CHINESE property developer Yanlord Land Group recorded 26.1 billion yuan (S$4.8 billion) in total contracted presales from residential units, commercial units and car parks for the first nine months of the year.

The presales were for a contracted gross floor area of about 1.02 million square metres (sq m) and were 51.7 per cent lower than presales for the year ago period, the group said in a bourse filing on Tuesday (Oct 10).

Presales include those by the group, its joint ventures and associates.

Yanlord Land’s total contracted presales for September was down by 83.2 per cent to 1.6 billion yuan for a contracted gross floor area of 67,835 sq m.

In its unaudited key operating figures for the nine months ended Sep 30, Yanlord Land said it has approximately 2.6 billion yuan of subscription sales, which are expected to be turned into contracted presales in the coming months.

Five cities in China – Nanjing, Suzhou, Shenzhen, Jinan and Tianjin – accounted for about 59.5 per cent of total contracted presales for the first nine months of the year.

For the first six months of 2023, Yanlord Land posted a net profit of approximately one billion yuan for the half year ended June 2023, down 20 per cent from the 1.4 billion yuan a year ago.

Property prices in China have slumped amid worsening business sentiment as property giants Country Garden face potential debt default and Evergrande Group aims to restructure US$22.7 billion of offshore debt.

Source : TheBusinessTimes

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Clearance rates at 60 per cent or above usually mean prices are rising, while anything below indicates falls.

The lowest clearance rates across greater Melbourne included the inner suburbs (57.3 per cent), inner south (56 per cent), south-east (55.5 per cent), west (49.8 per cent) and Mornington Peninsula (52.2 per cent).

Christopher said these price falls showed vendors were compromising on price to get a sale over the line.

“It is slowly swinging towards a buyers’ market and our forecast for Melbourne is a modest to moderate decline in house prices to continue [in 2024],” he said.

While the market has changed, it’s not all smooth sailing for buyers. Higher interest rates and cuts to borrowing power make it tough for some to make an offer.

CoreLogic’s head of residential research Eliza Owen said conditions were still tough for buyers, who wanted to borrow enough to get into a market where house prices were still high.

However, they, and home sellers could be in a much better position next year if interest rates fall.

“Depending on whether interest rates fall and how much they fall, we may see a flurry of transaction activity when that reduction in the cash rate begins,” Owen said.

Jellis Craig Stonnington partner Michael Armstrong believed Melbourne’s market had shifted in favour of buyers, but only for certain types of properties.

Renovated or new homes are still selling quickly, Armstrong said. There were fewer of these properties on the market, so listings attracted more competition from buyers.

 

Apartments or homes in need of work were offering buyers more time to negotiate and less competition, he said.

“The sale of unrenovated stock is more in favour of buyers because they take a little longer to sell, and buyers can get a better deal – same with land value properties [tear down and rebuilds],” he said.

The changing market has been both a blessing and a nervous time for Danielle North and husband Nick Stebbing, who benefited from the conditions and managed to buy a family home in Brunswick last weekend.

But the couple, both 47, plan to sell the Kingsville house they have owned since 2008, and plan to update it first, to make it more attractive to potential buyers.

 

“I am really nervous about selling,” North said.

“It’s not in a fit state to sell,” Stebbing said. “We’ll have to get a bridging loan to get things moving, and fix it up over the holidays.”

While they were happy with their Brunswick buy, closer to their children’s school, rate rises cut their budget and meant they had to adjust their expectations.

“We had to lower our standards,” Stebbing said. “Mostly places in our price range were not in a good state,” North added.

Wheatley Finance’s Andrew Wheatley, who helped North and Stebbing buy their Brunswick home, said some buyers had to rethink their approach to the market because of higher interest rates.

Some were being forced out of the market, as they couldn’t qualify for a mortgage, meaning there is less competition for more affordable properties.

“In the desirable suburbs of Melbourne, it feels like nothing’s changed,” Wheatley said. “But if you move to what first homebuyers are looking at, properties with a price range of $400,000 to $750,000 like a two-bedroom apartment or a townhouse, or a new build in the outer suburbs, there’s no rush or pressure to buy. I’d say it’s more of a buyers’ market.”

Source : TheAge

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WASHINGTON, Dec 8 (Reuters) – More U.S. commercial property owners are expected to turn to commercial mortgage-backed security (CMBS) lenders next year instead of banks, according to a new Moody’s report.

Elevated interest rates, volatility in property values and weakened cash flows have led to tightened lending standards by banks and other commercial real estate (CRE) lenders through 2023.

