Well we’ve reported before on the fragility of Western Australia’s mining towns property values. Towns such as Karratha, Newman and Port Hedland have boomed because of two factors: the jobs and the shortage of land to build more accommodation.

Now the boom is at least temporarily on-hold, with no hiring going on at all in the mining industry and many contractors finding their hours cut or their contracts not renewed. How much longer are there going to be people willing to pay the average rental of $1800/week for an average Dampier house. As soon as those cash-rich tenants dry up you can be sure of one thing - that the average 3-bedroom house in a dismal industrial town and port 1550 kilometres north of Perth will not hold its “value” of $910,000.

Instead in might be worth looking further south at Geraldton, a real town, which does not live by mining alone. Sure the town has been helped by the mining boom: but if you didn’t have a job, you may just choose to live there. Geraldton is a regional centre with a sunny Mediterranean climate which is lot more gentle than the 50 plus temperatures places further north see in the summer. With a population of 30,000 its approximately 435 kilometres north of Perth. Tourism and agriculture is important here along with gold, iron ore, mineral sands and garnet mining. And a typical house only costs $300,000. The local Council expects the population to increase to 80,000 by 2020 which sounds sustainable.

The State government has just spent $400 million on Geraldton’s infrastructure including expansion of the port. The port is still over-loaded though and future projects include the $3 billion dollar Oakajee port just south of town. Other major projects include the $2 billion Square Kilometre Array which is a radio telescope. If Geraldon wins this project then it will also host the largest super-computer in the Southern Hemisphere to process the data. Who said there weren’t high tech jobs in the regions?

It appears that there is no shortage of land in Geraldton - which is what is keeping the prices in check, so you won’t get the spectacular capital gain that investors further north have enjoyed, but you also will not see the huge capital losses that the Pilbara will see if the mining boom stays on hold for more than a few months

Dubai's property bubble bursts

After months of press releases and government promises that there will be no such thing as a bubble in Dubai, the big boys of Dubai are finally saying, “Beam me up Scotty, I think I’m in trouble.”

“Trouble,” would be the understatement of the year, and the developers are making it clear they are not one whit interested in the fortunes of the smaller investor. Despite the recent introduction of laws written to protect smaller investors, Dubai’s property developers are thinking up new ways of avoiding any responsibility and screwing every last penny possible from the situation as fast as the new laws are passed.

MiNC, developer of Prodigy 1 in Jumeirah Village South has put a new proposal to their current investors:

Pay more than the agreed price, or we will cancel the project and keep your deposit.

The wording was slightly different, but that is what it amounts to. According to MiNC, two banks have withdrawn funding and “the project is no longer financially viable. Costs have increased to the extent that MiNC would make a significant and material loss if it were to build this project.”

Gulf News

It is actions such as this that will finally deflate what is left of the Dubai bubble. A lot of confusion is surrounding Article 11 under Law 13, which guarantees investors - “In the case of canceling the contract, the developer may retain 30 per cent of the ‘contract’s value’, and the rule of (30-70 per cent of the money paid) shall be applied on amounts exceeding 30 per cent.”

Key words here are “contracts value,” not “monies paid,” as the Article originally stated. Arguments abound and opinions are divided amongst those who feel that Dubai no longer needs outside investors and the emphasis of government intervention should be in favor of protecting the developers, and others feeling (as we do) that the smaller investor is vital if Dubai wishes to be anything more than a “Disneyland in the desert.”

As things stand at the moment, if a small investor defaults (as is starting to happen on a large scale), the developer keeps 100% of the money in some cases, and developers are simply refusing to answer questions or deal with inquiries. A number of smaller investors are attempting to band together in an effort to at least recover the “70% of monies paid.” One such group can be contacted here:

investorslaw13@hotmail.com

Elsewhere, prices are falling dramatically, with distressed properties being offered at 40% discounts on Palm Jumeirah, which is still massively over-priced. If falls in the US and Spain are any indicator, some analysts are expecting Dubai’s prices to fall anything as much as 60% in the next few months.

Other property websites are now starting to report on Dubai’s bursting bubble, and here is a selection:

Reuters - Dubai real estate suffers as distressed sales rise
AOL Dubai Property boom halts as prices fall and jobs go

According to Mohannad Sweid, CEO of Depa, some of Dubai companies are in “denial” about the viability of projects in light of the global financial crisis.

