Daily Archives: 2 Oct 2009

Numbers confirm bounce in property’s step

Posted on 2 Oct 2009 | Comments Off on Numbers confirm bounce in property’s step

15.9% q-o-q jump in Q3 could mark the end of one of the shortest downcycles ever

Property cycles seem to be getting shorter and with sharper price swings, mirroring the trend in general economic cycles. In one of the quickest upturns in recent years, the official private home price index jumped 15.9 per cent quarter-on-quarter (q-o-q) in Q3 this year. The four quarters of price drops that preceded this mark the shortest downcycle in the past 18 years – assuming, of course, that prices do not decline in coming quarters.

The increase in Urban Redevelopment Authority’s (URA) flash estimate of its Q3 2009 private home price index was the biggest change since a 27.2 per cent increase in the index in Q1 1981.

Jones Lang LaSalle also pointed out that the turn in the index – from a 4.7 per cent q-o-q contraction registered in second quarter this year to the 15.9 per cent jump in Q3 – was the sharpest since the series began in 1975.

The unprecedented loss of confidence last year from the global financial crash and the collapse of Lehman Brothers led to the unwinding of risky investments. By Q1, investors were awash with liquidity and looking for a trusty place to park their funds. ‘Singapore real estate certainly fits the bill as a safe depository of wealth,’ observes Real Estate Developers Association of Singapore CEO Steven Choo. Continue reading →

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Posted in Luxury Property, Property Market / Real Estate, Property Price, Sentosa Property

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K-Reit slides 5.1% after $620m cash call

Posted on 2 Oct 2009 | Comments Off on K-Reit slides 5.1% after $620m cash call

Nomura sees rights issue lowering cost of capital for any acquisitions ahead

K-REIT Asia’s $620 million cash call on Wednesday night caught the market by surprise, and its units fell as much as 6.8 per cent or eight cents soon after trading began yesterday.

The counter recovered slightly to close at $1.12, 5.1 per cent or six cents down. Some 3.58 million units changed hands.

Most investors and analysts did not see the one-for-one renounceable rights issue coming because K-Reit’s gearing was comparatively lower than its peers’.

After conducting a rights issue in January last year to raise $551.7 million, it had cut its aggregate leverage from 53.9 per cent to 27.6 per cent.

K-Reit’s debt-funded purchase of six strata floors in Prudential Tower would have raised its leverage to 33 per cent, but that would have remained close to the industry’s average gearing level. The rights issue would shave its leverage sharply down to 9.1 per cent.

K-Reit also revealed a 6.3 per cent drop in the value of its assets on Wednesday, from $2.1 billion as at Dec 31 last year to $1.97 billion as at Sept 29. Continue reading →

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Posted in Funds

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