HONG KONG: Property investors are pencilling “second half, 2009” in their diaries as the likely time to start pouring money into China again as they search for bargains in its ailing real estate market.
But they are wary of slowing economic growth, overbuilding in some areas, difficult partnerships with developers and red tape.
Private equity fund manager Gaw Capital Partners is looking to raise up to US$1.5bil for Chinese property, while ING Real Estate is marketing a US$750mil fund it wants to launch in the first quarter of next year.
“I think it’s a good time to start looking,” said Goodwin Gaw, cofounder of Gaw Capital, which manages US$4.7bil of assets in 14 Chinese projects. “2009 and early 2010 could be a sweet spot.”
Many among the 540 investor groups at the MIPIM Asia property conference in Hong Kong last week pinpointed China as the market that would recover quickest from the global economic crisis because of growing domestic demand for housing and office space. And they are keen to raise funds to prepare.
Behind the enthusiasm is a hope that capital starved property firms will offer plum investment deals to foreign investors looking for internal rates of return of 25%-30%.
China has announced four trillion yuan (US$586bil) in fiscal stimulus measures, with 800 billion yuan going to low income housing and one trillion yuan on infrastructure spending.
While economists admit they do not know how much is new spending, they believe more steps are in the offing - probably tax and interest rate cuts and perhaps more spending in earthquake-hit Chengdu.
By Reuters
Tuesday, November 25, 2008
Investors scour Asian property marts for bargains
HONG KONG: Asia's battered property markets are starting to attract strong interest from investors, with Japan, Australia, China, Hong Kong and Singapore among their top picks in the region.
Property fund manager LaSalle Investment Management, which raised a US$3 billion (US$1 = RM3.63) fund in August, expects Hong Kong and Singapore to recover first from the financial turmoil, its regional director David Edwards said.
"We are seeing a decline in values throughout the region.
There are properties that are being sold at much lower prices than the market's perception of their values," Edwards said.
ING Real Estate plans to double its investments in Asia to US$1 billion, with most of its investors in Europe wanting to diversity into the region, said the firm's Asia Pacific managing director Nicholas Wong.
ING invested mostly in China and Japan, he said, and was now marketing a US$750 million fund to build Chinese housing.
Several Asian markets were already 30-40 per cent off their peaks, Wong said. And a Reuters poll last week found that analysts believe Hong Kong and Singapore prices are set to fall by at least a fifth in the next year.
"Most of our clients are from the UK and Europe and traditionally, they invest only at home," Wong said. "Now, they want global exposure and most of them want to go to Asia for diversification."
With Hong Kong, Japan and Singapore in recession, Asian developers are battling falling demand and tighter credit, even after efforts by central banks to encourage lending by slashing key rates.
"The risk of bankruptcies are still higher throughout Asia and most financial institutions are not out of the woods yet," said Kelvin Lau, economist at Standard Chartered Bank in Hong Kong. "That's why overall lending conditions have not yet returned to normal."
In Japan, more than 400 small and medium-sized developers have gone out of business this year as the residential market slowed and as credit dried up.
But the tough environment is not stopping property investors from prowling the region for bargains.
"The present environment is incredibly difficult. As a business, we are taking a cautious approach. But we are still looking," said LaSalle's Edwards.
LaSalle had so far invested US$10 billion in Asia and nearly half of the amount was in Japan, Edwards said. The company was also keen in Australia and China, he added.
Other investors were optimistic that some property segments would recover soon.
China's ailing housing market, for instance, may stabilise in about six months and recover in two years, before most other Asian countries, said Cheng Soon Lau, managing director at Invesco Real Estate Asia.
Invesco is planning to invest directly in China, Japan, Hong Kong and Singapore, buying office blocks and building housing.
Managers of securities funds are becoming less worried that investors will withdraw money, according to Chris Reilly, director of property for Asia at Henderson Global Investors. "Right now, there is really not much redemption," he said."
By Reuters
Property fund manager LaSalle Investment Management, which raised a US$3 billion (US$1 = RM3.63) fund in August, expects Hong Kong and Singapore to recover first from the financial turmoil, its regional director David Edwards said.
"We are seeing a decline in values throughout the region.
There are properties that are being sold at much lower prices than the market's perception of their values," Edwards said.
ING Real Estate plans to double its investments in Asia to US$1 billion, with most of its investors in Europe wanting to diversity into the region, said the firm's Asia Pacific managing director Nicholas Wong.
ING invested mostly in China and Japan, he said, and was now marketing a US$750 million fund to build Chinese housing.
Several Asian markets were already 30-40 per cent off their peaks, Wong said. And a Reuters poll last week found that analysts believe Hong Kong and Singapore prices are set to fall by at least a fifth in the next year.