Many new and existing borrowers are instead turning to CMBS, which pool individual loans and which have seen continued demand from investors focused more on the overall credit quality and yields of those securities’ loan pools, according to a Moody’s report published Wednesday.

Multi-loan (conduit) and single-asset, single-borrower (SASB) CMBS loan issuance has declined overall this year from 2022 levels. But the second half of the year has seen a spike in SASB and CRE collateralized loan obligation (CLO) issuance, Moody’s found.

About 19% of $42.3 billion in performing CMBS conduit loans maturing next year carry high default risk. But CMBS investors, attracted by 10% or greater yields on these loans, will help them achieve refinancing even as lenders have gradually required lower outstanding loan balances as a percentage of property value.

Landlords have struggled this year to keep up with rising coupon rates on mortgages, which most recently averaged 7.21%. That is double the average rate of 3.62% in 2020, according to Moody’s.

The hardest-hit commercial properties have been offices, which have experienced rising vacancies since more employees began working from home during the coronavirus pandemic.

About $12 billion in CMBS conduit loans maturing this or next year have already entered delinquency or special servicing, in which a third party helps the borrower work out a solution to avoid default.

While overall CMBS property yields will remain elevated in 2024, roughly $14.7 billion in SASB CMBS carries yield less than 8% and faces greater challenges to refinancing.

In the event of trouble refinancing, these and other CRE loans will face low interest from buyers. Moody’s expects transaction levels to remain low, matching 2021 levels, as wide bid-ask spreads between buyers and sellers have led to lower sales prices.

Borrowers’ debt service coverage ratios – their ability to make debt payments – have also declined closer to one-for-one. This has led to an uptick in interest-only loans as CMBS and other lenders continue putting capital to work, according to Moody’s.

Source : Reuters

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In recent years, property prices have largely followed a consistent upward trajectory; however the last 12 months have been anything but smooth sailing for the housing market. A combination of factors from rising interest rates, falling property prices, and shaky public confidence have been a perfect storm for the property market that looks to have no sign of ending just yet.

A perfect storm for the housing market

Buoyed by the prospect of falling prices, many wannabe homeowners hoped the predictions of a property crash would finally allow those priced out of the market to get a foot on the property ladder; however, as yet, this hasn’t materialised.

This is because the value of any falls in purchase price have been tempered by the increased cost of borrowing; average falls in sold property prices in 2023 are reported to be around 4%, but with the soaring cost of borrowing, the reality is that buying a property with a mortgage has actually become a more expensive prospect for many. If interest rates are to remain at their current levels, the only way affordability can be improved is if earnings rise or property prices take a meaningful fall.

The problem of uncertainty

An uncertain marketplace creates an environment of low consumer confidence. A property purchase is likely to be among the most significant buying decisions an individual will ever make, therefore, before taking this step, they understandably want to be as sure as possible that they are making a sound investment with their hard-earned money. First time buyers, particularly those with low deposits, are at particular risk of falling into negative equity should they purchase at the start of a sustained period of declining prices. This is making potential buyers much more cautious and therefore much more keen on securing a discount on the listed price.

Goodbye 2023, hello 2024

As we approach the end of 2023, it appears that buyers and sellers have reached an impasse. While buyers are wanting a discount on their purchase to cushion the squeeze on affordability and mitigate the risk of negative equity, sellers are so far reluctant to take a hit on the price they want to achieve.

So what does this mean as we look into 2024? Well, should this stalemate continue, this has the potential to create a property supply shortage as wannabe sellers hold firm. While some property sales are a necessity, such as in the event of death, divorce, or redundancy; many property transactions are optional, fuelled by a want – rather than a need – to trade up or down.

So while those that need to sell may be required to adjust their expectations as a consequence of weakening buyer power, those who do not have to move may well make the decision to stay put and ride out any impending storm.

Adjusting to a changing marketplace

While a stagnant property market is a possibility in 2024, the alternative is that buyers and sellers alike may find they adjust to the ‘new normal’ over the course of the year; for purchasers the new normal means higher interest rates, whereas for sellers the new normal is a reduction in the price that they can command for their property. With revised expectations on both sides, this may be enough to kickstart the housing market once more.

A cooling market or a crash?

It is important to make the distinction between a cooling in property prices and a wholesale property crash. Many experts are predicting house prices will experience a drop in 2024, however, estimates for the scale of this drop are relatively conservative. It is perfectly possible for house prices to fall without the property market suffering a catastrophic crash in the process; for many, this appears to be the most likely scenario as we look forward into 2024.

