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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falak pema's picture

That explains why France's treasury bonds are experiencing negative rates! 

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"?

markmotive's picture

China may still be less f@cked than the US if the age-dependency ratio is any indication.

Four chan's picture

china is the new...detroit?

Ginsengbull's picture

But instead of shooting, they are known to kick with their legs and feet.

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.

Keyser's picture

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

thamnosma's picture

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

drdolittle's picture

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

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.

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.

The_Prisoner's picture

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.


holmes's picture

Better those two than the asshole greens who would have taken down the whole Australian economy with their bullshit carbon tax.

TeethVillage88s's picture


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?

The_Prisoner's picture

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.

Lore's picture

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.

Jafo's picture

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.

Carpenter1's picture

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.

TeethVillage88s's picture

V, seems to do a good job on this one. A few Rants.

Caravan To Midnight - Episode 114 The Guerrilla Economist, V

Dr. Engali's picture

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?

cpnscarlet's picture

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.

Quaderratic Probing's picture

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?

homiegot's picture

Sentosa Cove: Where the dumb money goes.

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.

thamnosma's picture

Sociopaths like to show off.

Lore's picture

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

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.

toady's picture

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

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

pelican's picture

Crisis? But O said everything is awesome!

pelican's picture

Crisis? But O said everything is awesome!

El Hosel's picture

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

thamnosma's picture

So is this a good time to buy one of those Hong Kong boxes?

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.

williambanzai7's picture

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...

The_Prisoner's picture

Banzai, you just described Singapore.

CheapBastard's picture

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.

The_Prisoner's picture

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."

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."

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.

mickeyman's picture

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

limacon's picture

Buy one city , get one free .

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..

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?

Ginsengbull's picture

They're here to pave the streets.

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.

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!

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!

TeethVillage88s's picture

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.

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.