All Hail Kubes

[chaos theory]

It is time to give credit were credit is due. Kubes stuck to his predictions and it is pretty much spot on in timing and outcome.

Well Done Kubes. I think the following article which is previously postered:

4 Sites Relaunched For Collective Sale At Lower Prices
Source : The Straits Times, June 5, 2008

PropNex hopes 30% cut in asking price will attract buyers, as demand is 'still there'

Is a fundamental validation of his prediction as it is no longer just his personal biased views based on everyones personal data interpretation, it is a major development which is re-setting its price strategy to meet the market.

I am surpised how quicly this has happened. How low the market can go is now open for discussion. I think there are 2 more major shocks comming.

1. DPS contract maturity
2. Interest rate rises.

[Interest Rates]

Check today's ST back page in the Money section. It says the interest rates in Singapore are only going to go up...guess what that will do to property prices.....kick the dog when it's down...YELP!

Hail Kubes.

[Kubes.SG]

I am quite sure that there is a very strong correlation between en bloc sales pricing, transaction volumes and market sentiment, versus the same metrics in the broader residential property market and what happens in en bloc marketplace is followed in the broader property market 1 to 2 quarters later. I have not seen any analysis to confirm this, anyone? 

The full article below also highlights and re-confirms what I have been saying forever, and what many owners, speculators, promotors and other here just don't understand.  It is absolutely fundamental and basic economics:   The value of an asset is not the price the seller is asking for, but what the buyer is willing to pay.   

This blind faith and belief about "prices holding up",  "don't see prices crashing",   "where is the fire sale"  are the effect of the standoff between sellers and buyers - the expectations are too far apart and the gap is widening fast.

Yes and to the PP point just watch the panic selling start to happen in prime property market when the SG interest rates start to normalize ro 3% or 4%.  Better to write-off a few hundred thousand now rather than being bankrupted next year.

Also say that the murmurings are starting that the Fed will slightly increase rates soon.  Remember with the local press starts talking about things that might happen here, they are telegraphing the up-coming actions or policy choices.  Be warned.


4 sites relaunched for collective sale at lower prices

June 5, 2008

PropNex hopes 30% cut in asking price will attract buyers, as demand is ’still there’

A BOLD property firm is defying market trends with a renewed bid to sell four housing sites en bloc, even though the market appears dead for now.

PropNex Realty admits its move is ‘contrarian’ but hopes a hefty asking price cut of up to 30 per cent will attract buyers.  Even then, developers may not bite, given market uncertainties, property consultants say.

Some other sites were relaunched for collective sale this year, but none was sold. Any bids that did emerge were below the owners’ expectations.

PropNex is relaunching four sites: Cavenagh Gardens in Cavenagh Road, Novena Hill in the Novena area, Seletar Gardens along Yio Chu Kang Road and Hong Thye in Geylang.

‘We are trying to take a contrarian view,’ said the firm’s head of investment sales and commercial department, Mr Charles Chua. ‘We believe the demand is still there. Someone has to take the lead and kick-start the market.’

The four estates were first launched for sale around September and October last year. Their owners had since lowered their expectations, but not their reserve prices. This was the minimum sale price fixed when the owners first agreed to a collective sale.

In the case of the 130,000 sq ft Cavenagh Gardens, the asking price is now $450 million to $455 million, well down from $619 million in October.  Mr Chua hopes the prospect of combining the freehold site with an adjoining piece of state land will be an added attraction.  That will lower the price to as little as $1,481 per sq ft per plot ratio (psf ppr). Last year, the price was $2,308 psf ppr, excluding the state land. A developer could then sell the new units at about $2,200 psf, said Mr Chua.

Seletar Gardens is also heavily discounted now. The asking price is $50 million to $55 million from $75 million last year.  The asking price at Novena Hill is now at $42 million to $45 million, down from up to $60 million last year.  And the price tag on the Geylang plot has had about $3 million lopped off and is now going for up to $13 million.  However, even if the sellers have lowered their pricing expectations, there are other issues to consider, observers say.

‘It depends on how reasonable the seller’s price is. It is quite meaningless to lower just the asking prices and not the reserve,’ said a market observer. ‘If developers were interested in buying below the asking prices, they would already have asked for it.’

Most developers already have some projects on their books, so they may not be keen, said Mr Colin Tan, Chesterton International’s head of research and consultancy.

‘The issue is the construction bottleneck,’ he said. ‘For new sites, they have to consider rising construction costs, in addition to the risk of a declining market.’

Mr Karamjit Singh, the managing director of Credo Real Estate, which has handled a significant amount of collective sales, said developers would need a greater profit margin in the event selling prices soften even further.

Straits Times - 5 Jun 2008

[agent x]

yawn, This is all old news and doesn't mean anything. En-bloc is al about forward projections. 12 to 18 months ago all the 'wise' invest banks/develpers were saying private prop to go up 30 to 40% in 08 and x% in 09. That is how the en-blocs were valued. Expectations have been slashed since then and property stocks have tumbeled by 40%.
We are still in a consolidation phase where overprices developments are coming down and solid development hold or increase their value. the longer this state contiues, the worse it gets for en-bloc hopefulls. No new launches, no need for new land. But demand is still there folks. Just that sentiment is not favorable. Still hopefull that sentiment improves on the back of econmoic growth in asia later in the year. We will see

[interest-ing]

Interest rates can only go up??

Incredible analysis when the 3-month SIBOR is 1.3%.

They've got some way to go before they really hurt. Anyone with nous is remortgaging now for 2-3 years at below 3%.