We are at the denial stage where lots of developers know for a fact that their projects should be cancelled and they’re either not announcing it or they’re saying it’s going to be delayed. We cannot deny the effect [the crisis] has been having, we are a part of this world and I believe it’s just not right to say we haven’t seen any impact. What we have had in the GCC in the last three years is the difference between reality and non-reality. Our market research showed there will be 280 new hotels built over four years within the GCC. That was advertised all the time… If we look at the reality - how many hotels have been delivered - it’s hardly more than five or six hotels a year.

In terms of risk to his own firm, Sweid was confident that infrastructure projects would still go ahead.

In this region, a lot of infrastructure is not developed yet and these elements of infrastructure have to be developed - it’s not a choice,” he said, citing Dubai’s new metro system as an example. He added that Depa was still on track for growth for next year, but the “fears” were for 2010 and 2011.

The real question is not whether the Dubai bubble has finally burst, but more how far it will deflate. With property prices quoted as having risen somewhere in the region of 76% over the last year, a major correction is likely. Already prices have fallen 40% in most developments, and we feel it is going to deflate a lot faster than it blew up.

Condo.com announced the recent addition of Fernando De Los Reyes as their new Chief Marketing Officer joining a rapidly growing team.  Fernando is responsible for both traditional and web 2.0 interactive marketing, advertising, brand management, public relations, media and business development. Prior to joining Condo.com, Fernando was Chief Marketing Officer for Fathead.com/Fathead LLC, a Quicken Loans company.

“Our vision for Condo.com is to be a global company and brand.  From our internet start-up beginnings just a few years ago, we are now the largest condominium marketplace in the world,” stated Richard Swerdlow, CEO of Condo.com.   “Condo.com is fast becoming synonymous with real estate success worldwide for consumers, agents, brokers and developers alike.  To ensure we accomplish this strategically, we needed someone like Fernando with his tremendous breadth of global branding experience to guide us.  We are fortunate to have him join our team and look forward to his contributions toward achieving our marketing vision,” Swerdlow added.

“I’ve been fortunate to have worked with some very creative and successful family-oriented consumer companies throughout my career like Nike, Disney and Cartoon Network, but what we do at Condo.com represents the biggest consumer-lifestyle, family investment and business transaction I’ve ever been a part of influencing globally,” remarked Fernando De Los Reyes.  “Condo.com has built an impressive team with tremendous energy and the sort of talent that any Fortune 500 Company would be thrilled to have.  Beyond the people and pace however, it’s the opportunity and innovation that’s taking shape in the online real estate industry that has me most excited to join the Condo.com team and inspired to execute our vision for Condo.com, the brand.”

Fernando De Los Reyes brings 20 years of Fortune 500 experience to Condo.com, having been a key marketing voice for Disney Consumer Products (DCP), where he was Vice President of Television Franchise Management, credited with getting TV shows like Hannah Montana into the DCP licensing pipeline. Prior to Disney, Fernando was Vice President of Marketing for Turner Broadcasting’s Cartoon and Boomerang Networks, Latin America.  During the mid and late 90’s, Fernando was Director of Marketing for Nike Soccer and Marketing Director for Capitol Records.

Fernando received his BA in International Relations from the University of California at Davis and attended the University of California’s Hastings College of the Law.

Tired of the doom and gloom of the world share markets and property? Don’t want to know that as of yesterday Australia’s share market was worth exactly 50% of what it was last year? Well I have a word for you: timeshares. The timeshare operators are in the market and are buying up big!

Accor Vacation Club is a major timeshare operator in Australia and has bought a swag of apartments in a prime Gold Coast building. AVC operates well-known brands such as Grand Mecure and Novotel.

According to The Australian newspaper:

it is buying 44 units in one line at what is believed to be a significantly discounted price.

AVC chief executive John Osborne declined to reveal the price paid for the Freshwater Point apartments but local agents said one-bedroom apartments in the Broadbeach complex had been selling for about $400,000 and two-bedroom units for between $500,000 and $700,000.

AVC bought 22 of each. Sources put the value of the deal at about $20 million.

This is not just any old apartment building in need of a refurbishment though. The developer Matthew Property Group had finished the building a year ago and the apartments are a mixture of one and two star apartments all rated 4.5 star. The property is prime real-estate located in the heart of Broadbeach and accross the highway from Jupiter’s Casino, the iconic destination for the Gold Coast.

It seems that times are good for timeshares - the Australian Timeshare and Holiday Ownership Council research shows that timeshare occupancy is running at over 94%. It may well continue to be strong to - especially in Australian’s decide to holiday at home on the back on the much weaker US$ which has dropped from US98c to US67c in less than 4 months.

