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.

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