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The financial turmoil will continue to take its toll in the real estate market with further downward adjustment in 2009.

Though cautious, rebound may take place in 2009 when positives set in. The remarks underlined the 12-month forecast for the Hong Kong property market announced by Colliers International at its press conference today.

Colliers International: 2009 Forecast for Hong Kong’s Property Sectors (Nov 2008 – Nov 2009 % Change YoY)

Commercial Leasing
Amid uncertain global economic outlook and low expectations on business growth, a number of companies have cost saving as one of the most important initiatives in their agendas. “The possible strategies that occupiers may consider include staff retrenchment, lease restructure, office decentralization… etc,” said Iain Chapman, Director of Commercial, “On the other side, vendors are now open to negotiate with new tenants and adopt realistic approach on rentals.” Therefore, these translate into further vacancy growth and drop of office rentals.

According to Colliers International’s projection, the Grade A office rentals and prices are expected to decrease 26% and 35% respectively.

Besides the traditional core business districts on Hong Kong Island, the emerging office areas in Kowloon also saw rental decrease. “Despite the downward trend expected in the near term, positive factors, for example, supportive arm from China, well equip the office market for any potential upside turn.” said Fiona Ngan, Director of Kowloon Commercial.

Investment Sales
According to the latest record of property investment concluded at over HK$30 million, the number of transaction dropped 39% year-on-year (YoY) in 2008, while the total transaction value declined 44% YoY to HK$39,150 million.

In 2009, the investment market is expected to see more sources of funds, for example, some from Europe and South East Asia. “Investors in property market generally remain cautious but optimistic,” commented Antonio Wu, Regional Director of Asia Investment Sales, “Thus, some end-users, such as Chinese enterprises, banks and insurance companies, may become active to invest in properties for owner-occupation after price adjustment. In terms of property type, office and retail properties are expected to be the most attractive sectors in 2009.”

Luxury Residential
2008 saw significant retreat in buying demand in luxury residential market. “Luxury residential investors and end-users were sidelined by credit crisis and financing barrier respectively,” mentioned Ricky Poon, Executive Director of Residential Sales, “the number of luxury residential transactions worth over HK$100 million decreased notably by 44% YoY in 2008.”

Although luxury residential rentals and prices might see further decrease of 15% and 20% respectively in 2009, initial positive signals might emerge if banks start adopting less restrictive lending policies. “As the discrepancy of sellers’ and buyers’ expectation on prices narrows, the sales volume will then rebound and is predicted to rise 87% in the next twelve months,” commented Simon Lo, Director of Research & Advisory. “Based on the past property market cycle, the first half of 2009 is expected to be a good entry point.”

Industrial
In 2008, industrial rentals decreased 8% YoY while prices fell 7% YoY. The slowdown of regional trade activities acted as the major cause for weak re-exports performance. Meanwhile, local contraction of retail spending also worsened logistics activities. Although I/O premises were the outstanding growth components in the market in recent years, they were also challenged by the slowdown of the office sector. “Industrial rentals and prices are expected to decline by 17% and 26% respectively in 2009,” said Simon. “As Asia market is expected to be the relatively resilient region compared to other locations in the world, Hong Kong, being an important trade and logistics centre in the region will benefit from it.”

Retail
In the retail market, mid-range food & beverage operators received major hit amid the current downturn cycle. However, there was no major rental defaults across the board when compared with the previous ‘SARS’ crisis. Retail market for child-care and basic necessities remained resilient. In order to cope with the trimming sales income amid the weak economy, retail tenants continue to go for cost-effective options.

In the sales market, investment yields is expected to edge up at least 50 basis points and cash-rich buyers will take the lead. According to Colliers International’s forecast, the rentals and prices of ground-floor retail shops in core areas are expected to fall 11% and 20% respectively in 2009.

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As the financial tsunami shows no signs of abating property investors need to search even harder to find real estate bargains so today we focus our attention on the UAE and specifically Dubai.

