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GLOBAL PROPERTY REVIEW

November 28, 2018

Singapore

 

Singapore’s property market continues to see upward movement, demand and office occupation through the summer and third quarter, even as economic news overall disappointed.

 

The city states economy grew 3 per cent in Q3, up from the 1 per cent from Q2 and lifting the year so far to 2.2 percent. 

 

But both Q3 and the year were far below the 4.2 per cent and 2.4 per cent, respectively, forecast by a Reuters poll.

 

Still, property writers have had a lot to cover so far this year - including the S$10.84 billion invested primarily in residential property in Q1 this year that was near-double the same quarter last year. 

 

Office rents in the last quarter increased for the sixth quarter straight, and are now just off the recent 2015 peak. Demand is higher and supply is tighter.

 

Grade A office rents in the Commercial Business District rose 2.3 per cent in Q3 against Q2, to average S$9.93 per square foot, JLL research found. This is just 6 per cent off of the 10.56 per square foot from three years previously.  

 

However, the rate of growth within Grade A CBD space is slowing - the 2.3 percent from last quarter is almost half the 4.2 per cent growth a year ago in the last quarter of 2017.  

 

Commentators have cited the dip in construction - down 2.3 per cent against Q2 - as a sign of further supply limits, but there is uncertainty too as to the impact of higher interest rates. Rents during Q2 recovered modestly on the back of fewer new completions and would-be primary market buyers looking to secondary.

 

 

 

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Beijing

 

Property is becoming a tricky asset class in the Chinese capital as a result of continued price growth that is challenging renters but also offplan developers. 

 

Rents in the city have risen around 21 per cent against a year ago, according to the China Real Estate Association, relating to the third quarter. High price rises are keeping sections of the population, particularly the young, from purchasing, yet at the same time, higher interest rates and more strict criteria on lending seek to prevent a further market bubble. Go figure.

 

Indeed, the impact on new mortgages in the city is startling. Outstanding mortgages rose just 9.6 billion yuan in the first half of this year, less than a tenth of the 103 billion yuan increase from H1 2017, figures from the Peoples Bank of China show.

 

In an attempt to help renter get on the property ladder, 10 new residential projects representing more than 4,000 units were slapped with a price cap earlier this summer, continuing a similar initiative from last year. So fat this has only received a limited response from pre-sale buyers, who still need roughly $441,000 at the outset to purchase a home. 

 

Around 45,000 price capped units are expected this year.  

 More credit from banks has been freed for public housing - around 67 per cent of the 40.8 billion yuan of outstanding loans for real estate in this year’s first half was for lower income accommodation.

 

Developers not only find profits challenged, but face increased supply overall. The government plans to sell more land plots that will double the developable area of the city, producing more apartments that is expected to take two years to soak up.

 

 

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Zagreb

 

The Croatian capital is one of the big success stories for price appreciation in Eastern Europe, as a limit on prime supply keeps enquiries coming into intermediaries. 

 

Prices have risen 10 per cent in October compared to the same month last year, a survey of online postings has found, representing a busy secondary markets as previous investors cash in  on recent rises. Foreign investors are also in evidence

 

Apartments are up 7 per cent in a year, with homes up 4 percent, according to the website Njuskalo. 

 

Separately, the average asking price of a new-build in the city was EUR 1,800 per square metre by the end of March this year, according to the Croatian bureau of statistics. This is up from the EUR 1,654 per square metre from the end of 2017, which itself was up almost 25 per cent from the proviso year. Prime areas such as Pantovcak are more than EUR 2,000 per square metre.

 

Much of the activity derives from a sudden opening of a market that has had little extra construction supply in the last few years. This has led some - such as Right Property Croatia - to entertain a doubt that such price growth is sustainable once new developments start to deliver. 

 

But that all depends on what is delivered. Recently built, but poor quality, accommodation has already lost capital value as buyers opt for better options. The city also competes with national rivals, such as Dubrovnik, which currently contains more of the most expensive real estate.

 

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