It is believed to be Asia’s most expensive property – with each sq foot costing $9,200, and the world’s most expensive apartment. The deal came as the territory’s chief executive, Donald Tsang, said he was concerned about a possible property bubble emerging.

The 6,158 sq ft (557 sq metres) flat is on the 68th floor of its block and was sold by Henderson Land Development.

Thomas Lam, from the company, said the building, offered “a chance to allow the elites in town to enjoy such prestigious property”. Another unit in the same building was sold for $51 million.

Property prices in Hong Kong have benefited from mainland China’s booming market, however it has one of the world’s most expensive property markets - with many locals finding it difficult to buy. In his annual policy address, Mr Tsang said the government was considering making more land available for development.

“The relatively small number of residential units completed and the record prices attained in certain transactions this year have caused concern about the supply of flats, difficulty in purchasing a home, and the possibility of a property bubble,” he said.

The previous most expensive apartment was One Hyde Park flats in London, whose per-sq. foot price was 9,585.23 USD (HK$74,286).

The world’s most expensive house is the Fleur de Lys in Beverly Hills, California, which was bought for $125 million.

Overall consumer expectations are consistent with house price inflation but poor GDP figures have mixed implications for the real estate market, the country’s largest mortgage lender says.

It was the sixth consecutive month in a row that property prices have increased but it is clear that the strong upward momentum in property values seen over the summer is showing some signs of moderating.

October saw an increase of 0.4% higher compared to an increase of 0.9% in September and 1.4% in both July and August.

The three month on three month rate of change, generally a smoother indicator of the near term trend, dropped back slightly from 3.8% to 3.4%.

The average price of a house is now £162,038, some 2.0% higher than a year earlier, representing the first time since March 2008 that the annual rate of change has been in positive territory.

Over the first ten months of 2009, the seasonally adjusted index of house prices has risen by 4.6%, though relative to the October 2007 peak it is still down by 13.1%.

‘A moderation in the rate of house price inflation was to be expected, as the very strong monthly increases seen over the summer months were unlikely to be sustainable over the long run.

Slower house price inflation is also consistent with developments in housing market activity, as industry figures have shown that the pick-up in mortgage approvals for house purchases has lost some momentum in recent months,’ said Martin Gahbauer, Nationwide’s Chief Economist.

He added that it may also reflect a more natural level of stock available for sale coming to the market, alleviating some of the extreme shortages of property on the market seen during most of this year.

But the fact that the latest GDP figures show that the UK is still in recession will have an impact.

‘On the one hand, a deeper and longer recession implies higher levels of unemployment and a longer period of subdued wages, both of which will act as constraints on the housing market’s recovery,’ explained Gahbauer.

‘Given the poor labour market situation implied by the economy’s ongoing weakness, it is difficult to imagine the housing market returning to the buoyant levels of activity and price inflation that prevailed earlier in the decade,’ he said.

‘On the other hand, the figures mean that interest rates are likely to remain at or near their current record lows for well into next year.

As a result, mortgage affordability will remain relatively favourable for both new and existing borrowers.

This should limit the number of distressed sales and cushion the negative impact of labour market weakness on housing demand,’ he added.

Simon Rubinsohn, chief economist at the Royal Institution of Chartered Surveyors welcomed the figures.

‘The latest gain in house prices caps a generally good news week for the housing market with transaction levels continuing to recover according to the Land Registry and net mortgage lending rising a little further,’ he said

– source: Property Wire

According to real estate agents the decision by the Hong Kong Monetary Authority to cut the mortgage limit on property worth HK$21 million or more to 60% has had an immediate impact.

Hong Kong Chief Executive Donald Tsang confirmed that the government approves of the move and is ready to do its bit.

‘We do not want to see a huge property bubble developing in Hong Kong,’ he told a meeting of businessmen.

He said the government had tools available to stabilise the market but did not give details except to say any action would be motivated by a need for stability, transparency and smooth market operations.

Prices of mass market residential property have surged more than 20% this year, despite the economic downturn, while luxury property prices have soared more than 40% thanks to excess liquidity globally and an influx of cash from newly rich mainland Chinese.