Until recently Dubai was the property investors haven with real-estate prices heading northward in a seemingly unstoppable wave. However just like everywhere else the ripples of the financial tsunami have also had a dramatic effect on property here.

In fact some have said that Dubai will be hard hit having been fuelled by easy credit and high oil revenues however reports of Dubai’s demise are premature and here’s why?

First a history lesson back in the 1970s when the British withdrew from what was called the Trucial states the seven local sheikdoms became the United Arab Emirates. Abu Dhabi had the greatest share of wealth coz it has by far the greatest share of oil, but Dubai had entrepreneurial spirit.

In the 1980s under Sheik Rashid Bin Saeed Al Maktoum and then his son Sheik Mohammed Bin Rashid Al Maktoum, Dubai developed its massive free port,golf courses which changed the landscape and luxury resorts like the Burj Al Arab hotel.

Recently Dubai has also been an exporter of capital investing huge sums in projects’ such as six major us container ports. In fact up until recently Dubai was well on its way to achieving $108million GDP not bad for a sheikdom with no oil!

So where did they get the money from? Well its no secret that Abu Dhabi has been the major contributor in the development of Dubai and even in these financially turbulent times can easily prop up its little brother. When oil was $147 dollars a barrel Abu Dhabi’s 2.7million BP day output pulled a neat 140 billion a year and Abu Dhabi’s budget predicts oil at just $67 for all of 2009, even that creates $45 billion so you see they can well afford to support Dubai and not only that the region needs Dubai to succeed. Its is regarded as a shining example of the New middle east, a turbocharged entrepreneurial place that offers a sharp contrast to the chaos and religious sectarianism of Iraq and the corrupt state of Egypt. Dubai sees itself as a bastion of the free market and a city of modern laws and modern mores in a region where they are in short supply. Dubai’s ruler is endlessly innovative and backed by the never ending wealth of its big brother Abu Dhabi, we can confidently predict that Dubai is still a real estate haven to watch. So go ahead Take your pick ,from opulent waterside villas to a one bed pied a Terre Dubai offers property for every budget. At the moment bargains are to be had with developers offering rental guarantees, huge discounts and even free luxury cars for every purchaser.

For exclusive deals please signup at http://www.852realestate.com

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Here is a reuters report Developer Sun Hung Kai Properties has cut its apartment sales target for this fiscal year as the global financial crisis hits Hong Kong’s property market, but expects a market pick-up in early 2009.

Asia’s third most valuable property group now aims to generate HK$16 billion
($2 billion) in revenue in the year ending June 2009 by selling 2,400 housing units, the head of its real estate agency, Eric Chow, told reporters on Thursday.

But he countered analyst predictions for a market slump next year, saying he expected a 5 percent rise in Hong Kong property prices next year.

“We will see a more active market in the first half of next year than the second half of this year,” he said after a shareholders’ meeting on Thursday.
Some analysts said the outlook was difficult to determine.

“It will be a bit optimistic (for room on the upside) and it all depends on whether the economic environment deteriorates or not, if the jobless rate still rises or stays steady,” said Patrick Yiu, a director from CASH Asset Management.
Sun Hung Kai Properties has surprised some analysts by recording strong sales in recent weeks. Chow said sales at projects in Yuen Long and Shatin in the New Territories had generated about HK$3.8 billion.
But total property transactions in Hong Kong fell to a 17-year low in
November, with home sales plunging 79 percent from a year earlier as a
deepening global financial crisis shattered buyers’ confidence in the market.

And a Reuters poll of analysts earlier this month showed apartment prices
were expected to slide more than 20 percent by the end of 2009.

Chow did not elaborate on the revision of the sales target. The company had
said in September for that it aimed to rake in HK$20 billion worth of
apartment sales in this fiscal year, with about 90 percent coming from

Hong Kong and the rest in mainland China.
Sun Hung Kai Properties said the strong public response to its projects

recently reflected a stablising property market, and a relatively small
supply of 10,000 units a year in Hong Kong also helped. The average annual
supply of new apartments in the last decade has been around 18,000.

