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Asian Property Prices Are Falling "As If There's A Global Financial Crisis"
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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That explains why France's treasury bonds are experiencing negative rates!
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"?
China may still be less f@cked than the US if the age-dependency ratio is any indication.
http://www.planbeconomics.com/2014/08/rising-age-dependency-ratio-for-ja...
china is the new...detroit?
But instead of shooting, they are known to kick with their legs and feet.
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.
Hmm, you know times are tough when the 0.01% start defaulting on their status symbols...
Have you seen the prices of real estate in Singapore? Even with the haircut, they're still in the upper atmosphere.
Time to load up on those 50 year Spanish bonds...
yep, cause if there is deflation, I'm sure I can trust the full faith and credit of a sovereign state.
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.
who coulda knowed?
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.
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.
Better those two than the asshole greens who would have taken down the whole Australian economy with their bullshit carbon tax.
Cartooner;
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?
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.
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.
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.
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.
V, seems to do a good job on this one. A few Rants.
Caravan To Midnight - Episode 114 The Guerrilla Economist, V
https://www.youtube.com/watch?v=Ejxx_dpzYO0
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?
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.
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?
Sentosa Cove: Where the dumb money goes.
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.
Sociopaths like to show off.
The REAL rich are the bookies who traffick the debt. Most home "owners" will be like Stanley Johnson.
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.
Alright, that one got me! As if....
I laughed out loud. Now everyone is looking at me like I'm crazy.
Crisis? But O said everything is awesome!
Crisis? But O said everything is awesome!
... Like the one we have been sweeping under the rug the last six years?
So is this a good time to buy one of those Hong Kong boxes?
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.
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...
Banzai, you just described Singapore.
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).
http://www.independent.ie/business/world/lvmh-shares-tumble-as-sales-of-...
If he continues his anti-corruption campaign we may see Cali houses also reflect the lower demand.
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. http://smh.domain.com.au/real-estate-news/foreign-buyers-sidestepping-firb-approval-20140901-10b1gd.html
"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."
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."
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.
So, what's wrong with a smoggy, crane-filled sunset off your balcony?
http://en.wikipedia.org/wiki/Sentosa#mediaviewer/File:Imbiah_lookout_vie...
But . . . but. . . but Banzai, they have such a nice fountain show at night!
Buy one city , get one free .
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..
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?
They're here to pave the streets.
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.
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!
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!
Jack Burton; I guess you know you are describing Communist China. Not 100% how Russian Investor look.
In the 1990s some former USSR Citizens spoke up about the terrible buildings put up by the Communist maybe including in places like Kiev. Ugly buildings that everyone hated build by central planning committees.
I guess you know if seems like President Obama is in this position now... especially with China owning the most LT Treasuries and who knows what other kinds of assets. Seems like I heard of two programs to bring US Citizens to the Cities Centers from suburban or urban dwellings.
http://www.america2050.org/megaregions.html
I heard the other program was One America, but all I can find is Volunteering, and Education
- I'm thinking Ghettos & Ugly Buildings
- Turn of the 20th Century wages were better in Cities than on the farm, but farming today employes very few employees in the USA
- China Has build many huge Industrial Cities with housing problems and low quality of life and huge pollution problems with air, water, and agricultural land
- USA already has many examples of dying cities, wasted industrial areas, prohibitive educational Costs (like China), probably... since Worker Rights made US Labor too expensive by 1979 (the Top)... US Labor Laws are getting softer to accommodate migrants and child labor... how else to reclaim & reinvigorate industrial areas
What else is Obama planning after Open Border (for 100 years now), Obama Care, Amnesty, H1B Visas to deflate US AVG Wages, Globalization of Finance, Production, Corporation Tax bases... You have to control the people not just with DHS & NSA Spying
- Individuals will lose freedoms & Rights, Credit & Debt will become control devices, Cell Phones control Devices, Border Crossings are control devices, Militarized Police are control devices, Ownership of the Press is control, Use of your Social Security Number for Business transactions, National ID Cards, Implanted RF-ID... this allows our Bankers & Creditors to control us.