The Gold Coast is a perennially popular family destination with that magic combination of theme parks, good beaches and cheap food - and Broadbeach is a a prime area of the Gold Coast.

AVC reports that all their properties have occupancy rates of better than 90% including properties Melbourne CBD, Snowy Mountains, Sydney CBD, resorts and Coffs Harbour and Cairns and Sunshine Coast.

It looks like the big player bargain hunter are entering the market: I guess anyone with cash who can afford to buy a significant percentage of a building would be in a great bargaining position with a cash-strapped developer. It works for the timeshare company to, as they normally like to own a fairly large percentage of the building so that they can cost-effectively manage it and control the day-to-day running of the property.

Conrad Jupiters Casino

Singapore’s Budget Statement for 2009 is eagerly anticipated. It is seen as pivotal to the outcome of both local and foreign businesses operating here in Singapore. As a matter of fact, it is so important that the Government has brought it forward to January 2009. The policies laid down in this Statement shall indicate the Government’s response in relation to the bleak world economic forecast for the year 2009.

Addressing a recent partisan assembly, Prime Minister Lee Hsien Loong announced that Singapore’s economy could possibly be negative next year. With the threat of slowing economic growth looming ominously on the horizon, PM Lee revealed the Government’s intention in expediently adjusting financial and economic policies to meet the global economic downturn by releasing the Budget Statement one month ahead of schedule.

Singapore pushes ahead with Infrastructural Developments

Expedient Response is Vital to Real Estate Value

Singapore’s ability to quickly respond to changing world economic conditions has done much to stabilize local real estate value. This was evident during the SARS epidemic and the Asian Financial Crisis. Back then, the Budget statement had also been adjusted to stimulate the economy and support jobs while strengthening the economy at the same time. As the Government was able to minimize businesses casualties, the demand for commercial properties dipped slightly.

Real estate stability here is an incidental result of the Government’s emphasis on helping companies cope with the challenges ahead. This not only safeguards jobs but in so doing, ensures that industrial, commercial, and residential occupancy rates remain at an optimum in relation to the economy.

As was previously projected, real estate value is not expected to see a dip beyond 10% in the coming year ahead. It is speculated that the Budget Report 2009 shall further consolidate this position in the face of weaker tourism and domestic exports.

Market Indicators

In its weakest showing since September of 2007, the Singapore dollar fell to a low of 1.5253 against the US greenback. As Singapore is heavily dependent on tourism and trade, a weaker Singapore dollar is seen as positive direction in securing competitiveness and maintaining economic stability. The MAS (Monetary Authority of Singapore), which plays a key role in regulating and adjusting its monetary policies is also expected to bring forward its policy review to further boost Singapore’s competitiveness as and when necessary.

In breaking news, Las Vegas Sands Corp is reported to have announced that it has raised enough funds to complete construction of the Marina Bay Sands. It says that it is halting its Macau and Las Vegas projects and therefore can proceed with Marina Bay Sands without assistance from the Singapore Government. The continuance of this development amid worldwide economic uncertainty highlights confidence in both local commerce and real estate value.

And in other local news, the government has announced that it will enhance schemes to help businesses here to secure loans from banks. Finance Minister Tharman Shanmugaratnam was cited as saying that the government will be announcing ‘enhancement of loan schemes that will involve risk sharing with the banks so that they maintain access to credit on the part of our companies’. As a point of note, the Government is more than able to do this as all the local banks in Singapore are semi-Government institutions.

Existing Policies in Place

Finance Minister Tharman Shanmugaraynam also addressed the issue of Singapore’s budget deficit for the year 2008. He was reported as saying that this deficit was expected to triple to over S$2.4 billion. Although this is much higher that what was initially expected by the Government, Tharman attributed this to ‘higher infrastructure costs, additional spending on procreation measures and lower revenues collected”.

Tharman reiterated the government’s stance on raising expenditures that will facilitate a more expansionary budget given the current economic slowdown. The funding for this deficit shall not come from trimming Government spending or raising revenues. He affirmed that the funding for this deficit shall come from last year’s S$6.4 billion Budget surplus. He maintained that ‘the larger deficit is an appropriate fiscal stance in the context of an economy that has entered a slowdown’.

History has shown that such Government policies have been very effective in countering economic slowdowns and buffering the impact of economic recessionary waves. Most countries in the region cut down on costs and brace themselves to face economic recessions, and then struggle to recover throughout the aftermath of such recessions. Singapore builds itself up during such periods in preparation of the conclusion of economic recessions.