“We believe property prices have stablised,” said Raymond Kwok, managing
director of the property group.

He said recent mortgage rate hikes by some banks were expected to have a
limited impact on home buyers as rates were still relatively low at around
3-4 percent.

HSBC Holdings and Bank of China raised their Hong Kong mortgage rates earlier this week, dragging the blue chip property index down 7.7 percent so far this week. In the office
property segment, Sun Hung Kai Properties has leased about 90 percent of its
2.5 million square feet office towers in International Commerce Centre on

Kowloon to tenants including Morgan Stanley and Deutsche Bank, said Victor Lui,

an executive director of Sun Hung Kai Real Estate Agency.

Lui said he did not note any lapse of leasing deals despite the current
economic conditions and tenants were expected to move in as planned.

Sun Hung Kai Properties is now chaired by Kwong Siu-hing, the mother of the
Kwok brothers, after long-time chairman Walter Kwok left the firm this year
following a dispute with his brothers over control of the firm.

Raymond Kwok said Kwong was likely to continue to be chairwoman of the group
Shares of Sun Hung Kai Properties, which have fallen more than 66 percent so
far this year, closed down 1.2 percent on Thursday, lagging a 0.6 percent

drop for the benchmark index

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Renowned for its wild fluctuations, Hong Kong’s property market is once again on a roller coaster.

The total number of residential transactions in August was down by more than 60 percent from November 2007 levels, according to the most recent market report from the Knight Frank real estate agency.

Even in Hong Kong’s luxury market, prices dropped 3.1 percent in August, Knight Frank reports - and there is little doubt the declines are growing.

Data released by the government’s Land Registry office show sales in October were down 58 percent from a year earlier.

Tony Tsang, Citi’s co-head of regional property research, recently told a reporter he expected prices to drop 30 percent more by the end of next year.

“We have not seen the worst in Hong Kong and that’s why we are quite bearish about the property market,” Tsang said.

Until the recent global financial turmoil, Hong Kong was one of the hottest markets in the world. From August 2006 to August 2008, Global Property Guide’s index of Hong Kong property rose 32.4 percent.

For those of you interested in The UK market here is an interesting prediction from Frank Knight.
Rather brave of them to come out with this, see what you think .

Residential property prices in the UK will bottom out towards the end of next year, according to the latest predictions from analysts published today.

Prices will fall 30% from their peak in 2007 and equity rich property investors are already circling like vultures looking for distressed land and property sales, according to the Knight Frank 2009 residential market forecast report.

Average prices are unlikely to return to the 2007 peak until 2015. London is likely to be the first in 2012 and Northern Ireland the last in 2019.

Sales volumes are expected to hit a low point later this year - achieving around 30% of long term average - and are predicted to recover to reach around 60% by the second half of 2009.

Development land values outside London are down 33% from their peak and are expected to fall another 15% in 2009. Agricultural has reached its peak and are now expected to fall by up to 10%.

‘The central question for anyone who owns property is when will prices stop falling? Our forecast suggests that we will be closing in on the bottom of the market during late 2009/early 2010,’ said Liam Bailey, head of residential research at Knight Frank.

‘Prices in the UK peaked in late 2007 and have fallen sharply since that point. Our forecast suggests that we are now at least half way through the process of price falls with around 15% of an estimated 30% peak-to-trough decline already factored into prices,’ he added.

The effects differ across markets, the report points out. The regional new build sector, for example, has seen more than a 50% decline in sales in some areas.

Recovery will be dependent on lending. Knight Frank analysts are assuming that mortgage providers will adopt a far more conservative approach to lending in the coming years.

The winners in the property markets in 2009 will be those who can buy in the next six months. ‘Those requiring significant finance will be unlikely to be quick enough on their feet. Vulture funds and cash-rich individuals will be the first to benefit,’ added Bailey.

‘Opportunistic buyers are looking for distressed property sellers. They are particularly interested in repossessions and also development land or even newly completed developments. In fact, anything where values are felt to have fallen as far as they are likely to

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