Asian Property Prices Are Falling "As If There's A Global Financial Crisis"

Tyler Durden's picture


With China's property developers slashing prices, piling on incentives, and still seeing sales slump; it is no surprise that demand from the top to the bottom across Asia is falling. As Reuters reports, even Singapore's Sentosa Cove (the man-made island resort billed as Asia's Monte Carlo) is eerily silent as the billionaires seem to be staying away with prices down over 20-30% in the past year. New mortgage business is down over 40% as "the rential can't even cover the mortgage anymore." As one analyst notes, "the tables have turned," adding rather ominously that, "The way prices have fallen, it's as if there is a global financial crisis."

China's property plunge continues...


Source: @M_McDonough

And appears to be spreading to Singapore... (as Reuters reports)

There's an eerie silence at night in Sentosa Cove, the man-made island resort billed as Singapore's answer to Monte Carlo and the only place in the country where foreigners can buy landed property.


Dozens of houses - complete with their own private yacht berths and multiple swimming pools - sit empty while few lights are on in the apartment blocks overlooking the marina, a few kilometres away from Sentosa's giant casino.


Prices in the gated community, where Australian mining tycoons Gina Rinehart and Nathan Tinkler bought properties, fell around 20 percent in the past year as lending restrictions and taxes on foreign buyers burst a bubble in the Southeast Asian financial hub's luxury real estate market.




"Some of the earlier buyers are likely to have bought at prices 20 to 30 percent above current prices," said Christine Li, head of research at property consultancy OrangeTee.


"The rental can't even cover the mortgage for these high-end investments - they want to offload but there are no takers." 




Some in the luxury property industry fear foreign buyers have gone for good.

But the problems are growing rapidly...

United Overseas Bank, Singapore's third-biggest lender, last month reported a doubling in its bad debt charges for the second quarter, saying a group of investors was struggling to service high-end property loans.


The number of residential properties being put up for sale at auction by banks after buyers defaulted on mortgages, known as mortgagee sales, quadrupled to 64 in the first half of this year from 16 in the second half of 2013, according to real estate agency Colliers.


"This is different from previous years, when owners' sales dominated auctions," said Joy Tan, head of auctions at DTZ.


"The tables have turned and we expect more mortgagee sales on the way."

As bad as it gets...

"The way prices have fallen in Sentosa, it's as if there is a global financial crisis," said Alan Cheong, head of Singapore research at property firm Savills.

And finally - summing it all up perfectly...

"Sentosa happens to be a development targeted at a time when the world was leveraging up but now that we have deleveraged, there is a much smaller pool of people who can afford it," Savills' Cheong said.


That, combined with the end of the "easy money" seen before the 2008 financial crisis, may mean the quiet on Sentosa Cove's streets is here to stay.

*  *  *
Nope, no state-sponsored mal-investment malaise here at all...

But do not fear - we are sure any fallout from this will be "contained"

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Mon, 09/01/2014 - 19:04 | 5169211 falak pema
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That explains why France's treasury bonds are experiencing negative rates! 

Mon, 09/01/2014 - 19:27 | 5169256 BandGap
BandGap's picture

Bizarro world mega saga continues. I am completely divested of bonds, only a few stocks (mostly miners) in the mix.

Fucking French bonds are "safe"?

Mon, 09/01/2014 - 21:55 | 5169691 markmotive
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China may still be less f@cked than the US if the age-dependency ratio is any indication.

Mon, 09/01/2014 - 22:19 | 5169768 Four chan
Four chan's picture

china is the new...detroit?

Mon, 09/01/2014 - 22:42 | 5169842 Ginsengbull
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But instead of shooting, they are known to kick with their legs and feet.

Mon, 09/01/2014 - 22:49 | 5169863 TeethVillage88s
TeethVillage88s's picture

China is the New US Banker.

Now you will have to get used to seeing Chinese Seals on your Invoices for Loans & Mortgages.

Oh and China would move to UN Chairmanship.

Mon, 09/01/2014 - 22:53 | 5169873 Keyser
Keyser's picture

Hmm, you know times are tough when the 0.01% start defaulting on their status symbols... 

Tue, 09/02/2014 - 07:36 | 5170425 bobnoxy
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Have you seen the prices of real estate in Singapore? Even with the haircut, they're still in the upper atmosphere.

Mon, 09/01/2014 - 19:56 | 5169345 thamnosma
thamnosma's picture

Time to load up on those 50 year Spanish bonds...

Mon, 09/01/2014 - 20:01 | 5169361 drdolittle
drdolittle's picture

yep, cause if there is deflation, I'm sure I can trust the full faith and credit of a sovereign state.

