Archive for September 15th, 2007

Hey, idiots!

Natural selection at work.

From Straits Times, September 15, 2007:

“Tsunami alert draws crowds to beach

IN HARM’S WAY: Curious hordes of onlookers waiting along Gurney Drive in Penang, apparently to see if a tsunami would hit the coastal area. — PHOTO: THE STAR/ASIA NEWS NETWORK

KUALA LUMPUR – SCORES of curious Malaysians rushed to the beach to see a possible tsunami, despite a warning to stay away after a massive earthquake hit neighbouring Indonesia.

A photo in The Star, a local newspaper, on Thursday showed a large number of people standing along a promenade in the northern resort island of Penang, apparently waiting to witness a tsunami.

The report prompted a minister yesterday to urge people to stay away from the beach.

‘Don’t gather at the beach when the tsunami alert is issued,’ said Deputy Science, Technology and Innovation Minister Kong Cho Ha.

‘When we tell people to move away from the shore, some people purposely go to the shore to have a look. This is something that the people should not do,’ he said.

The promenade was one of the areas struck by the December 2004 tsunami when 3m-high waves pounded the wall. A total of 68 people were killed in Malaysia, most of them on the island of Penang.

Police criticised the onlookers for staying on after the tsunami alert was issued to the coastal states of Penang, Kedah and Perak soon after the 8.4-magnitude quake struck off the west coast of Sumatra island on Wednesday.

A tsunami never materialised, but local police chief Azam Abdul Hamid was quoted by The Star as saying: ‘Heed our warning. It is for your own good.

‘If a tsunami had really hit that night, those who lingered on could have been seriously injured or even lost their lives.’



S’pore housing market heads for correction

From September 14, 2007 Straits Times:

“Private home prices, which have surged to decade highs in the past 40 months, are holding for now, but analysts say the market is increasingly vulnerable to a sudden downturn in sentiment. — PHOTO: BT

SINGAPORE’S housing market – which has seen prices skyrocket amid frenzied buying – is heading for a correction, as analysts predict a building boom could flood the city-state with new homes by 2009.

Private home prices, which have surged to decade highs in the past 40 months, are holding for now, but analysts say the market is increasingly vulnerable to a sudden downturn in sentiment.

Global property investor LaSalle Investment Management, which has US$6 billion (S$9 billion) of real estate assets in Asia, says Singapore residential property is ‘fully priced’ and will consolidate before appreciating any further.

‘By global standards, Singapore luxury apartments are very expensive. At some point, affordability and common sense have to come in,’ said Jack Chandler, LaSalle Investment Asia-Pacific Chief Executive Officer.

Property developers and agents say fewer deals were struck last month, slowing a buying frenzy that saw people queue overnight for some projects and that pushed Singapore real estate price gains past those of regional rivals such as Hong Kong.

‘A correction is going to take place. The question is: how severe?’ said Winston Liew, analyst at OCBC Investment Research.

Singapore luxury homes fetched an average $16,743 per square metre (psm) in June, up 52 per cent from a year ago, against Hong Kong’s 13 per cent rise in capital values to $18,286 psm.

Those who bought property as a sure-fire investment are fretting.

‘I’m nervous because I don’t expect prices to rise anytime soon. The signals aren’t good,’ said Charles Wong, who paid S$1.1 million (US$728,000) for a one-bedroom downtown apartment in April.

Excess supply
Housing supply has been tight as developers tore down old developments to replace them with newer properties, pushing thousands of displaced homeowners back to the market.

According to Jones Lang LaSalle, some 3,876 private apartments will be demolished this year – more than the 3,295 new homes expected to come on to the market.

These ‘en bloc’ deals – where entire housing estates are knocked down – have slowed since the government tightened rules on them. Collective home sales totalled S$11 billion in the first seven months this year but dropped to S$783 million in August.

Property market sentiment has been supported by Singapore’s long-term goal to boost the island’s population to 6.5 million from 4.5 million, but analysts forecast a glut of new homes from end-2008.

‘In terms of actual occupants, there will be excess supply by 2009,’ said Jones Lang LaSalle Head of Research Chua Yang Liang.

He estimates there will be 11,975 new private apartments available in 2009 – nearly four times the number expected this year and double the anticipated amount in 2008.

Car garages in the sky
At least four out of five Singaporeans live in state-subsidised high-rise flats, leaving the private home market dependent on upper-income residents and foreigners.

Investment firm Emirates Tarian Capital is betting these foreign investors, who comprise nearly half the buyers in most projects, will focus increasingly on high-end homes.

‘Demand is going to be selective and for branded, quality projects where the quantity is limited,’ said Kunalan Sivapuniam, managing partner of the firm, which is investing in two high-rises including one 30-storey block equipped with individual lifts to bring owners’ cars up to each apartment.

Developers, who usually sell their projects in stages, have held off launching their units for sale in recent weeks.

‘If we feel the market is slowing, we’re not going to push the project only to have buyers back out later,’ Cheng Wai Keung, chairman of luxury home builder Wing Tai Holdings said.

Crunch time
Analysts say a global credit crunch could constrain Singapore property firms’ ability to offer liberal repayment schemes that allow buyers to make a 10 to 20 per cent deposit and delay the bulk of payment until the property nears completion.

These ‘deferred payment’ plans, introduced after a property slump in 2001, have been key to driving market growth, with up to 90 per cent of buyers in some projects opting for them.

In July, the central bank warned that delayed payments plans posed ‘additional risks’ to developers and their banks because of the possibility of default. Those risks have only grown with the US mortgage crisis.

‘If the cost of capital rises, smaller developers will find it harder to offer deferred payment schemes,’ said an analyst.

Singapore’s biggest developer CapitaLand said it would continue to offer such schemes ‘where appropriate’.

CapitaLand, City Developments and Keppel Land have posted strong second-quarter profits, driven by strong contributions from their Singapore businesses.

They should, however, be largely protected against a fall in housing prices as most have diversified into office property and housing developments outside Singapore. CapitaLand, for example, earns up to 80 per cent of its profit overseas.

‘Major developers have lower gearing, sufficient cash or unutilised credit lines to prevent a squeeze,’ wrote Deutsche Bank strategist Gregory Lui in a recent report. — REUTERS”