Singapore’s proactive response by stimulating the economy and providing aid to businesses saves companies and jobs and in so doing, supports local the real estate sector. For when far less companies go under, occupancy rates remain high and, supply and demand for real estate remains stable.

On-line real estate classified market seems resilient in the face of turmoil elsewhere in the property market.

The REA Group’s new CEO Greg Ellis says that the Group will focus on improved profitability and improving the level of innovation in the coming year.

REA Group is planning a mobile website to compliment its flagship site realestate.com.au and is also looking at other new product development such as 3D imaging and adding video technologies to its site. That would be about time: their competitor open2view.com.au has had video walk throughs for years.

REA has had a good financial year so far with revenues up 45% to $155.6 million and nett profit up 48% to $22.3 million. And Mr Ellis says:

“There are no projected slowdown in the growth rates”

REA may be on to a good thing as it appears that, at least for now, on-line real estate advertising maybe a rare bright spot in the rather bleak economic forecast for the property industry as a whole.

Last week a report by Nielsen Online suggested that online media was becoming increasingly important to property buyers, sellers and renters. The percentages of these groups that admitted to doing on-line research were: buyers (87%), renters (85%) and sellers (79%). I’d love to know who the 21% of property sellers who do NOT check their house’s value online are: they could be a good deal waiting to happen for the informed buyer!

The most popular Australian property websites are still realestate.com.au and domain.com.au.

Spain head in sand not helping

For those with a property to sell in Spain, a recent report brings more doom and gloom to the Spanish markets. With the countryside littered with part-finished developments, and the Spanish government having been snubbed by most world governments recently regarding the recent summits to discuss the “financial crisis,”  the news keeps getting worse and worse. What many do not seem to realize or accept is that the Spanish property crisis is almost entirely home grown. Massive over-building combined with extremely lax regulations on developers, estate agents and mortgage brokers caused this crisis, not the world credit crunch. With what appears to be half the local government officials in Spain either already in jail or on the way, it’s about time Spain woke up and smelled the horse manure. Sticking one’s head in the sand and blaming it all on the “credit crunch,” is not going to resolve anything.

Spanish property prices need to fall by 23% to bring housing affordability back to its long term average, and return the market to normality, argues a new report out today from property consultants Aguirre Newman.

The report asks how much average Spanish property prices have to fall to bring the cost of housing in line with the long term average of 30% of household income.

Assuming mortgage financing of 70% for 30 years with a rate of Euribor (4.5%) plus 0.5%, for a property of 75m2 and a disposable annual household income of 21,259 Euros, the report concludes that prices must fall by 23%.

The report focuses on primary housing, so the conclusions do not necessarily apply to prices for second homes, especial in coastal areas. Second homes are a luxury that tend to suffer more than primary housing in economic downturns.

Whilst identifying over pricing as the main problem, the report also points out that the market is under added pressure from the credit crunch and falling consumer confidence as unemployment rises.

With the property market paralysed by high prices, Aguirre Newman expect a trend towards renting over buying, should property prices not fall.

To date renting has been an unpopular option in Spain, with less than 8% of households renting, compared to 35% in other European countries. Aguirre Newman recommends legal and fiscal changes to stimulate the rental market.

The report forecasts that rents will increase just above inflation, making rental property investments worthwhile with the right legal and fiscal changes.

Singapore’s Duxton Hill is renowned as a good place to stay while on a business trip to Singapore where the Berjaya Hotel Singapore is but a stone’s throw away from busiest business center. Unlike most other hotels in the CBD (Central Business District), it sits in a neighborhood with building structures reminiscent of the early 1900s.

Singapore's Duxton Hill - A Unique Presence Within The CBD

Who would have ever thought that a nutmeg plantation would one day be transformed into one of the most sought after niche real estate properties in Singapore? This is even more incredulous given that this plantation was later sold off and regressed into a crime-riddled slum. But thanks to the Urban Redevelopment Authority of Singapore, all the shop-houses in this area were selected for conservation and allocated for commercial use.

From it’s humble beginnings as a modest nutmeg plantation with nearly 2,000 trees, Duxton Hill has come a long way. No longer do people reside above the terraced shop-houses that comprise this small estate. A segment of these shop-houses have been procured by a hotelier while the rest of the units have been taken up by both day and night time businesses.