"Most of our clients are from the UK and Europe and traditionally, they invest only at home," Wong said. "Now, they want global exposure and most of them want to go to Asia for diversification."
With Hong Kong, Japan and Singapore in recession, Asian developers are battling falling demand and tighter credit, even after efforts by central banks to encourage lending by slashing key rates.
"The risk of bankruptcies are still higher throughout Asia and most financial institutions are not out of the woods yet," said Kelvin Lau, economist at Standard Chartered Bank in Hong Kong. "That's why overall lending conditions have not yet returned to normal."
In Japan, more than 400 small and medium-sized developers have gone out of business this year as the residential market slowed and as credit dried up.
But the tough environment is not stopping property investors from prowling the region for bargains.
"The present environment is incredibly difficult. As a business, we are taking a cautious approach. But we are still looking," said LaSalle's Edwards.
LaSalle had so far invested US$10 billion in Asia and nearly half of the amount was in Japan, Edwards said. The company was also keen in Australia and China, he added.
Other investors were optimistic that some property segments would recover soon.
China's ailing housing market, for instance, may stabilise in about six months and recover in two years, before most other Asian countries, said Cheng Soon Lau, managing director at Invesco Real Estate Asia.
Invesco is planning to invest directly in China, Japan, Hong Kong and Singapore, buying office blocks and building housing.
Managers of securities funds are becoming less worried that investors will withdraw money, according to Chris Reilly, director of property for Asia at Henderson Global Investors. "Right now, there is really not much redemption," he said."
By Reuters
Property downturn not as bad as in 1997
The current down cycle in the property market is not as bad as the 1997 Asian financial crisis, said ECM Libra Capital Sdn Bhd.
"We are more inclined to see a moderate property downturn similar to the dot-com bust days in 2001. Although oversupply is evident in varying degrees in various sub-segments of the property market, indications are that the market is fairly resilient," it said in a report yesterday.
"With the exception of luxury condominiums, correction of capital values and rental of properties should be moderate," it added.
ECM Libra recently hosted a property talk and invited property consultants from Regroup Associates as speakers to shed some light on whether the Malaysian property market is resilient enough to ride out the economic downturn.
"We came away from the talk with reinforced belief that the current property downcycle is not as bad as the Asian financial crisis," it said.
ECM Libra also said a "crash" test was carried out, revealing that the risk of declining sales is moderate and not likely to crash, especially residential properties.
"Further risk of margin erosion is also minimal as building material prices have stabilised, and developers are in a better financial position now as leverage is half that of the 1998 Asian financial crisis.
"Besides that, property stocks are already trading at "mini" distressed valuation last seen in 2001," it said, upgrading its call on the property sector from underweight to neutral.
"Although there may be more negative news in the near term, we believe most of the bad news have already been priced in. We believe that the fundamentals of the economy and property market are stronger now and the current downturn should be more moderate," it said.
Prices of property stocks have fallen by 50 per cent to 70 per cent year-to-date. However, ECM Libra warned that the change in its stance is more of turning less bearish than turning bullish, as property stocks will still operate under challenging environment over the next six to 12 months.
Sunway City is its top pick for the sector due to its more resilient earnings from property investment as well as its undemanding valuation.
By Business Times
"We are more inclined to see a moderate property downturn similar to the dot-com bust days in 2001. Although oversupply is evident in varying degrees in various sub-segments of the property market, indications are that the market is fairly resilient," it said in a report yesterday.
"With the exception of luxury condominiums, correction of capital values and rental of properties should be moderate," it added.
ECM Libra recently hosted a property talk and invited property consultants from Regroup Associates as speakers to shed some light on whether the Malaysian property market is resilient enough to ride out the economic downturn.
"We came away from the talk with reinforced belief that the current property downcycle is not as bad as the Asian financial crisis," it said.
ECM Libra also said a "crash" test was carried out, revealing that the risk of declining sales is moderate and not likely to crash, especially residential properties.
"Further risk of margin erosion is also minimal as building material prices have stabilised, and developers are in a better financial position now as leverage is half that of the 1998 Asian financial crisis.
"Besides that, property stocks are already trading at "mini" distressed valuation last seen in 2001," it said, upgrading its call on the property sector from underweight to neutral.
"Although there may be more negative news in the near term, we believe most of the bad news have already been priced in. We believe that the fundamentals of the economy and property market are stronger now and the current downturn should be more moderate," it said.
Prices of property stocks have fallen by 50 per cent to 70 per cent year-to-date. However, ECM Libra warned that the change in its stance is more of turning less bearish than turning bullish, as property stocks will still operate under challenging environment over the next six to 12 months.
