Friday October 24, 2008

Property developers crash on negative Singapore real-estate, rental housing market outlook

This article belongs to the Singapore property market story arc.

bloomberg.com :

CapitaLand led Singapore's developers and property trusts lower after Goldman Sachs said office and retail rents will decline amid the widening global financial crisis and economic slowdown. Prime office rents may drop 40% by 2010 from the peak in Q2 2008, while retail rentals could fall 15% by 2010, Goldman Sachs analysts said, cutting their share-price forecasts for property developers by as much as 46% and property trusts by 49%. Grade A office rents peaked last quarter at S$18.80 a square foot a month for as vacancy climbed 1.2%. Prime rents were at S$16.10. Rents may start falling amid increasing supply - the Marina Bay Financial Centre will be completed in 2010, the biggest downtown property development in a decade.

Singapore's economy slid into recession for the first time since 2002, with the GDP projected to have declined 0.5% from a year earlier. The Singapore property market fell in Q3 2008, the first time in more than 4 years. The FTSE Straits Times Real Estate Index has dropped 56% this year, outpacing the 44% loss in the benchmark Straits Times Index. The share price of CapitaLand, Singapore's largest developer, has fallen over 58% in 2008.

- Sources say that the 40% drop in office rentals has already taken place, but the exact location and companies involved remain undisclosed. It might be more useful to look for an accelerating trend instead of a linear extrapolation, as the financial system meltdown continues to rippple faster and faster through the economies of the world.

I have two friends and fellow investors - one net short the local housing market, the other net long. I am more or less net neutral, being in a HDB flat, nearly halfway through the home loan - foreigners could pretty much consider it low-cost public housing. The bottom in the Singapore housing market could well come in at prices that would have been unbelievable just a short few months ago. Meanwhile I am sitting back and watching things crash.

See also :

1. Singapore property market losing momentum
2. Property prices softening fast in Singapore
3. Singapore property market boom ends : URA expects Q3 2008 private home prices to fall 1.8%

(2008-10-24 23:56:16 SGT) [Biz] Permalink

OPEC agrees to production cut of 1.5 million barrels a day from Nov 2008

bloomberg.com :

OPEC has cut oil production targets for the first time in almost 2 years to stem a collapse in prices. The 13 OPEC nations decided to lower supply by 1.5 million barrels a day from Nov 2008, oil ministers said today [24 Oct 2008] at the end of a meeting at the group's Vienna's headquarters. Crude oil has tumbled 57% from a July 11 record of $147.27 a barrel as the financial market crisis spreads, job cuts increase and fuel consumption slows. Prices fell as much as 7.1% to $63.05 on NYMEX after the decision. Another cut in December is "possible," depending on how the oil market reacts, Qatari Oil Minister Abdullah bin Hamad al-Attiyah said.

- The markets are going haywire, as NYMEX crude oil prices continued to fall through the floor even after the production cut. World markets are pricing in for a global economic collapse and for all we know, we might just get one. One of my favourite plays has got over $1.8 billion worth of NI 43-101 certified uranium resources in the ground, and if you look at that alone, never mind the other assets such as equipment and cash in the bank (over $6 million), at the current market cap of less than $6 million, it is going for a price/book ratio of 0.003.

The production cut was interesting, coming in exactly in the middle of the rumored 1 to 2 million barrels per day. What is more interesting is the way NYMEX crude oil prices fell after the decision. Price are going insane and all indications are they will get even more so.

See also :

1. OPEC announces production cut of 520,000 barrels per day
2. NYMEX crude oil falls for the third day to below $72 on recession concern
3. OPEC plans production cut as crude oil threatens to head toward $50
4. Sep 2008 OPEC oil output down 330,000 barrels per day to 32.47 million barrels/day

(2008-10-24 18:28:48 SGT) [Energy] Permalink

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