Tsang, however, said that the current surge in prices exhibited far fewer signs of speculative behaviour than a previous property market bubble in 1997 which burst amid the Asian financial crisis.

HKMA Chief Executive Norman Chan said at the time that it was difficult to tell if there was a property bubble.

But the measures might not work since many mainland Chinese buyers of luxury property in the city buy with cash.

The mortgage measures might not calm the luxury sector, analysts warned.

Financial Secretary John Tsang met last week with the city’s property developers to express the government’s concern about sharply rising property prices.

Developers, however, said the government should release land at more reasonable prices, arguing that plots proposed for auction by the government in the past couple of years have been priced too high.

Before a site can be put to auction, a developer has to agree to pay 80% of the site’s recommended price which is set by the government.

The big hit was seen in sales volume, which plummeted 48% in the first quarter of 2009 compared to the previous quarter and year, according to data compiled by Jonathan Miller, of appraiser Miller Samuel, for Prudential Douglas Elliman.

The primary reason given for the gap was the different expectations of house hunters and sellers. “That’s really showing the huge ocean that separates them,” she said. “Many sellers left their prices too high for too long. We had a lot of long negotiations that ultimately led nowhere.”

Lately, she added, sellers have capitulated but buyers have not. “Now our problem is that buyers have gotten too aggressive,” she said. “Their offers are unrealistic and that can be a turnoff for sellers.”

Meanwhile, the median sales price of all condo and co-op apartments sold rose 6%, to $907,500, in the first quarter of 2009 compared to the first quarter of 2008, according to New York City brokers Halstead Property and Brown Harris Stevens. Prudential Douglas Elliman’s report showed an increase of 3.1%, to $975,000.

During the boom years, Manhattan was churning out double-digit price increases, with a 20% jump, for example, during 2005.

The Corcoran Group was the only broker that reported falling prices, noting that the median sales price of apartments tumbled 2%, to $925,000.

Where prices are dropping is in the co-op market, which saw a 13% drop in that median sales in the first quarter compared to the last quarter of 2008, according to the Elliman report. Miller believes this is more reflective of the “real market” because co-ops sales are almost always existing homes, whereas most new home sales in Manhattan are condos.

And, in fact, it was sales of new condos that skewed overall market prices higher. The median condo price rose 9.6%. The average size of apartments in these developments was nearly 1,700 square feet, 40% larger than last year. That, combined with a record market share of 43%, pushed up overall average prices.

The price per square foot, however, declined by 2.3% for all apartments to $1,289, compared with a year ago, according to Elliman. Corcoran reported it dropped 6% to $1,158.

Manhattan prices are still so high that many buyers have to finance their purchases with non-conforming loans - jumbo mortgages. This market segment froze up for months with lenders reluctant to issue loans to all but the lowest-risk borrowers.

“The tipping point was in September and was largely triggered by the bankruptcy of Lehman Bros. and bailouts of AIG, Fannie Mae and Freddie Mac,” said Miller. “This marked a sharp contraction of credit, greatly restricting demand as participants had more difficulty obtaining financing.

“Plus,” he added, “unemployment related to credit markets affects Manhattan disproportionately because many high-wage earners there work in that industry.”

Not only were there many layoffs on Wall Street, there was also a substantial reduction in bonus money paid by investment banks, down 44% from 2007.

Wall Street, even after it recovers, will likely to never be quite the same, which could lead to a permanent restructuring in high-end housing.

“Already,” said Greg Heym, chief economist for both Halstead and Brown Harris Stevens, “there’s been a decline at the highest end of the market, $10 million and above, a big drop in sales.”

Big, indeed, with 87% fewer closings than during the first quarter of 2008.

The Manhattan market’s recovery will be driven by first-time buyers and low- to mid-level buyers, those paying $1.5 million or less, according to Diane Ramirez, president of Halstead Property.

“There are a lot of buyers [in that range] who had been priced out of the market and who are making sure they sure they get in this time,” she said.

As an example, she told the story of a woman in her mid-40s who previously had not looked into purchasing anything bigger than a studio; it was all she could afford.

