale prices often bear little relation to each other and there are now a fairly large number of properties for sale in Bulgaria on our free listing site. As an example, a plot of land overlooking the sea is only 35 euros a square meter.

Even Greenwich is not Immune - with a single property being offered at a 50 million dollar discount.

By any stretch of the imagination, fifty million dollars is a lot of money, but that is the price reduction on this Manor house in Greenwich, Conn.The house was originally listed at $125 million but has now been reduced to $75 million in what has to be the biggest discount in the history of luxury real estate discounts, putting even Donald Trump’s Florida mansion discount to shame (reduced by $25 million last May.) Luxury property

Tourist number continue to fall to Lanzarote, Spain, France and other tourist hotspots, bank financing is still scarce, and even the FNAIM have admitted property prices fell on the Cote D’Azur on the French Riviera. Tourist numbers to Paris and the Riviera are down 20% for February, and expected to decline more quickly in March and April and one of France’s largest banks, Society Generale is currently denying rumors that it will be forced to write off another E10 billion this year.France 24

Singapore has 2 new MRT Stations ready. The Pioneer and Joo Koon Stations saw some 5,000 people attend their Open House on Saturday (yesterday) which was officiated by Senior Minister of State, Ms Lim Hwee Hua.

Situated at the Western end of Singapore’s East-West MRT line, the official launch of these 2 stations shall do much to alleviate passenger traffic at Boon Lay MRT Interchange.

In the past, throngs of MRT commuters had to ply via public and private transport to Boon Lay MRT Station which was then the last stop in the West. Overcrowding at this station had been a very sore point for commuters these last few years.

New Underground MRT Station In The Heartlands

More MRT Stations On The Way

In line with the island’s massive civil infrastructure drive, the new Circle Line MRT route is very close to completion. According to Minister for Transport Raymond Lim, the Circle Line should become operational in as early as 30 May 2009.
The underground Circle Line shall serve commuters plying within the South-Central part of the island and is expected to greatly reduced above-ground vehicle and paedestrian traffic.

Singapore’s Strategy During A Global Recession

The Government had officially announced its plans to focus on intensive civil infrastructure works for the duration of the current global economic downturn. A massive S$20.5 billion was allocated to a new scheme dubbed the “Resilience Package” which places emphasis on expanding and accelerating public spending on infrastructure and developing suburban nodes and upgrading neighbourhoods.
At the expense of drawing from past reserves that results in a S$8.7 billion national financial deficit, this bold initiative allocates an additional S$4.4 billion to boosting infrastructure, health and education projects.

Impact Of New MRT Stations and Islandwide Upgrading

Whenever infrastructural improvements are implemented, real estate prices rise across the board. Though these prices have taken a beating these past few months, they are expected to rise sharply at the tail-end of this recession.

Holistic Approach to Maintaining The MRT

And though many jobs are expected to continue to be lost during the onslaught of this global downturn, the Government is working at a furious pace to create and offer new jobs for its citizenry.
As it stands, Job Fairs have been conducted across the island on a very regular basis. Government-sponsored Skills Upgrading Programs also come with these new jobs that are aimed at re-integrating retrenched professionals into new careers paths.
This strategy of keeping the National Unemployment Rate at a bare minimum ensures that MRT services shall not only be self-sufficient, but also profitable even during a severe economic recession.

Temasek Holdings’ investments fell 31% from S$185 billion to S$127 billion in 8 months. But why were these 8 months chosen to produce a statistical value? Aren’t statistics always based on quarterly, half-yearly and annually accumulated data? Why release this information (correct as of end November 2008) in the middle of February 2009, more than 2 months later?

Temasek Holdings

Temasek Holdings is a sizable Government-owned commercial enterprise that enjoys the support and backing of the Singapore Government. Unlike privately owned companies, Temasek Holdings doesn’t need to sell off its fixed assets during as recession. As a matter of fact, with the full support of GIC (Government of Singapore Investment Corporation), Temasek Holdings can even afford to acquire fixed assets at bargain prices during a recession.

Temasek Holdings’ CEO

News of CEO Madam Ho Ching’s impending resignation has sparked off a flurry of rumors. Under her stewardship, Temasek Holdings reported a phenomenal 13 percent annual rise in revenue for the year ending March 2008. But since then, speculation has been rife regarding billions of dollars that were supposedly invested in Merril Lynch since late 2007.

All investments come with a measure of risk. But as Madam Ho Ching is the wife of Singapore’s Prime Minister Lee Hsien Loong, the spotlight remains on her due to her high public profile. Though nothing is known of the actual reasons behind her resignation, coffee shop gossip remains a popular pastime in Singapore.

Temasek Holdings’ Other Investments

The Standard Chartered Bank, SIA (Singapore International Airlines), Singapore Telecommunications and, DBS (Development Bank of Singapore) Group Holdings are not the only financial concerns that Temasek Holdings has invested in. According to Bloomberg, other investments include UBS, Citigroup, Merril Lynch, Barclays and, ICIC Bank (India).