After Hours Entertainment

Duxton Hill is lined with 2 rows of small pubs. These refurbished double and triple-storey terraced shop-houses provide the ideal stopover for those that seek relief from a maddening day at the office. From secretaries to upper management, these individuals form the 1st shift that patronize these pubs between 5 to 7 PM - happy hours.

Duxton Road Pubs - A Place To Unwind After A Hard Day

As “clubbing” (patronizing pubs) has become a part of the lifestyle of Singapore’s elite, the ambiance of these outlets also attracts the young and affluent in Singapore’s privileged citizenry. This group of patrons make their appearance well into the night and hop from pub to pub until the wee hours of the morning where they have to be coaxed to allow pub owners to close shop. The variety of pubs in this location makes it more convenient to do this. But the night scene is not the only thing that Duxton Hill is renowned for.

Niche Restaurants

Also within this alcove on the outskirts of town, you will also find some exceptional restaurants. The Universal is perhaps the most famous restaurant reputed to serve some of the finest European dishes anywhere on the island.

Another well known restaurant would be the BROTH Bar Restaurant. BROTH, which stands for Bar Restaurant On The Hill, serves classic and novel Australian cuisine. They also have a wide selection of Australian and international wines.

The Uluru is another Australian restaurant that specializes in gourmet beef cuts and steak grills that reach 1,500 degrees C. These are but a few of the restaurants found in this area.

Office Space

Businesses such as architectural and advertising firms have flourished here at Duxton Hill. These pre-World War 2 units possess a distinctive charm unlike any office in a modern skyscraper. Such units are tastefully decorated to cater to the image that companies want project to their clientele.

A part of the CBD and yet distinctly different, Singapore’s Duxton Hill stands out as the location of choice when one seeks to set up shop and make an impression that lasts.

Brisbane Square, Queensland

The biggest investment listing of 2008 in Brisbane has been withdrawn from the market. Even so Brisbane, which has recorded $730 million in CBD sales is in marked contrast to Sydney. Sydney, according to Jones Lang LaSalle has only had a handful of commercial sales.

Westscheme has been privately marketing the two-year old Brisbane Square office tower but dropping yields and lack of investor interest has seen the agent’s admit defeat and withdraw the property.

Sydney’s only significant sale this year was Valad’s $136 million sale of 40% share of Goldfields House development.

Melbourne has done slightly better with Investa Property Group reporting sales around $332 million, reflecting four major commercial property sales.

In contrast Queensland has seen $800 million in sales in the September quarter alone. Investa’s Mr Cook is quoted as saying:

“there is still reasonable value in the Brisbane market and that the availablity sub-$100 million ticket price suited opportunistic high-net-worth private investors.

In two or three years’ time, as the market starts to turn around yields start to tighten again and rents go up a bit, those guys will take the opportunity to trade out and will do very well”

DTZ national research manager predicts that the fall of the Australian dollar may prompt more investment activity from offshore buyers in the coming months.

Though the question is really going to be - when? Most high rich individuals in Australia are heavily invested in the share market and some are therefore up to their necks in margin calls: something which is starting to show in high end residential real estate which is ending up on the market. Australia’s complicated superannuation and tax laws positively encourage those on high salaries to leverage their share investments and the fall-out from this could be long and nasty and will definitely reflect in high end residential property and commercial real estate for quite some time.

Discussion forums can be an excellent way of determining the true state of a market. Unfortunately, many so-called “discussion forums,” are populated almost entirely by real estate agents - and do not give a true picture. One of the research tools we use to sift through the sales pitches when discussing prices are forums. This is a brief list of forums that are populated by genuine people talking about the “for real,” situations they find themselves in. If there is a market I have missed that You are interested in, please drop me a line and I will see if I have one on my collection - Contact IPI.

Most of these do not have property for sale, and, on the whole, any forum that is based solely on property for sale is to be avoided.

India
Indian real estate forum
New Zealand, Australia, UK, USA
Property talk
Spain
Spanish Real Estate Forum
South of France
Anglo info Riviera
This company has a number of other sites with discussion forums - mostly around Europe, but also Singapore, Thailand and China.
Dubai
Dubai discussion forums
Skyscrapers
Skyscraper city
Luxury Property
The Luxury Property Forums

Unfortunately, much of the current discussions on most of these centers around property prices falling. If you are a cash buyer in any of these markets, these are good places to find a property investment bargain. If you are an indebted seller, expect no good news. Most of these forums also discuss non property related issues for English speaking expats.