A Quietly Luxurious  and

Generously Spacious Development 

in District 10

A Prestigious Development

Exuding A Sense of Calmness and Serenity

With Just The Right Touch of Elegance

For more information

about price, floor plans,

and how you can own a unit here,

click here

OR

Call Jarene Chuang

@

(+65) 9431 4139

Do you know:

On the first day of the launch,

more than 350 units of the 450 units were sold?

98.1% of 1 bedroom + study were sold

within the first day (only 2 units were left!)

The BEST among all 2 bedroom units were all sold!

Even The BEST among all 3 bedrooms

were gone on the first day!

2 penthouse units were sold on the first day

(That is usually quite rare)!

Find out why many buyers

are flocking to view Bedok Residences &

made the decision ON THE SPOT to invest in one!!!

(Clue: Location! Location! Location!)

Click here to find out why!

PM wants a rental property while the Lodge is being renovated

Security demands making the choice more difficult

One in ten Aussies in housing stress

PRIME Minister Julia Gillard is experiencing Australia’s housing crisis first hand in her search for an alternative home while the Lodge is being renovated.

The Sydney Morning Herald reports Ms Gillard’s office has ruled out a purchase to fill the gap, leaving the first couple to rely on the difficult rental market.

But like many Australians, she is struggling to find a suitable property.

And to make things more difficult, the Australian Federal Police have produced a lengthy list of demands for any prospective home.

Ms Gillard and partner Tim Mathieson need to find a home with a secure entry and car access, live-in accommodation for bodyguards and bulletproof glass.

The Lodge – the traditional home of the prime minister – is in urgent need of a new roof, plumbing upgrades and an overhaul of some dodgy wiring.

It is expected to be a huge project that will reportedly cost millions of dollars and take 18 months to complete.

Fairfax reports the couple ruled out moving into the Governor-General’s Yarralumla residence, with Mr Mathieson calling the home “intimidating”.

According to a recent report, one in 10 Australian households is in housing stress and at risk of financial hardship and poverty.

And renters are most at risk, with 26 per cent in housing stress.

Hobart and Sydney put the tightest squeeze on renters.

Hobart has the highest rate of renters in housing stress at 33 per cent, while Sydney has the highest number with more than 100,000 households facing poverty because of the high cost of renting.

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Australian residential building approvals fell 13.6 per cent to in September, seasonally adjusted, the Australian Bureau of Statistics (ABS) said on Wednesday.

Economists’ forecasts had centred on a five per cent fall in approvals in September.

Approvals for private sector houses in September rose 1.1 per cent and the volatile “dwelling excluding houses” category fell 20.7 per cent.

Nomura chief economist Stephen Roberts said he expected the housing sector to improve in the coming months, especially after yesterday’s interest rate cut.

The Reserve Bank of Australia cut the cash rate from 4.75 per cent to 4.5 per cent and it was followed by by all four major banks cutting their standard variable interest rate.

“Already, we’ve seen housing finance commitments picking up over the last few months,” Mr Roberts said.

“This pattern with interest rates is only going to accelerate it as we go ahead.

“We’ve seem to have gone through the base as far as housing credit is concerned and that will pick up in the next few months, so some of that will come back to home building approvals.”

Mr Roberts said the rise in building approvals was particularly strong in the larger states.

“The interesting part is that is that the house part of it improved a bit and was relatively strong in both NSW and Victoria,” he said.

“The multi occupancy part is really up and down, particularly the public sector part of it.”

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This compares to a downwardly revised 13,758 units in August.

In the year to September, building approvals were down 12 per cent, the Australian Bureau of Statistics (ABS) said on Wednesday.

Economists’ forecasts had centred on a five per cent fall in approvals in September.

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About 14 per cent of them have either already migrated from China or have applied for migration.

The three most favoured destinations by the Chinese rich are the United States, Canada and Singapore. The US is the first choice of some 40 per cent of the people interviewed, according to a white paper jointly released by Hurun Report and the Bank of China (BOC) on Saturday.

According to US Citizenship and Immigration Services (USCIS), the number of Chinese applicants for investment immigration has exceeded applications from any other country or region.

‘Among all the destinations in terms of investment immigration, the US always outstands all other options as the country does not impose any quota,’ said Jiao Lingyan, a client executive of the investment immigration department of the Beijing-based GlobeImmi International Education Consultation Co.

‘The minimum amount required for investment immigration to the US is US$500,000 (S$641,130). But it should be noted that this applies to investments in projects recommended by authorities in the US. People considering these projects should take into account that they may not make profits,’ Mr Jiao said.