Summary

While Temasek Holdings has suffered a very heavy loss during this global recession, one mustn’t forget that it has had an average annual return on investment of 18 percent since 1974. Not many companies across the world share such achievements.

Temasek Holdings’ Chairman, Mr. S. Dhanabalan, remains one of the most respected and trusted businessmen in Singapore. A former Minister in Singapore Government, his exemplary track record for honesty and trustworthiness remains beyond reproach.

Madam Ho Ching’s reputation only came into question after she, in her capacity as Temasek Holdings’ CEO, managed to buy Thailand’s Shin Corp in 2006. This initiated problems not only in Thai politics but also in relations between Thailand and Singapore. Temasek Holdings’ recent report on losses amounting to S$5.8 billion has not helped her situation.

Singapore’s official private home price index slid 5.7% in Q4 2008 over the preceding quarter. For full-year 2008, the index fell 4.3%, reversing a 31.2%  increase during 2007. This is the Singapore real estate market’s worst performance  since Q4 1998 and property consultants are predicting a further decline of 10-20% in 2009, with luxury homes continuing to be the worst hit, as in 2008, this sector having seen the biggest increases over 2006/7..

‘The bid-ask gap is very high; any buyer that comes in now wants to make sure he’s buying at very attractive prices to cushion against future risk. As a result, most transacted prices are quite distressed,’ said DTZ executive director Ong Choon FahBT understands buyers are looking at prices at least 20% below Q3 2008 levels before they are willing to commit.

URA’s non-landed private home price index for Core Central Region (CCR) fell 6.3% quarter-on-quarter in Q4, or a full-year drop of 5.5%. CCR includes the prime districts, financial district and Sentosa Cove. In the Rest of Central Region, the price drop was 5.5% for Q4, and 4% for the full year. Outside Central Region, a proxy for suburban mass-market locations, suffered the smallest declines, of 4.7 % in Q4 and 1.6% for the  year.

The declines in URA’s indices were far smaller than the price drops estimated by property consultants, probably due to lack of sales volumes, with sellers continuing to hold out for unrealistic prices. CB Richard Ellis said that last year, average prices of new luxury homes under construction fell 30 to 35% for prime districts 9 and 10, while those in Marina Bay and Sentosa Cove eased 10-13%.

URA’s price indices are also weighted according to the moving average mix of transactions for the preceding 12 quarters, and this tends to make changes in the indices more muted during sharp market swings.

For this year, JP Morgan analyst Chris Gee said: ‘The critical factor that will affect private home prices in 2009 - probably more importantly than the economy and jobs market - will be banks’ financing of property. Banks seem happy to lend to the right type of buyers, but they’re more conservative on valuations and tighter on loan-to-value.’

Smaller property developers have already started to cut prices. ‘Among bigger developers, some are restructuring their portfolios and re-evaluating their risk positions,’ DTZ’s Mrs Ong noted.

A seasoned developer pointed to a diversity of strategies among developers, according to their financial strength, profit margin for each project and their view of when the recovery will take place. ‘Some will cut and sell; some will package things that effectively give more discounts; some will lease instead of selling; some will just sit it out and wait for better times.

‘Projects will be slowed down or delayed, stretching out the supply coming into the market, which in itself is a regulating mechanism,’ he said.

In the public housing segment, the Housing & Development Board’s (HDB) resale flat price index still inched up 1.5 per cent quarter-on-quarter in Q4 to scale a new peak. But this was slower than the 4.2% rise posted in Q3.

ERA Asia Pacific associate director Eugene Lim said: ‘We’ve been seeing more transactions with decreasing cash-over-valuations (COVs). The days of transactions with above $50,000 COVs are over.’

He is predicting a sub-1% rise in the HDB resale flat price index for each of Q1 and Q2 this year. ‘If the recovery takes longer, we may see the price index flatten in H2 2009 before decreasing, if the situation worsens.’

Knight Frank director Nicholas Mak predicted a 5 to 10% correction in HDB resale flat prices this year, as the weakening economic conditions filter into the HDB market.

ERA’s Mr Lim noted that ‘in uncertain times, home buyers go for the ’safer’ option of HDB flats to ease their financial burden’. He estimated 30,000 to 31,000 HDB resale transactions were done in 2008 - surpassing the 29,436 in 2007.

As for the private housing sector, CBRE predicted developers may sell 5,000-6,000 units in 2009, as falling prices boost take-up. It put the figure for last year at 4,300 to 4,400 units - just 30% of 2007’s record volume. Sales also slowed in the secondary market. CBRE estimated about 7,400 to 7,600 resale deals were done last year - against nearly 21,000 transactions in 2007. The 1,600 to 1,650 subsale deals it estimated for 2008 were also a far cry from the 2007’s figure of 4,863.

URA press release