Sunway City is its top pick for the sector due to its more resilient earnings from property investment as well as its undemanding valuation.
By Business Times
Sales forecast for Magna City slashed
MAGNA Prima Bhd, whose luxury homes fetched record prices in Malaysia last year, slashed by almost half projected revenue from its biggest development as the global recession cuts demand for retail property.
Magna Prima will remove a mall and hotel from its Magna City project in northern Kuala Lumpur and focus on apartments, shops and offices, chief executive officer Lim Ching Choy said. He cut his sales forecast from the development to RM600 million (US$165 million) from RM1.1 billion.
“We have to reposition our direction,” Lim, 47, said in an interview yesterday in Petaling Jaya, outside Kuala Lumpur. The “downscaling” will help Magna Prima “manage sales according to market conditions.”
A worldwide recession has triggered real-estate slumps from the Netherlands to New Zealand, and IJM Corp and Berjaya Land Bhd are among Malaysian developers reported to have shelved projects. The Southeast Asian nation’s government expects the slowest growth in eight years in 2009, and Lim said it may be 18 months before the economy rebounds.
“The whole market is bearish on property stocks,” said Ang Kok Heng, who oversees US$156 million as chief investment officer at Phillip Capital Management in Kuala Lumpur. “They have a few choices, either you delay the launches, hold or scale them down to suit the conditions.”
Yesterday, Malaysia’s central bank cut interest rates for the first time since 2003 and lowered the amount lenders need to set aside as reserves to help shield the Southeast Asian economy from the global recession.
Shares of Magna Prima, based in the Kuala Lumpur suburb of Damansara, have fallen 59 per cent this year, outpacing a 41 per cent slide in the benchmark Kuala Lumpur Composite Index.
Still Profitable
Lim said the profitability of the Magna City project, scheduled to be introduced in the first quarter of 2009, won’t be affected by the cutback. He’s seeking a profit margin of between 25 per cent and 30 per cent from the development.
The recession might also offer takeover opportunities because valuations have fallen, he said. The company plans to double its cash reserves to RM100 million in the next 1 1/2 years for property acquisitions that can be injected into a real-estate investment trust, Lim said.
A slump is the “best time to make more money,” he said. “Land cost is reasonable if you have money.”
With the Magna City project scaled back, Lim plans to focus on building higher-priced homes. Demand for low-priced homes has been “drastically affected” by the slowdown, he said.
Bank loans approved for Malaysian home purchases in September fell to a seventh-month low, according to the central bank.
Economic growth in 2009 is expected to slow to 3.5 per cent from about 5 per cent this year.
Magna Prima will roll out two high-end residential projects worth as much as RM300 million each next year, and is in talks to acquire 2.5 acres (1 hectare) in Kuala Lumpur near the Petronas Twin Towers to construct an office building, he said.
Last year, Magna Prima sold the last unit in a luxury residential block in the center of Kuala Lumpur for a record RM2,100 per square foot. Space now goes for an average RM1,300 per square foot and above, according to Mervin Chow Yan Hoong, an analyst at OSK Research Sdn Bhd.
Magna Prima last week said third-quarter profit tumbled 85 per cent to RM1.1 million.
By Bloomberg
Magna Prima will remove a mall and hotel from its Magna City project in northern Kuala Lumpur and focus on apartments, shops and offices, chief executive officer Lim Ching Choy said. He cut his sales forecast from the development to RM600 million (US$165 million) from RM1.1 billion.
“We have to reposition our direction,” Lim, 47, said in an interview yesterday in Petaling Jaya, outside Kuala Lumpur. The “downscaling” will help Magna Prima “manage sales according to market conditions.”
A worldwide recession has triggered real-estate slumps from the Netherlands to New Zealand, and IJM Corp and Berjaya Land Bhd are among Malaysian developers reported to have shelved projects. The Southeast Asian nation’s government expects the slowest growth in eight years in 2009, and Lim said it may be 18 months before the economy rebounds.
“The whole market is bearish on property stocks,” said Ang Kok Heng, who oversees US$156 million as chief investment officer at Phillip Capital Management in Kuala Lumpur. “They have a few choices, either you delay the launches, hold or scale them down to suit the conditions.”
Yesterday, Malaysia’s central bank cut interest rates for the first time since 2003 and lowered the amount lenders need to set aside as reserves to help shield the Southeast Asian economy from the global recession.
Shares of Magna Prima, based in the Kuala Lumpur suburb of Damansara, have fallen 59 per cent this year, outpacing a 41 per cent slide in the benchmark Kuala Lumpur Composite Index.
