Source : Business Times - 9 Oct 2008
Investor sentiment in the property market weakened further in Q3 2008 - exacerbated in the last two weeks of the quarter from the spate of bailing out and bankruptcies of financial institutions in the US, which spread to Europe - said a report by property firm DTZ released on Thursday.
Investment sales in Q3 2008 slowed down significantly, compounded by the increase in margin spread. Transaction value totalled about $1.1 billion (US$0.7 billion), a sharp decline of 79 per cent over last quarter.
Total investment in the first three quarters of 2008 was $14.5 billion, one-third of 2007’s total sales and 57 per cent of 2006’s total sales.
Most of the deals in the third quarter were small (below $100 million) due to credit tightening.
The office and industrial sectors were no longer the two main drivers like in the first half of 2008. The residential sector was the main contributor, due mainly to two residential sites sold by the government and the sale of 36 apartments at Goodwood Residences to Kuwait Finance House at about $2,800 per square foot. There was one collective sale of Ruby Apartments at $11 million.
The retail market also slowed down in Q3 2008 due to consumer budget tightening under inflation pressures and a weaker economy. Visitor arrivals, which is one of the drivers of the retail sector, had fallen for three consecutive months from June to August.
Although retail sales for July 2008, after removing price effect and excluding motor vehicles, increased by 3.9 per cent (year-on-year), this could be due to the 2 per cent hike in GST last July which dampened sales then. Total sales for July 2008 fell 1.7 per cent to $2.88 billion, compared to the $2.93 billion in June 2008.
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