Note: was going to add that now we have all these wars since 2001... no one is thinking and talking how bad Communism was, how bad China Was, How the Mafia took over Russia... and on and on. You'd think Communist took over US MSM Press. But No, it is just that it is all about Banking, Getting Cheap Labor, Getting Resources, Getting Off Shore Benefits everywhere. Neither China, Russia, UK or USA want it's dirty laundry out in Public.
Exactly Jack. This is one hole (social unrest) that the Authority is focused on. A hole with all its variants like the collapsing export machines that had fed on subsidies and need the dosages to stay alive.
So you see them patching the "hole" with all the erratic stimuli and masqurading with dubious econ stats. Also, the populace need diversions so therefore the "Japan Banshings" and forays in South China Sea.
It is a matter of who go down first EC, Japan, US or them.
Some results of that seen in Zhengzhou. Haven't seen riots, but the gov't is changing rules rapidly trying to support the market
http://worldcomplex.blogspot.nl/2014/08/are-ghost-cities-in-china-really...
Strip malls in formerly nice areas are eerie with all those empty store fronts. More every day in many formerly nice neighborhoods. Retail sales way down and profit margins slim to none. I don't see house prices rising anywhere where I live. Luckily, at least my area has not deteriorated [yet] despite this recession.
The only spending I see, esp the bigger items, is on credit.
It seems America and China have something in common.
They have a lot in common. Unfortunately for all of us, eventually theyr'e meeting in the middle, and then we're all fucked.
dupe
Can China Break? Yes it can. As the debate continues as to how stable china really is I wonder how bad might it get. Much of the recent growth in China after 2008 came from a massive 6.6 trillion dollar stimulus program that expanded credit and poured massive amounts of money into the system. This money encouraged expansion and construction with little regard as to real demand or need.
Now China finds itself in a credit trap. For years the people of China have had the habit of saving much of what they earn but the low interest rates paid at banks has not rewarded savers. With few investment options much of this money has drifted towards housing and driven housing prices sky high. The economic efficiency of credit is beginning to collapse in China and the unwinding of China’s giant credit spree could be very painful. More in the article below.
http://brucewilds.blogspot.com/2014/03/china-and-great-credit-trap.html
Nail. Head. This is exactly why the CCP aren't taking the Hong Kong voting thing lightly. In fact, it's all the fake bravado and saber rattling that shows just how fucking terrified those old bastards really are.
I found Singapore to be dull. Planned 'colorful ethnic' neighborhoods. The Li'l Islam neighborhood was actually seething with unrest ... a lot of unemployed guys in white shirts walking around looking angry with nothing to do. The food was not that great. I would take even Macau over Sing every time. Macau has some interesting old neighborhoods. Hong Kong is my favorite city on earth, for some reason.
Wow, didn't get impressed by Singapore. I was thinking a little about Malaysia, but it seems very commercial and for cheap living you give up some things or move out of the cities. I ran into a guy that used to live in Malaysia and he seemed to feel it was more Muslim than 50 years ago. Most governments are very strong, so I figure if you don't deal with them much it doesn't matter. But last year gave up on the idea of Asia for a while.
Hong Kong would not be as flat as Malaysia. I could see Hong Kong out of my price range completely, but probably most of these places are "Hot" and Singapore & Malaysia get the Smoke from slash burning in Indonesia.
Now we worry about the radiation in Seafood in all of these places and even South America.
Still Malaysia would have the most open land and possible low price rentals... Maybe try for the Hill Areas.
I just can't get into the idea of part time living in Asia or even Thailand. Just not feeling it.
Forget moving to a Muslim nation like Malaysia. Seethign with discontent and poverty. Every time they get riled up they pull out their machetes and start lopping off heads of their business people [who are mainly hard working Chinese] and foreigners; I know since I was there in 1988 when they had some serious Muzzie riots and I barely escaped. They were attacking every non-Muzzie they could find. Phuk dat. Have zero desire to return to Malaysia.
CheapBastard; Thanks for the take on this.
- Actually as you know... many of the Islands and much of South East Asia has Muslims... I don't know really how much radicalization of Muslims has occurred. In Southern Thailand the old Prime Minister seemed to be supporting poor people and Muslims with funding... after his Coup... the Southern Thai area near Malaysia began Rioting or Mass Terrorism or Mass Genocide at a small level.