Still Profitable
Lim said the profitability of the Magna City project, scheduled to be introduced in the first quarter of 2009, won’t be affected by the cutback. He’s seeking a profit margin of between 25 per cent and 30 per cent from the development.
The recession might also offer takeover opportunities because valuations have fallen, he said. The company plans to double its cash reserves to RM100 million in the next 1 1/2 years for property acquisitions that can be injected into a real-estate investment trust, Lim said.
A slump is the “best time to make more money,” he said. “Land cost is reasonable if you have money.”
With the Magna City project scaled back, Lim plans to focus on building higher-priced homes. Demand for low-priced homes has been “drastically affected” by the slowdown, he said.
Bank loans approved for Malaysian home purchases in September fell to a seventh-month low, according to the central bank.
Economic growth in 2009 is expected to slow to 3.5 per cent from about 5 per cent this year.
Magna Prima will roll out two high-end residential projects worth as much as RM300 million each next year, and is in talks to acquire 2.5 acres (1 hectare) in Kuala Lumpur near the Petronas Twin Towers to construct an office building, he said.
Last year, Magna Prima sold the last unit in a luxury residential block in the center of Kuala Lumpur for a record RM2,100 per square foot. Space now goes for an average RM1,300 per square foot and above, according to Mervin Chow Yan Hoong, an analyst at OSK Research Sdn Bhd.
Magna Prima last week said third-quarter profit tumbled 85 per cent to RM1.1 million.
By Bloomberg
Contruction boom is over for Dubai
DUBAI:The United Arab Emirates (UAE) began to bail out and consolidate Dubai's rattled banking sector and curb a building frenzy yesterday as the former boomtown started cutting state spending in the face of the global crisis.
In a major policy shift, the federal government will inject capital into Emirates Development Bank, a newly created rescue vehicle preparing to absorb merging Islamic lenders Amlak and Tamweel.
And in what marks the end of an era for Dubai, Mohamed Alabbar, a member of the emirate's ruling council, said the emirate would now pare its construction ambitions back in anticipation of waning demand after spending the past five years building as much property as fast as possible.
He assured investors the Gulf's regional financial hub of Dubai was able to meet its sovereign obligations.
By Reuters
In a major policy shift, the federal government will inject capital into Emirates Development Bank, a newly created rescue vehicle preparing to absorb merging Islamic lenders Amlak and Tamweel.
And in what marks the end of an era for Dubai, Mohamed Alabbar, a member of the emirate's ruling council, said the emirate would now pare its construction ambitions back in anticipation of waning demand after spending the past five years building as much property as fast as possible.
He assured investors the Gulf's regional financial hub of Dubai was able to meet its sovereign obligations.
By Reuters
Elegant designs
Lago, from Mobalpa's Tendance Collection, imparts a classic yet modern feel to any kitchen.
Cabinets set a kitchen's style and tone. Therefore, it is crucial to explore all your options before making the final decision.
Renowned French brand Mobalpa was founded in 1949, at Thônes, France, by Societe Fournier. The company is now 100 years old and has made a name for itself in three areas, namely kitchens, bathrooms and fitted wardrobes.
Working with wood is a tradition among the mountain dwellers of the region, which is dotted with alpine chalets built entirely of wood that, for centuries, have withstood the ravages of weather at its worst.
Mobalpa certainly benefits from this environment and from its time-honoured traditions. When it began, the company consisted of a modest workshop in which a handful of craftsmen produced solid rustic fittings for its local clientele.
In 1947, Mobalpa produced its first fitted kitchens, and has been producing fitted kitchens for over 40 years and customised bathroom cabinets since 1993. Development of the state-of-the-art techniques is devoted specifically to this activity.
Today, Mobalpa is the among leading makers of kitchen cabinets in France. There are over 40,000 homeowners in France whose homes get fitted with Mobalpa kitchens every year.
Mobalpa kitchens are available in three collections. These are the 100 % Design Collection which focuses on elegant, creative and contemporary designs, the Tendance Collection, which concentrates on classical, timeless designs and the Heritage Collection featuring country designs accented by the nobility of wood.
Check out the classic, modern feel of Lago. The beige kitchen has a unique combination of moulded lacquered doors. A wedged oak island unit doubles up as a food preparation counter or dining counter.
It is crafted for ample storage space. A mineral worktop complements its façade. Lago is a design from the Tendance Collection.
Managed by Advantage Resources Sdn Bhd (ARSB), the sole distributor of Mobalpa products in Malaysia, Mobalpa kitchen cabinets are showcased in its latest outlet in Damansara Utama.
By The Star
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