The housing market does not exist in a vacuum; property prices rising or falling is often something which happens in tandem with something else, be that changes to interest rates, unemployment levels, availability, and population levels. With demand for property ever-changing, and the short-term economic outlook so uncertain, forecasting the future of the property market – something which until recently was easy to predict – is now becoming an increasingly impossible task.

Source : Today’sConveyancer

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A significant one in three home buyers in the U.K. will pay cash for their property purchase in 2023, according to a report Monday from Zoopla.

Cash buyers will make up 32% of buyers across the nation by the end of the year, a notable jump from the average 20% share they’ve held for the past five years, the online property portal said.

That figure represents buyers from across all price points of the market, but a cash purchase is typically a luxury more readily available to the wealthiest of buyers.

“The U.K.’s property market, particularly at the higher end where properties cost a minimum of £1 million (US$1.21 million), has seen a noticeable boost in cash buyers over the past year,” said Nigel Bishop of nationwide buying agency Recoco Property Search. “This increase has been driven by less favorable interest rates and, with rates unlikely to decrease any time soon, will continue in 2024.”

Those who are dependent on mortgages though—and who are already battling those high interest rates—will have another hurdle if the number of cash buyers continues to grow, he said.

“The presence of more cash buyers could create further challenges for buyers who are reliant on a mortgage, as some sellers favor cash transactions for their chain-free nature which often results in an overall faster sales process.”

The high cost of borrowing is not only driving more buyers to opt to fund their buy with cash, it’s also rapidly cooling home prices across the U.K. resulting in the “most dramatic slowdown in price growth since 2009,” Zoopla said.

Property prices, which were up 9.2% a year ago, are now down 1.1% today and year-on-year price falls have been registered in 80% of the U.K.’s housing markets.

Source : MansionGlobal

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Sector among first to recover as more brands, investors, developers are attracted

The retail property sector will be among the first to see recovery, said industry experts, who believe this particular realty domain contains huge growth potential.

By comparing the average data of the same period between 2017 and 2019 with this year’s first nine months, demand for retail property leasing recovered rapidly, only after logistics properties, said Xie Chen, head of research with CBRE China, a commercial real estate services and investment firm.

“Thanks to the constant resumption of demand, the rise of retail property vacancy rates shrank since the last quarter of 2021,” said Xie. “The conditions in Beijing, Shanghai and major second-tier cities in East and Central China are more encouraging, as the rent for retail space on the first floors of shopping centers has stabilized with small growth.

“Despite a slow global economy, China’s economic fundamentals have continued to attract brands, investors and developers to the retail property market,” said Shaun Brodie, head of research content for China with Cushman & Wakefield, a global real estate services firm.

Due to China’s positive economic performance, good business environment and established retail ambiance in mature projects, brands, investors and developers have further expressed their confidence in the country’s overall retail property market, said Brodie.

Data from the National Bureau of Statistics showed China’s total retail sales of consumer goods increased by 6.8 percent year-on-year to reach 34.2 trillion yuan ($4.7 trillion) in the first three quarters, and consumption contributed 83.2 percent to overall economic growth, indicating that consumption has become a major driver of economic growth.

“Retailers, particularly domestic brands, are adjusting their offerings to align with evolving consumer preferences and pricing to cater to a more affordable range,” said James Macdonald, head and senior director of Savills China research.

Furthermore, specific sectors like health and wellness, new energy vehicles, and children-related retail operators are showing signs of recovery and increased activity, Macdonald said.

“The revival of consumption has spurred recovery of the retail property market. In Shanghai, for example, retail leasing in the city continued to improve over the third quarter,” said Yao Yao, head of research for JLL China, a global real estate advisor.

Some 320,000 square meters of retail space in Shanghai’s urban area were absorbed in the third quarter, nearly twice that of the 170,000 sq m in the second quarter, said Yao.

“The food and beverage sector remained active in offline expansion. We also observed stable demand from sportswear and sports equipment brands, skincare and perfume chains, jewelry and accessory brands as well as NEV showrooms, offering strong support toward the sector’s leasing demand rebound,” Yao said, adding that due to the huge market supply, the recovery of rents was at a comparatively slower pace.

To better tap new trends in the retail property sector, Yao suggested strengthening the merger of online and offline channels, further exploring new retail forms by building innovative consumption scenarios and enhancing consumption experiences as solutions.

Brodie sees great potential in the retail property sector in major Chinese cities in terms of real estate investment trusts, sustainability, digitalization and the metaverse.