- Clearly either they were Disenfranchised from greater Thailand or they were radicalized.
If you have Disenfranchised people... it seems you need to send money directly into their community while making sure that you are not funding radical or radical fundamentalist groups... not sure what was the story in Thailand after 2002 before the Coup.
- This reminds me of Social Programs in USA in the Depression... Use of Military against US Veterans protesting for payment on Authorized Congressional Bill... and the reason that FDR authorized Social Security after the history of US Hooverviles... and the Depression...
- and the event where US Banks would not Invest in the USA...
- Until war where there is a "Secret Agreement" that - "Government Guarantee's that ALL DEBTS will be Honored"
A. LOT. I noticed among Indonesians in Hong Kong they've almost all gone full headscarf in the last 6-8 years. Seems the poor are being radicalized into Islam and that radicalized Islam is spreading like a forest fire through Southeast Asia.
Good take dude. I laugh at all these fucking expats and Hongkies buying into cheap condo complexes in the KL suburbs. No wall high enough when the mobs come and the airport will prove a loooooong hard drive when the shit hits the fan.
Hong Kong's best days are behind it. The commies are making sure the civil service is completely corrupted and kowtows to the CCP. Since '97 nearly 1 million mainlanders have already taken up residence in Hong Kong making nearly 1 in 7 current residents a post-handover migrant. These are DISTINCTLY different from the migrants who came before the handover. Most Hongkies who fled to Hkg BEFORE the handover were fleeing from the ravages of the cultural revolution and are distinctly ANTI communust. The current crop of migrants are either commie party elite or low skill flotsam and jetsam. Either way, Hong Kong is fucked.
You have this nonstop flow of mainlanders driivng up the price of everything; real estate, basic commodities, everything. The 50+ million mainland tourists have turned our downtown areas into one massive fucking shopping arcade selling nothing but Rolexes, jewelry and frog brandname handbags.
I barely recognize the city anymore. Already working on my exit plan. It was good while it lasted, but all good things end and all that jazz.
It's a demand problem.
Chinese can live 30 or 40 families in one house.
They can thrive in close quarters better than most Mexicans or Puerto Ricans.
"The rental can't even cover the mortgage for these high-end investments - they want to offload but there are no takers."
Coming to a theatre near you...
FUBAR.
thats been the case in Australia for ever with negative gearing - basically the goverment lets you do a tax write off of any gap between rent and your interest payments, problem sorted.
On to the moon.
That is called Sched. E in the US
Fucking Chinese are right where we were in the 1920's when everyone was stock speculator.To bad they could not see the parallel with their awesome intelligence..but the biggest shame is this is going to hurt everyone else too in this globally connected market
Very smart, but not especially experienced wit certain things.
They have atleast 30% down unlike the Ninja shit the US was packaging. Yes, they have a bubble, but when it burst it will not wipe out their equity even in a 50% move. In the US, a 20% move will blow everything up including the moronic CDS's, ABS etc. In the east, they do not package mortagages and trade them as derivative products. They are nearly all plain vanilla. The Chinese are a lot more conservative than Wall Street.
There isn't always a bigger sucker, unless the government gets involved and subsidizes it.
You're all nuts. Benny (and now Yellin) told me everything will be OK. Be a consumer and enjoy life. Rates are cheap, just borrow more. Ride on and enjoy life.
https://www.youtube.com/watch?v=XNdagpIgItw
When the Asian property bubble bursts, as it will, the effect will be limited to the construction industry and some banks. It will not be systemic, since the mortgages have not been repackaged into securities and sold to pension funds. Everyone directly involved in the speculation will lose heavily and few others will be impacted.
correct. Its nothing like the property scam in the US. Down payment is minimum 30%.
Just another debt bubble popping.
Sentosa? If I wanted to be hot and humid with a good chance of being blown away by a hurricane I would move to Pensacola, Florida, and eat seafood, drink beer, and fish until the hurricanes or oil companies did in the northern Gulf of Mexico communities completely.
As if...? The fininacial system as we knew it died ~6 years ago. Now derivatives and money printing keeps the global fiat ponzy alive in the ER, hooked to ever moar until it all ends in a singularity.
exactly. The hallucination of the past 6 years eventually will end
What!?!?!???