International briefs

Prices jumped in Hong Kong and other Asian cities
Asian recovery sparks fear of real estate bubble

Real estate markets in Asia are rebounding so quickly from the global downturn that several governments have signaled that they may step in to cool rising prices.

In a surprising turn of events, the sinking prices, stalled transactions and dried-up credit spurred by the Wall Street fallout are gone. Now, thanks to a faster-than-expected rebound and eager attention by investors, the governments of China, Hong Kong and Singapore are keeping an eye on speculation, according to a report in the New York Times.

In a speech in October, Donald Tsang, the chief executive of Hong Kong, said, “The relatively small number of residential units completed and the record prices attained in certain transactions this year have caused concern about the supply of flats, difficulty in buying a home and the possibility of a property bubble.”

Prices in several large Chinese cities are 6 to 9 percent higher than in the previous upturn. Reports say the government is expected to introduce price curbs.

Among several changes in its mortgage industry, Hong Kong is limiting loans on homes selling for $2.6 million or more at 60 percent, down from 70 percent.

Last month, Singapore’s central bank said it would keep a close eye on home prices and transactions. Interest-only loans have already been shut down to discourage flipping apartments.

Huge Italian developer falls on hard times

A Milan bankruptcy court last month approved the 500 million euro debt restructuring plan of Italian real estate development group Risanamento SpA, arguably one of the worst victims of the Italian real estate collapse.

Risanamento’s property values plummeted during the financial crisis and as of last month, the development group had 2.9 billion euros of unsustainable debt — the equivalent of U.S.$4.3 billion.

In the days leading up to the court hearing, Risanamento’s share values saw seismic shifts, with investors wagering on whether the embattled group would declare bankruptcy. In addition, construction on the group’s Santa Giulia project — a massive luxury residential development designed by starchitect Lord Norman Foster — has halted. The unfinished development, which counts Rupert Murdoch’s Sky Italia offices as a tenant, is now riddled with unfinished roadways and park areas overrun with rats, residents said, according to a published report from Reuters.

Foreign investors keen on Australia

Australian residential brokers are hopeful an influx of foreign investment will further propel a real estate recovery there.

John Bongiorno, director of the Melbourne-based Marshall White & Co., told the Brisbane Times that international buyers comprise around 5 to 10 percent of his firm’s sales. To facilitate deals, the company has forged ties with immigration services firms in China, where Bongiorno said many of his out-of-country clientele originate.

Although some real estate experts in Australia are concerned that a stronger U.S. dollar would hamper international interest in housing, Australia has been able to hold the attention of foreign buyers. Home prices in Australia jumped a little over 8 percent in the first nine months of 2009, the Brisbane Times reported, according to the RP Data-Rismark Index.

A new rule bars foreigners from purchasing an existing home. According to Australian law, noncitizens can only purchase newly built homes, a standard created to spur residential development.

Compiled by Amy Tennery