“Now,” said Ramirez, “she bought a one bedroom and she’s absolutely delighted.”

The lower prices are giving aspiring New Yorkers reason to hope, according to Corcoran Group’s Liebman.

“The silver lining is that people can move to Manhattan again,” she said.

Further price falls are expected but changing market conditions mean that the rate of fall may not be as great as it has been, according Yolande Barnes, head of residential research at the property adviser Savills.

‘We could now be about to enter the latter stages of house price falls and be on the brink of the first stage in the recovery process. This is characterised by low supply as well as low demand levels which causes prices to bottom out,’ she said.

‘We have already seen a pronounced recovery in affordability, thanks to both price falls and reduced interest rates, which sets the platform for a recovery when macro-economic conditions are right,’ she added.

However the return to house price growth will be a faltering process and further bad news on the economy particularly that which increases fear of unemployment, is likely to delay the point at which static prices turn to price growth, she warns.

Also there will be many stages and regional variations in the future trajectory of house prices that will test the nerves of both home owners and investors but the opportunities for those wanting income returns and the prospect of long-term growth are clearly in place now, Savills is convinced.

This is because there is anecdotal market evidence that suggests that the interest from cash buyers is already much higher and that good quality stock is being taken up, leaving a shortage of supply in some cases”.

‘It is prime stock that is likely to first see an upturn and that will characterise the second stage of recovery. The third stage of more widespread recovery in the mainstream markets will be most dependant upon the depth and length of the recession,’ she said.

It is becoming increasingly likely that the worsening economic climate will have the effect of pushing out the timing of recovery from Savill’s earlier projections, perhaps by 12 months, she added.

Research from Savills shows that key market indices are currently showing between -15% to -20% falls from peak, but these mainstream indicators traditionally lag the ‘forced sale’ market, and discounts for distressed or forced sales are already running at -25% to -30% from their 2007 peak.

‘Whilst Savills research cannot rule out the possibility of further price falls, they believe that the market will settle at around -25% from peak in the mainstream regional markets, and -30% in prime central London,’ Barnes concluded.

*** Extracted from PropertyWire

Manhattan data compiled by the appraisal firm and released yesterday showed that the volume of signed contracts in September and October plummeted roughly 75 percent from the same period last year.

“It’s pretty unbelievable,” said Jeffrey Jackson, a principal at the firm.

He estimated that roughly 50 to 70 transactions are being signed per week in Manhattan, far fewer than in previous years.

The number of recorded sales in Manhattan in 2007, for example, was a record 13,430, according to city data, yielding an average of 258 sales per week.

Jackson’s data was culled from contracts signed between September 1 and mid-November for homes his company appraised. That number, Jackson said, makes up one-third to one-quarter of all sales in Manhattan. While the sample size isn’t as large as the sales covered in market reports produced by the Corcoran Group and Prudential Douglas Elliman, it gives a more current picture of conditions than do the quarterly reports, which track closings in the previous quarter, reflecting deals negotiated months earlier.

Jackson estimated that apartments are now selling for roughly 10 to 15 percent less than they were in early 2008, when the credit crisis began to take hold in the city. The data also showed that homes are now being sold at levels approximately equal to what they were worth in the first half of 2006, he said.

“All the turmoil in the financial markets is the major factor,” Jackson said. “The reason people aren’t signing contracts is because they believe [the home] will be worth less tomorrow. There is no compelling reason for a buyer to step up and purchase today.”

He added that a cause for concern is the drop in demand for housing in New York City.

“There’s been an enormous shift in overall demand,” he said. “The absorption rate is atrocious.”

However, he said, the speed of the slide means the city’s real estate market may crater sooner than expected.

“The good news is that it’s happening very steeply right now,” he said. “With the shrinking of the time period, maybe we’ll get over it sooner.”

*** Extracted from the Candice Taylor’s article from “The Real Deal”.

There are now more properties to rent than ever before and while this may be good news for tenants it has resulted in a drop in rents, says the Royal Institution of Chartered Surveyors in its Q3 lettings survey.

Supply is now at historic levels as frustrated vendors are placing their property on the market to let as they have been unable to agree sales due to a lack of demand in the housing market.