According to estimates, there are more than 2,100 pedestrian streets each with a retail area of more than 20,000 sq m in China. The total inventory of pedestrian streets now exceeds 100 million sq m. Meanwhile, there are over 6,835 retail properties with a gross floor area of over 30,000 sq m each.

The total inventory of retail properties now exceeds 540 million sq m. REITs can open up the previous closed-loop system related to retail asset operations involving investment, financing, construction, management and fund exiting, Brodie added.

Source : ChinaDaily

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The Cabot Collection has launched real estate pre-sales at its first mountain property: Cabot Revelstoke in British Columbia.

Set amid Canada’s Monasheee and Selkirk Mountain ranges, Cabot’s second Canadian property will include six chalets offering 79 residences that range from two to five bedrooms. Called the Residences at Cabot Revelstoke, the properties are surrounded by river and mountain vistas and are inspired by European ski chalets of the Dolomites, Austria and Switzerland. Pricing begins at $2.5 million.

The golf centerpiece at Cabot Revelstoke is an 18-hole course (Cabot Pacific) being designed by Whitman, Axland & Cutten that’s scheduled to open in 2025, joining Cabot’s golf offerings in Cape Breton, the Highlands of Scotland, St. Lucia in the Caribbean, and Citrus Farms in Florida. Overlooking the Columbia River, the course will have public access similar to Cabot’s original Cape Breton property.

Revelstoke is a year-round alpine destination, however, set in an alpine haven known as the “heli-skiing capital of the world.” At the base of Revelstoke Mountain, Cabot’s newest property is located at Revelstoke Mountain Resort, which has North America’s greatest vertical drop at 5,620 feet.

“I was in awe of the remarkable landscape from the moment I first walked the site and knew it was perfect for Cabot’s second Canadian property and our mountain golf and ski debut,” said Cabot co-founder and CEO Ben Cowan-Dewar. “We are thrilled to add to this already spectacular destination.”

All chalets will feature shared outdoor areas complete with a hot tub and barrel sauna. A homeowner experience manager will be available to homeowners 24 hours a day to prepare the residences, coordinate tee times for golf, or arrange offsite adventures. Among the notable holes forthcoming at Cabot Pacific, a long par 3 over a gorge that demands a carry of just over 250 yards from the back tees.

Source : Forbes

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In 2022, the value of all global real estate – residential, commercial, and agricultural land – reached $379.7 trillion, maintaining the asset’s position as the world’s most significant store of wealth, according to research by Savills.

The global real estate services provider points out that real estate is more valuable than all 2022 global equities ($98.9 trillion) and debt securities ($129.8 trillion) combined, and it is almost four times that of global GDP ($100.6 trillion). The value of all gold ever mined, by comparison, stands at $12.2 trillion – just 3% of the value of global real estate.

Notwithstanding the fact that overall, the total value of global real estate in 2022 decreased 2.8% from 2021, when it was $390.5 trillion, it is still up 18.7% on 2019 pre-Covid levels. Growth across all asset classes (real estate, equities etc) slowed in 2022 compared to 2020-2021, according to the international real estate advisor, as inflation rose, and interest rates spiked.

“Positively however, according to the research report, the value of all sectors of real estate, remain up on their 2020 levels. Notably, in terms of the different property sectors, residential is by far the largest, accounting for 76% of all global real estate value, and its value stood at $287.6 trillion in 2022, a decrease of 1.6% on 2021 levels ($292.2 trillion). Here in South Africa, it is estimated that residential property is notionally worth some R6.6 trillion (approximately USD343 billion),” comments Dr Andrew Golding, chief executive of the Pam Golding Group, Savills’ exclusive residential real estate partner in Africa.

Savills says that commercial real estate value stands at $50.8 trillion (2021 comparison: $51.7 trillion), comprising 13% of total real estate value, and ahead of the total value of agricultural land at $41.3 trillion (2021 comparison: $46.6 trillion) which accounts for 11%.

Paul Tostevin, head of Savills World Research which carried out the analysis, comments: “Despite upheavals in the markets, and some speculation about the future of some sectors, real estate as a whole continues to be the largest concentration of wealth in the world.”

“Residential property dominates, and between 2019-2022 its value grew 21.1% – only outperformed by gold – as it benefited from ultra-low interest rates over this period, coupled with a focus on the home in many countries during lockdowns. It’s clear that given the under-developed nature of real estate in some locations, on a long-term basis growth will continue as more stock is added around the world.”

As of 2022, China was the world’s most valuable real estate market, accounting for 26% of total global real estate value (residential and commercial), followed by the United States which accounts for 19%. Savills notes, however, that Canada (7th) and Australia (10th), both countries that have seen significant growth in residential prices in recent years, rank ahead of much more populous nations for total real estate value. India, the world’s most populous country, is in 14th position by value, demonstrating the potential for future growth in this market.