Tue, 09/02/2014 - 07:28 | 5170406 j0nx
j0nx's picture

Maybe all the Chinese are buying up the DC area RE. No drops in prices here to speak of. I keep waiting for it but so far it's still going strong.

Mon, 09/01/2014 - 19:12 | 5169224 Its_the_economy...
Its_the_economy_stupid's picture

who coulda knowed?

Mon, 09/01/2014 - 19:29 | 5169265 cart00ner
cart00ner's picture

Gina Rinehart and Nathan Tinkler moved in... there goes the neghbourhood.

Could explain why 60+% of ausie commecial realestate was sold to asians this year.

Mon, 09/01/2014 - 20:05 | 5169372 The_Prisoner
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Rinehart and Rupert Murdoch own the current Australian Government. They will be given cover during good times, protected during tumultuous times and, outright bailed out during hard times.


Mon, 09/01/2014 - 21:10 | 5169527 holmes
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Better those two than the asshole greens who would have taken down the whole Australian economy with their bullshit carbon tax.

Mon, 09/01/2014 - 22:05 | 5169727 TeethVillage88s
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Wow, another piece there. "Could explain why 60+% of ausie commecial realestate was sold to asians this year."

- $26 Trillion in US Assets owned by Foreigners
- 60% of Ausie Commerical owned by Asians
- If USA is at great risk, has junk bonds, Good Brand Names like Jack Daniels... why wouldn't Chinese buy into US Real Estate, Agricultural Land, Vacant Office Buildings, LT Treasuries, Federal Reserve Stocks...
- Aren't Military Weapons & Logistics Stocks available too for sale, this includes Telecommunications, internet & All Mainstream Media
- And who are the US Holding Companies that hold trusts and stock certificates & Bond certificates
- If Monarchies can run out of War Chests, then US Federal Government can run out of Fiat in a financial takeover or A-Cementric Warfare on Wall Street

Probably a waste of time to blame politics like Joe Biden, Eric Holder, and Mr. Obama

- Federal Budget Deficit was like $12 Trillion in 2008, now at $17 Trillion... the problem was Federal Spending much larger than $700 B TARP or QE
- DTCC, Depository Trust & Clearing Corporation does like $1.8 Quadrillion in Derivatives 2013 for USA according to their website I believe (must be cumulative I guess)
- DTCC is supposed to be the strongest member & stock holder of FED, so is in control of the Federal Reserve, who ELSE can buy into the Federal Reserve... European, Arabic, Israeli, South American & Asian Banks?

Mon, 09/01/2014 - 22:33 | 5169816 The_Prisoner
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Did you see me defending the Greens? You seem to be falling for the Australian version of playground-politics.

You seem to be incapable of understanding that because one points the flaws of one group it does not necessarily imply support for another group.

Assuming for one moment your false-dychotomy weren't false and I had to choose between Rupert Murdoch and Ebola, I chose Ebola. Rupert Murdoch is a zionist. He's not better than anything.

Tue, 09/02/2014 - 03:25 | 5170246 Lore
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I don't think he meant to imply any dichotomy. It's just a related observation, with which I concur: eco-fascists are another well-intentioned group led astray by false shepherds. It's important to keep them out of local politics, at least until they can be deprogrammed.

Tue, 09/02/2014 - 10:33 | 5170958 Jafo
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The Liberals aren't liberal, the Greens aren't green and Labor doesn't work.  That about sums it up.  Well, it did until the PUP turned up.

Mon, 09/01/2014 - 19:32 | 5169271 Carpenter1
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5 1/2 years of fakery and lies, added to the unpaid bills from 2008 = Total destruction in 2015

BTD'ers are guaranteed to get wiped out, since they buy every dip. Unless of course, this time it's different. 


Yep, that's the BTD'ers' bet right now, that and "I'll get out first. "


The two statements proving beyond a doubt you'll be one of the dead bodies when it's all over.

Mon, 09/01/2014 - 23:04 | 5169902 TeethVillage88s
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V, seems to do a good job on this one. A few Rants.

Caravan To Midnight - Episode 114 The Guerrilla Economist, V

Mon, 09/01/2014 - 19:34 | 5169277 Dr. Engali
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Whoa.... whoa... whoa, wait just a second. Falling prices? Is that how a market works when there's over capacity and no demand? Who would have thunk it?

Mon, 09/01/2014 - 21:33 | 5169603 cpnscarlet
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No. Falling prices is what occurs when a rare commodity is in great demand, but there are many more paper promises for them that can be written with none of that commodity ready to deliver.

This has been a paid political announcement from the World Gold Circus, The Federal Excess Reserve, Bundesbrautenbank, and The Clown Mercantile Exchange.