The influx of supply onto the market has forced downward pressure on rents. The net balance of surveyors reported rises or falls in rents fell from a positive 31% in the second quarter to a negative -12% in the third quarter, the lowest level in the survey’s history.

London and the South-East have been hardest hit with the net balance of surveyors reporting rises or falls in rents for London houses falling from a stable 0% in the second quarter to negative -53% in the third quarter. Flats fell from a positive 5% to a negative -33%.

The biggest turn around was in the South-East, with the net balance of surveyors reporting rises or falls in rents for houses plummeting from 53% to -33%.

There has been a boom in the letting sector in early 2008 as sales in the housing market slowed and would be buyers could not afford to enter the market and were forced to rent. Landlords were able to take advantage of this and gain higher rental returns. However, competition in the market place has increased as many vendors have been forced to become amateur landlords and this has created downward pressure on rents as supply is matching or exceeding demand.

The number of new landlords is causing concern across the sector. ‘Many landlords have entered the lettings market in the last year without perhaps planning to do so and have taken this step out of necessity rather than desire. I would urge these amateur landlords to exercise caution and to research as much as possible as it is a position of no little responsibility,’ said Ian Potter, operations manager of the Association of Residential Letting Agents.

‘It is imperative that they seek out a regulated agent who is in a position to give them strong and independent advice, and who can protect funds that are being held on their behalf under client money protection schemes,’ he added.

Over the weekend, the number of potential buyers viewing flats rose by up to 50 per cent from a week earlier, agents said. The surge was largely fuelled by lower asking prices and a reduction in mortgage rates from Monday.

But the bargain hunters’ enthusiasm is not shared by many analysts, who do not agree with property agents that now is the time to buy.

Researchers at investment banks Credit Suisse and Morgan Stanley said prices might continue to tumble in the next 12 months, in view of rising unemployment and the weakening local economy.

Transaction prices at major housing estates had plummeted by between 20 and 35 percent, agents said, as credit-starved speculators were forced to dump their units.

On Monday, major mortgage lenders, including HSBC and Hang Seng Bank, cut their home loan rates by 25 basis points. The discounts and lower interest rates have led to an increase in inquiries in Taikoo Shing, which is a regarded as a bellwether of blue-chip housing estates since it is generally the first to show signs of recovery after a market downturn.

Recently a 691 square foot unit was sold for HK$2.98 million in the Taikoo Shing district, or HK$4,324 per sq ft; about 17 percent below prevailing transaction prices for units of this size.

Sai Wan Ho’s Grand Promenade - a newer estate that was popular among speculators two or three years ago - was now back on investors’ radar screens, agents said.

“This month, three out of five units that were sold came with existing leases,” said Alex Yau Pang, a senior district manager at Midland Realty’s Grand Promenade branch.

Such units were particularly popular among investors looking for yields of between 3 and 4 percent instead of parking their money at banks, he said.

A 687 sq ft unit in the complex was being offered at HK$3.4 million and came with a lease at a monthly rental of HK$18,500. The owner had bought the unit at HK$3.88 million. A week ago, a 689 sq ft unit leased out at HK$14,500 a month sold for HK$3.2 million, he said.

“About 10 percent of some 600 units now on sale in the secondary market in Grand Promenade will be released at discounts if buyers can offer immediate payment,” said Mr Yau.

The aggressive buying came as Morgan Stanley said last week that Hong Kong residential prices could drop about 20 percent over the next 12 months and a further 10 percent over the subsequent 12 months.

The US bank said it expected the luxury segment to be even more vulnerable, as average selling prices had risen 50 percent more than those in the mass market from the Sars through to their peak this year, and buyers in the luxury segment were likely to have been more badly hit by the volatile stock markets.

“We do not expect a meaningful residential recovery until 2011,” it said.

In the light of anticipated negative economic growth and an unemployment rate at 5.5 percent, Credit Suisse further slashed its forecast for residential property prices for next year to a drop of 30 percent from current levels, as against 20 percent previously.

The expected 30 percent further decline, the Swiss bank pointed out, would take property prices back to levels last seen in March 2004.