Adds Dr Golding: “Being a nation with a predominantly youthful population, there is a positive demographic dividend for the South African residential market as the proliferation of new, smaller households in the key urban areas ensures ongoing, strong demand for accommodation. Increasingly this is being met via the conversion of commercial properties into mixed-used residential developments as well as new homes in coastal provinces as a result of semigration, but either way, South Africa’s youthful demographic profile will provide a fundamental underpinning for the local residential market as the influx of new, young homeowners ensures ongoing demand, in turn facilitating the movement of existing homeowners up the property ladder.”

Source : PropertyWheel

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Riyadh, Saudi Arabia: Barratt London and the recently launched Barratt London MENA office, led by UAE-based Hardington Residential, will be targeting Middle East investors with a range of projects offering high yields and impressive projected capital appreciation when the company makes its debut at Cityscape Global, which takes place from 10-13 September in Riyadh, Saudi Arabia.

One project being showcased to investors on Hardington Residential’s dedicated stand at the international property showcase is Barratt London’s award-winning Hayes Village regeneration project, which was recently visited by British Prime Minister Rishi Sunak, where he announced an additional US$250 million (£200 million) of government funding for development of new housing on brownfield areas in the English capital.

Homes at Hayes Village, set on a former Nestlé factory site, range from one-bedroom apartments to three-bedroom family properties, with some still retaining the elegant Art Deco featured in the original factory. Barratt London’s latest offering within the development is the Richart Apartments, a collection of one- and two-bedroom apartments, with prices starting from US$415,000 (£329,000). The development is surrounded by parks and gardens planted with 250 new trees and includes fitness trails, outdoor gym equipment and play areas to improve health and wellbeing.

A footpath also connects the development to Hayes and Harlington train station in less than a nine-minute walk, with high-frequency Elizabeth Line trains into central London in 30 minutes.

Stuart Leslie, International Sales and Marketing Director at Barratt London said: “Similarly to our other major regeneration schemes, Hayes Village is proving popular with overseas buyers, particularly those from the Middle East where we have seen significant interest and sales from individuals and family offices from Saudi Arabia, Kuwait, Qatar and the UAE.

“There has been a significant uptick from buyers in the Middle East looking for a home in London for work or as a home for children who are studying in the capital. With projected capital growth of 19% in the next five years and expected rental yields of up to 5.9%, the development offers great value for money, piquing the interest of Middle Eastern investors keen to diversify their portfolios in a reputable and potentially lucrative market.”

Another Barratt London development making waves amongst Middle Eastern investors is the recently launched Wembley Park Gardens, a new landmark development built in the heart of Wembley Park, an area famous with football fans worldwide as the home of the England national football team.

In addition to football fans, overseas investors have quickly recognised the area’s transformation, following US$3.5 billion (£2.5 billion) of regeneration in the last 20 years. In the previous five years, rents in the area have increased by 49%, compared to the 23% London average. Furthermore, despite benefiting from the regeneration of Wembley Park and the redevelopment of Wembley Stadium, according to research from JLL, the neighbourhood is still 30% cheaper than the Greater London average, further underscoring the return on investment opportunities.

The development will deliver a smart collection of 302 one- and two-bedroom apartments to the market, featuring outdoor private space, with prices starting from US$495,000 (£395,000) and handover for phase one expected by summer 2025.

Residents will benefit from a world-class destination, offering a good choice of shopping, world-class restaurants, picturesque green spaces, highly rated schools and cultural and leisure attractions. Central London is just 20 minutes via the Underground, while overground stations provide easy access to the countryside and key British towns and cities, such as Oxford.

Ian Plumley, Managing Director, Hardington Residential, said: “Investors in the Middle East have been quick to recognise the unparalleled financial opportunities many of the capital’s regenerative areas are offering, including Wembley Park Gardens, where robust yields, impressive return on investment and substantial capital appreciation have resulted in a spike in interest from interested buyers in this region.

“Cityscape Global represents an excellent opportunity to showcase the quality of the developments offered by Barratt London while also providing an overview of the potential financial remuneration investors can expect. We will have a team on hand able to outline everything from the areas within London where the developments are located to applying for mortgages, ensuring a confident and informative process.”

Barratt MENA will be exhibiting at Cityscape Global in Hall 1, Stand R64, with Stuart Leslie and Ian Plumley available for interview throughout the show.

Source : Zawya

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