Mon, 09/01/2014 - 19:35 | 5169284 Quaderratic Probing
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If I put my life savings into one empty house and it goes up in value I should borrow money and buy more empty houses. I should tell all my friends to do the same. What could go wrong?

Mon, 09/01/2014 - 19:37 | 5169289 homiegot
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Sentosa Cove: Where the dumb money goes.

Mon, 09/01/2014 - 19:44 | 5169311 potato
potato's picture

Haha. Rich people, more than anyone (due to their hard work in moving up and dealing with idiots at every level), hate everyone, because they realize everyone is a dick. Why would they want to live in such close proximity to other assholes? That is beyond me. Idiots buy SEntosa Cove. The real smart ones get 10 acres somewhere secluded.

Mon, 09/01/2014 - 19:55 | 5169344 thamnosma
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Sociopaths like to show off.

Tue, 09/02/2014 - 03:39 | 5170254 Lore
Lore's picture

The REAL rich are the bookies who traffick the debt. Most home "owners" will be like Stanley Johnson.

Mon, 09/01/2014 - 19:58 | 5169356 BandGap
BandGap's picture

Call me The Oracle but Las Vegas, Atlantic City....aren't those gambling hot spots?

Casinos all over are taking it up the ass. Even the native American casinos here in the Midwest.

Here's a fucking headline - people are hoarding what little money they have and waiting.

Mon, 09/01/2014 - 19:38 | 5169298 toady
toady's picture

Alright, that one got me! As if....

I laughed out loud. Now everyone is looking at me like I'm crazy.

Mon, 09/01/2014 - 19:50 | 5169329 pelican
pelican's picture

Crisis? But O said everything is awesome!

Mon, 09/01/2014 - 19:51 | 5169330 pelican
pelican's picture

Crisis? But O said everything is awesome!

Mon, 09/01/2014 - 19:54 | 5169337 El Hosel
El Hosel's picture

... Like the one we have been sweeping under the rug the last six years?

Mon, 09/01/2014 - 19:55 | 5169339 thamnosma
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So is this a good time to buy one of those Hong Kong boxes?

Mon, 09/01/2014 - 20:36 | 5169446 Dr. Bonzo
Dr. Bonzo's picture

Hong Kong prices haven't budged. Rents are still rising. Zero change and you visit Immigration Tower any day of the week it's a constant flow of mainland monkeys getting residence cards. Looks like insteaed of "pacifiying" Hong Kong the CCP is just going to commit cultural genocide and flood Hong Kong with commie trash.

No end in sight to the Hong Kong bubble.

Mon, 09/01/2014 - 19:56 | 5169342 williambanzai7
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If you have ever been to Sentosa Island you will understand why I say whoever bought there purely as an investment is a complete moron.

Let me begin by just saying the view on one side is a giant container port and the other is a wonderful oil refinery in the distance. Call it a Bunker of Last Resort...

Mon, 09/01/2014 - 20:07 | 5169383 The_Prisoner
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Banzai, you just described Singapore.

Mon, 09/01/2014 - 21:32 | 5169598 CheapBastard
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The corruption crackdown by Xi Jingping is also having an effect. Many of those overseas overpriced houses and other luxury items were bought by corrupt officals with Mainland Gubmint Loot that the present leader, Xi, is clamping down on ... so I read. The Singpaore news cites that as one reason their luxury retail sales have dropped. (of course, that tax on foreigners who want to buy overpriced property is also a biggie).


If he continues his anti-corruption campaign we may see Cali houses also reflect the lower demand.

Mon, 09/01/2014 - 23:21 | 5169666 The_Prisoner
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Australian government is only happy to accomodate Chinese hot-money.

With the mining boom gone, the government is betting the house on Australia becoming the new money laundering capital of the world in order to compensate for the loss of capex-related GDP with financial-services.

If you are very rich, Sydney is the new Singapore.

Edit: Just saw this.

"Sydney estate agents say many property purchases by offshore interests are taking place without Foreign Investment Review Board approval, but have dismissed suggestions that those sales are driving up the broader prestige market.

Claims that foreign buyers are illegally buying established property have been made by Melbourne buyer's agent David Morrell before a parliamentary inquiry into foreign ownership.

Mr Morrell said agents were looking the other way when foreign nationals bought real estate in Australia in return for higher commissions."

Tue, 09/02/2014 - 03:54 | 5170270 Lore
Lore's picture

It seems to be the same in Canada: every scumbag is out to game the system. 