[Agent XYZ]

Lets not get 'too excited' here.

First of all, here we have a guy praising himself whilst posting under a 'guest' name, then he logs in under the name kubes and congratulates himself.  definitely some issues there.

He works 'very hard' at talking down the market, very hard indeed.

We never know what is around the corner, although my sales figures are still encouraging, most buyers are holding off for now, but rental sector (not my area) is very robust.

Most investors can afford to see the quiet spell through.

There are still bargains to be had and lots of opportunities to be found.  Sales in the Golden Triangle are still fairly brisk although we are seeing signs of 'flipping' this last month what with the news of the massive development plans for the area.

Lets not get 'too excited' about prices falling 30%, it just isn't going to happen.

[Whats Wrong]

Agent XYZ - you find nothing wrong in your working 'very hard' to talk the market up, but find Kubes's efforts in the opposite direction to be strange?

Since the market is sleepy, did you consider the possibility of becoming a reviewer of 'brunches' and 'high teas' at '5 star hotels'? What with the incoming stampede of millionaires into Singapore, that might actually turn into a big business?

Replace Michelin with Agent XYZ stars! I am looking forward to it!

[chaos theory]

BM. I am happy for you to publish my IP address, to confirm to everyone that I am not Kubes.

I have nothing to hide and no vested interest other than I enjoy a good discussion about macro-economic policy and in this case its effect on property. My response to posters is as follows:

Most investors can afford to see the quiet spell through.

So now 1 developer is re-setting price expectations just watch the others follow suit.

Lets not get 'too excited' about prices falling 30%, it just isn't going to happen

It just has happened. How can you argue about a developer dropping the advertised price by 30%.

Interest rates can only go up??

Incredible analysis when the 3-month SIBOR is 1.3%.

They've got some way to go before they really hurt. Anyone with nous is remortgaging now for 2-3 years at below 3%

Yes they can only go up. US Fed has stated no more cuts. Indonesia & Malaysia has just increased theirs. ST story today confirms this. Thy are at the bottom of the cycle so up is only way now. Small increase on a low interest loan on a large amount hurts very quickly. That is SIBOR is 1.3% which is a very low base and inflation is running at 7%. SIBOR can double very quickly from a low base in high inflation envirnment. So someone who could borrow $1million yesterday can only borrow $500k tommorrow. Its called a credit squeeze.

But demand is still there folks. Just that sentiment is not favorable.

Demand = sentiment so this statement is not true.

[Agent XYZ]

Regarding lunches with clients, those are the 'perks' of my job as an agent.

All washed down with a couple of glasses of my favorite red - '04 Ramey Cabernet Sauvignon (goes lovely with the Fullerton's T-Bone by the way)

I have one Japanese investor with whom I meet on a weekly basis at the Fullerton over lunch. This young lady knows her wines. She has got me hooked on the stuff from Napa Valley !
 

[XYZ lookout]

I am at the fullerton everyday so will keep an eye out for agent XYZ and his japanese client. Will also check on the stock of wine and the amount of steak that gets consumed. If i spot an unusual high consumption trend we will know that the market is booming

[trustme]

I like how they call lowering there asking price 30% contrarian..I think a better phrase would be desperation..

[musicality17]

The original asking prices for these properties were unrealistic to begin with.  If you take Cavenagh Gardens as an example, they will have to sell at $3100psf to break even, if you consider their original asking price of $2300psf ppr.  This is a bit rich for a plot fronting a busy main road which is sometimes used for racing, and with the CTE as the backyard.  And by the way, $3200psf is the  price as the new Nassim Park Residences which is in a vastly superior location.

[To Musicality]

Ok, so if the developers stuck to the original asking price, and it went ahead, it would become proof of a robust market with sufficient base demand.

However, if the developers chose to reduce the asking price, then it means they were just bluffing with their original price, and it by no means reflects weakening sentiment, and reduced demand.

Hmm....Heads I Win Tails You Lose?

[To XYZ Lookout]

Yes please, can we all join in? I can't bear the "suspense" of waiting to see when the stocks "get depleted" in Fullerton?

The Urban Re Ministry announced that Agent XYZ's consumption pattern had direct one to one correlation with the Singapore property price, and decided to institute a new index:

RWRWF Index -
"2004 Ramey Wine and Red Wine at Fullerton Index"

If thats not convincing enough, we can always have the RWRWFXYZ index -
"2004 Ramey Wine and Red Wine at Fullerton Consumed by Agent XYZ" index 

[Cheers XYZ]

Lets not get 'too excited' here.

First of all, here we have a guy praising himself whilst posting under a 'guest' name, then he logs in under the name kubes and congratulates himself.  definitely some issues there.

He works 'very hard' at talking down the market, very hard indeed.

We never know what is around the corner, although my sales figures are still encouraging, most buyers are holding off for now, but rental sector (not my area) is very robust.

Most investors can afford to see the quiet spell through.

There are still bargains to be had and lots of opportunities to be found.  Sales in the Golden Triangle are still fairly brisk although we are seeing signs of 'flipping' this last month what with the news of the massive development plans for the area.

Lets not get 'too excited' about prices falling 30%, it just isn't going to happen.

You the man.

The coolest agent in town.

Not moved or sway by losers in this forum, great composure. People like FRI (Kubes), xyz lookout etc really look small against you.

By the way, i shared your sentiment of the market. It is not as bad as some people want it to be.

No, enbloc tender asking 30% lesser is not equal to new project launches asking 30% lesser. Get this facts right dont try to twist it.