Realestate bubble

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armchairlawyer
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Re: Realestate bubble

Post by armchairlawyer » Wed May 16, 2018 7:45 pm

pistolpete wrote:
Sat May 12, 2018 2:28 pm
How long do you think before the "bubble bursts" in todays market? Appears to be many condos being built and not too many buyers.
Have a look at this H2 2017 report on the market by Knight Frank. Although it is entitled the Cambodia Property Report, it seems to be limited to Phnom Penh.
http://content.knightfrank.com/research ... 7-5331.pdf

One needs to read between the lines because KF are bound to have their rose-tinted glasses on, especially when writing about the future outlook. Points I found interesting were:
Out of 7,325 units across 26 projects scheduled to complete by the end of 2017, seven projects providing 2,619 units were completed; 64% of anticipated supply rolled over into 2018.
54 projects providing 27,021 units were identified within the future stock due for completion between 2018 to 2021,resulting in an increase of 369%.
Sales of newly launched projects during H2 2017 was recorded at 23%, a decline of 22 percentage points compared with H1 2017, and 30 percentage points compared with the same period in 2016. However, the overall number of units sold increased by 184% to 940 units.
Figure 13 shows cumulative supply of condo units tripling from 2017 to 2020.
Sale and rental prices are basically flat or declining slightly. The outlook for the high end condos is less good than that for cheaper units.

Office supply has doubled from 2013 to 2017. It is projected to have gone up a further 50% by end 2020.
Office rents have declined a little recently and are projected to decline further, especially in the Grade C (cheaper) sector. Occupancy is 87%.

Retail space increased by 11.5% in 2017 and is projected to increase by a further 113% in 2018 (yes 113%). However, retail space per capita is low compared to other Asian countries (presumably the markets are not included!) Rents have been flat. Occupancy is 85%.
xxxxxxx
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Re: Realestate bubble

Post by xxxxxxx » Wed May 16, 2018 8:01 pm

Condos become hell-holes without strong, effective management and financially viable condo associations to collect the fees required to maintain the property and replace common assets when required. I would have zero faith in what happens in regards to condo management shortly after all the units are sold and the developer has no interest in good PR with clients there anymore. This is very problematic in condo buildings where most of the actual unit owners are only investors and the building occupants/renters don't really care about fully maintaining the property, which seems to be mostly the case in the Cambodian market.

I wouldn't recommend buying a condo here for that reason alone.
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Re: Realestate bubble

Post by offroadscholar » Wed May 16, 2018 8:10 pm

xxxxxxx wrote:
Wed May 16, 2018 8:01 pm
Condos become hell-holes without strong, effective management and financially viable condo associations to collect the fees required to maintain the property and replace common assets when required. I would have zero faith in what happens in regards to condo management shortly after all the units are sold and the developer has no interest in good PR with clients there anymore. This is very problematic in condo buildings where most of the actual unit owners are only investors and the building occupants/renters don't really care about fully maintaining the property, which seems to be mostly the case in the Cambodian market.

I wouldn't recommend buying a condo here for that reason alone.
Couldn't agree more
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armchairlawyer
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Re: Realestate bubble

Post by armchairlawyer » Wed May 16, 2018 8:16 pm

xxxxxxx wrote:
Wed May 16, 2018 8:01 pm
Condos become hell-holes without strong, effective management and financially viable condo associations to collect the fees required to maintain the property and replace common assets when required. I would have zero faith in what happens in regards to condo management shortly after all the units are sold and the developer has no interest in good PR with clients there anymore. This is very problematic in condo buildings where most of the actual unit owners are only investors and the building occupants/renters don't really care about fully maintaining the property, which seems to be mostly the case in the Cambodian market.

I wouldn't recommend buying a condo here for that reason alone.
Interesting. As I said, one has to read between the lines of the Knight Frank report. They also had a section on the Serviced Apartment sector in which this was said:
"The Ascott Limited is the world’s largest serviced apartment operator and with it brings international standards and quality of service. With another two projects confirmed in Phnom Penh under The Ascott Limited and the entry of more international operators, local operators will need to improve their service offerings to remain competitive which can only be a good thing for the market."
No such knight in shining armour was mentioned in the condo section of the report!
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Re: Realestate bubble

Post by armchairlawyer » Wed May 16, 2018 8:19 pm

Also see this PPP piece based on the 2016 Knight Frank market report.
https://www.phnompenhpost.com/post-prop ... oversupply
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Re: Realestate bubble

Post by armchairlawyer » Sat May 19, 2018 8:18 pm

offroadscholar wrote:
Sun May 13, 2018 1:31 pm
I do enjoy their weekly interviews though. Dollar bear up next week which is a contrarian view atm.
I listened to the $ bear (Juliette Declercq). Her case is basically:
1. The US economy is the leading (in terms of time) world economy. If the rest of the world follows US growth, the $ will weaken as real yields in the RoW catch up US yields. If the US economy slips back, yields in the US will fall. Either route is bearish for the $. The former will mean $ weakness against all currencies, the latter will mean $ weakness against the big currencies, she named euro, yen and gold, but $ strength against Emerging Market currencies. She favours the latter.
2. However, she sees diversification in the EM world. Some are doing badly, eg Argentina and Turkey, but some are doing well, she thinks Brazil, Russia, India and S. Africa.
3. China's economy has been softening and the government there has been easing and will continue to do so. The stronger EM economies have begun decoupling from the Chinese economy.
4. Inflation globally will ease.
5. The US economy is dependant on the US consumer, and he is buoyant. However, with full employment, there is no upward space. Therefore no path to stronger US growth compared to EMs either. Credit has been fuelling consumer spending, and credit has been growing rapidly. As soon as this peaks, it's downhill for the US economy. The Fed will then cut rates and down goes the $. 2018 is uncertain but 2019 will mean $ weakness for sure.
6. When pressed on individual currencies that should do well, she mentioned ZAR and AUD.
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