In Vancouver, race undercuts the discussion on real estate affordability (G&M, 31-July) 

"The sheer number of millionaire migrants who have poured into Vancouver is also compelling: From 2005 to 2012, 36,973 arrived in B.C. under the now-defunct immigrant investor program, which imposed a wealth benchmark of $1.6-million on applicants. Before being frozen in 2012, the scheme was the world’s most popular wealth-migration device, with Chinese immigrants planning to settle in B.C. submitting 65 per cent of all applications in 2011. Chinese domination of wealth migration to Vancouver is a statistical fact that belies widespread belief in other reservoirs of rich newcomers. B.C. admitted 30,013 millionaire migrants from Greater China (including Taiwan and Hong Kong) from 2005 to 2012. In that period, there were 242 from Britain and 160 from the United States. Thousands of the rich have also moved to Vancouver after first arriving in Quebec under that province’s own immigrant investor program. According to Ottawa, 90 per cent of Quebec’s millionaire migrants move elsewhere within five years, mostly to Vancouver. That likely adds 20,000 or more millionaire migrants to Vancouver’s tally in the 2005-2012 period."

Tue, 09/02/2014 - 03:32 | 5170253 Dr. Bonzo
Dr. Bonzo's picture

The whole "anti-corruption" drive thing is hugely overstated. I agree, there's a temporary effect working its way through the system from whateverthefuck they're doing at the moment, but don't take this shit too seriously. If they had real substantive reform the CCP wouldn't be getting its panties in a twist over Hong Kong holding free elections; they'd have financial disclosure laws in place and suddenly the spotlight would be on shadow banking sector and the mega trillions shlossing around.

Nah, it's just some pantomime for the peasants so they keep their pitchforks in the barn a day longer.

Mon, 09/01/2014 - 22:26 | 5169792 RockyRacoon
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So, what's wrong with a smoggy, crane-filled sunset off your balcony?

Tue, 09/02/2014 - 18:56 | 5173389 mickeyman
mickeyman's picture

But . . . but. . . but Banzai, they have such a nice fountain show at night!

Mon, 09/01/2014 - 19:59 | 5169358 limacon
limacon's picture

Buy one city , get one free .

Mon, 09/01/2014 - 20:06 | 5169377 fzrkid
fzrkid's picture

Fahk, I hope SG doesnt start to collapse as I am moving there this Wednesday..


MAS tied the interest rate to the fed fund rate so I can see the bubble at least filled if not increasing. Now if the FED raises interest rates and the variable rate loans in Singapore adjust I think there could be some negative consiquences. A recent article said something like a significant number Singaporeans have 65% debt or something like that..

Mon, 09/01/2014 - 21:22 | 5169568 q99x2
q99x2's picture

Jogging up in Lyndhurst today I noticed a lot of Chinese people. If they can't afford to buy mansions in their own country how are they going to continue buying them here?

Mon, 09/01/2014 - 22:37 | 5169826 Ginsengbull
Ginsengbull's picture

They're here to pave the streets.

Mon, 09/01/2014 - 22:46 | 5169855 TeethVillage88s
TeethVillage88s's picture

You might be right. They get Highway contracts in Ecuador... and even employ Ecuadorian Men. I guess they do a pretty good job.

But say if Obama started giving them contracts maybe he would use funding channeled to Tennessee Valley Authority and try to keep Americans from seeing who was in charge of the project.

Mon, 09/01/2014 - 21:42 | 5169639 Jack Burton
Jack Burton's picture

I like it when Middle Class Chinese show up at developers and property sellers front doors and throw a fucking riot because of the falling prices of hugely expensive apartments they bought on speculation.  The idea was that the hundreds of millions of country side people would have to move for work to urban centers and that they would need apartments, something those middle class with money could afford to buy on the ground floor and then sell to apratment hungry country folks just arrived to work in the city. Perfect! Except, country side people have few skills and command low wages, thus they can hardly afford cardboard huts, or flop houses with 20 men to a small room. Barracks for families, with hundreds in a military syle open barracks. This is where the new urban populations are living. Worse still, most city apartments were built to upper middle class standards, and thus expensive to even a middle income earner, WORSE, speculation bid up prices even higher. Speculation led to more building to sell to speculators. Fuck, you see where this is going?  Over built, over priced and lack of wage growth for the new Urban poor. No fucking demand, then collapse, then the riots.

I love people, and their belief that god has given speculators a right to high returns, and house prices can never drop. Riot on!

Mon, 09/01/2014 - 21:54 | 5169686 Son of Loki
Son of Loki's picture

Everyone expects a Bailout nowadays, Jack. Very few people accept responsibility for a bad choice, bad investment or what have you. It starts at the top and flows down ... the Dean of Princeton gave a lecture where I live way back when Paulson was trembling on stage and begging for his trillion dollar bank bailout. I was surprised when the dean said a bailout was a bad diea since no lessons would be learned and they'd do it again. He also said that attitude would 'trickle down' to where everyone would expect a bailout and accept little or no responsibility for their actions.


By Golley, he was right!

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