Asia delays projects

Agence France-Presse

The simple sign announces "South Beach" and calls it "Singapore's New Lifestyle Quarter" but there is little sign of life at the collection of dilapidated military buildings.

The abandoned camp was to become a $1.1 billion luxury hotel, office, retail and residential project known as South Beach.

Instead, it has become a symbol of the global economic downturn.

Construction of South Beach has not yet begun. Cautious Asian property developers are delaying some residential projects and reconsidering others during the worldwide crisis which has tightened funding and crimped buyer interest, industry players said.

Singapore has been among the hardest hit. Two years ago global real estate firm Jones Lang LaSalle described the city-state's market as the world's hottest. Property prices surged 31 percent overall in 2007.

Now the island nation is dealing with an over-supplied market, said Nick Brooke, of Hong Kong-based Professional Property Services Ltd.

"Singapore is in free-fall," said Brooke, chairman of the regional real estate consultancy.

Since the fourth quarter of 2007, the number of Singapore private residential units "in the pipeline" has decreased every quarter and more completion dates have been pushed back to 2012 and beyond, DTZ Research said in a February report.

Real estate firms "are already delaying construction and launches" of projects, the property consultancy said.

Tight conditions

Tight lending conditions during the worst economic crisis since the Great Depression of the 1930s are partly to blame for deferrals, industry players said. Pairote Sukjan, president of Buathong Property in Bangkok, said the crisis prompted Thai banks to cut back on lending to both condominium developers and buyers.

"Several condominium projects were delayed or cancelled because developers could not get loans from banks easily," Pairote said.

Real estate companies are still having difficulty securing debt at reasonable spreads, Macquarie Research said.

According to media reports, China's biggest property developer by market value, China Vanke, said it postponed two residential projects last year, one each in Shanghai and Shenzhen.

India's top listed property firm, DLF, recently reported that consolidated net profit for the third quarter fell 68.7 percent, hit by a liquidity crunch and a slowdown in large construction projects.

Rajiv Singh, the firm's vice chairman, said it would exercise caution and focus on timely completion of existing projects.