At the same time, however, professional investors with large property portfolios are cleaning up; many are sitting on substantial sums of equity built up throughout the housing boom. Unlike new investors, they can afford to meet lenders’ more stringent requirements for larger deposits. Figures from Hometrack, the property data company, indicate that 82 percent of rented property is in the hands of professional or semi-professional landlords who own at least ten homes. For these people, a weak housing market represents an opportunity to find a bargain property and take advantage of rents that have risen by 12 percent over the past six months, according to Paragon Mortgages. Investors know that fewer buyers in the market equates to a greater demand for rental homes.

The savvy investors know that this is a good time to buy. Lenders may be asking for deposits of 30 percent or more. In London there are lots of investors with cash who are happy to put down that deposit. They will do the maths and work out the yield. If the property is at the right price, they will buy. Leaving the money in the bank will not earn you that much interest.

Why the property credit crunch favours cash buyers

Paying about 5 percent below the asking price has become the norm but the investors getting the very best deals are those who are buying in bulk. Some investors are managing to buy properties at 20 percent below their market value. There are a lot of properties on the market which would have been snapped up within days last year but are now taking longer to sell. These are now being bought quite cheaply by professional investors who intend to hold for three to seven years.”

These investors will do well out of rents. Falling property prices and the tightening credit crunch means that fewer people are willing or able to buy their own homes and therefore end up renting. The average rental home generates more than £1,000 a month, according to Paragon, and that figure could rise even further.

In the long term, the Association of Residential Letting Agents (ARLA) forecasts that demand for rental homes is set to grow by between 20,000 and 30,000 a year over the next decade because of the rise in the number of divorcees and immigrants, as well as increasing job mobility.

John Heron, Paragon’s director of mortgages, says: “The professional end of the market remains committed to buy-to-let over the long term. They typically hold their investments for a decade or more.” Heron adds that professional investors are not under pressure from the credit crunch because the amounts many need to borrow to fund future purchases are modest compared with the size of their overall portfolio. “They borrow an average of less than 40 percent of the value of their portfolios,” he says.

Property investors today are a different breed to those who dreamt of instant riches during the height of the housing boom. Back then players such as Inside Track, the property investment company that recently went into administration, could easily charge the uninitiated £695 for seminars on how to make money out of bricks and mortar. Novices were taught how they could make money by buying new-build property “off-plan” before a single brick was laid and selling it on at a profit before the building was completed. Dabblers and professionals alike made thousands of pounds from the practice, known as “flipping”, during the boom years. Even at the start of this year, many were still hoping to turn quick profits by flipping properties to other investors.

Few are expecting to make quick money now. The risks are too great and the stakes are too high. Investors might be able to buy cheaply off-plan but will have trouble flipping the property now that smaller investors are not buying. Property investment has become much more professional and much more technical.

Abu Dhabi is part of United Arab Emirates (UAE), a federation of seven Middle Eastern states on the Persian Gulf. Abu Dhabi city is the capital of the UAE. Although it is one of the world’s largest producers of oil, Abu Dhabi has recently been trying to diversify its economy into other sectors such as the property and tourism markets.

There are other reports which support the Reuters findings. In recent weeks, the government has pumped US$33 billion into the banking system. Fitch Ratings recently expressed its approval of the government’s moves to guarantee liquidity in the banking system and it believes it will be unnecessary to downgrade the emirate’s Long-term Issuer Default Rating.

“The risks of a UAE bank suffering a capital markets-driven liquidity crisis are limited as none of the banks are reliant on these markets. Their funding bases are predominantly based on retail and corporate deposits, with the balance as inter-bank borrowings and some limited debt capital market issuance,” says the Director of Fitch’s Banks team, Robert Thursfield.

According to James Gonzalez, Market Analyst at Obelisk, guaranteeing liquidity is an important issue for Abu Dhabi. “In contrast to Dubai, where the earliest off-plan investment opportunities saw completion in 2002, the first completed units in Abu Dhabi will only be delivered in late 2009. Abu Dhabi remains a relatively new option for foreign buyers and lacks the market saturation of Dubai. It still remains an emerging market.”