‘It is worth noting that the minimum amount for investment immigration will be raised in the coming years, because the number of rich people in China is rapidly growing,’ she said.

While 32 per cent of the interviewees said they have invested overseas with a view to immigrate, half of them said they did so mainly for the sake of their children’s education.

‘A growing number of parents in China have realised that children growing up in the examination-oriented education system in China will find it hard to compete in an increasingly globalised world,’ Mr Zhang said.

Chinese immigrants are also getting younger, with the largest group aged between 25 and 30, compared to the 40-45 age group in the past, Mr Zhang said.

The Green Lodge site has an asking price that is above $195 million, or about $866 per square foot per plot ratio (psf ppr). The sale is being conducted through a tender exercise which will close on Dec 8 at 3pm.

The freehold property sits on a land area of about 14,035 square metres (151,075 sq ft). According to the 2008 Master Plan, the site can be redeveloped into a five-storey condominium project at a gross plot ratio of 1.4. Green Lodge currently has an approved density of equivalent plot ratio 1.4896, which means no development charge is payable.

Assuming an average apartment size of 1,000 sq ft and a building efficiency of 90 per cent, the site can accommodate about 210 residential units.

As for the Oxley Rise site, it has a site area of 25,630 sq ft and a gross plot ratio of 4.2 under the 2008 Master Plan.

This means it has the potential to be redeveloped into a new project with a gross floor area of 107,646 sq ft with 20 per cent commercial use and 80 per cent residential use, subject to approval from the relevant authorities.

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Chinese firm Qingjian Realty (South Pacific) Group trumped four other developers to put in the top bid for the site, which measures 218,034.6 sq ft and has a maximum permissible gross floor area of 654,103.9 sq ft. It barely edged out the second-highest bid, by Soilbuild Group Holdings, which came in at $203.888 million, or approximately $312 psf ppr.

The lowest bid came in from Opal Star and Lum Chang Building Contractors, at $290 psf ppr.

The narrow spread of bids indicates developers were more measured in bidding for the site. This could be due to the upcoming supply of around 1,500 private apartments and 700 executive condominiums in Punggol New Town, and the potential slowdown in demand for mass-market homes, in view of economic uncertainties.

While a slowing market may have deterred over-optimistic bidding, the top bid of $330 psf ppr is roughly in line with the $323 psf ppr fetched by the Punggol Field Walk site in September. It shows that tender bids in the Punggol location are holding, although there is lower tender participation today, with five bidders compared to eight in the previous one.

Zuo Haibin, managing director, Qingjian Realty Group, said they are planning for around 650 units of two to four bedrooms. The project should be launched within six to eight months, he added. The breakeven cost to should be around $700 psf.

Units at the nearby 882-unit A Treasure Trove have sold for a median price of $915 psf, based on the 750 units sold since its launch in early September.

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Presenting One Lygon…

Price:

AUD$420,000 with car park!

Deposit:

10% at point of purchase

+ 10% upon completion!

You only need to put down approximately AUD$42,000 at point of purchase and another AUD$42,000 at upon completion.

Location:

1 Lygon Road, Brunswick, Victoria

- Just 4km to Melbourne CBD

Long Term Growth Trend:

8%!

Approximate Completion:

Jul 2012

You do not want to miss out this opportunity!

Call Jarene Chuang at

(+65) 9431 4139 for more information TODAY!!!

Suites @ Newton

is now available

at SPECIAL PREVIEW PRICES!

1-Bedroom only from $1,041,427!
2-Bedroom only from $1,224,853!

Do not to miss such attractive quantum for a Prime D11 property!!!

Prestigious Freehold Development @ D11

1 Surrey Road

By Teambuild Land

~~~Newest Launch!~~~

~~~Worth Considering!~~~

Reasonable Quantum!

 Project Information

Location: 

District 11!

1 Surrey Road Singapore 307740

Tenure: 

FREEHOLD!!

Expected TOP: 

31 Dec 2016

Type of Development:

1 Block of 19 Storey Apartments (Total: 67 Units)

with Mechancial Car Parking and Surface Car Parking & Swimming Pool at 2nd Storey

Site Area:

1,346.51 sqm (14,493.19 sqft)

Total No. of Units:

~ 67 Units consisting of

1 Bedrms: 484 to 624 sqft – 21 units

2 Bedrms: 603 to 764 sqft – 43 units

2 Bedrms PH: 1302 to 1324 sqft – 3 units

Presenting….

An Investor’s Dream Location

- Stone throw away

to Novena MRT Station

Freehold!

Nestled among

private residential area

in Newton vicinity.

19-storey development

with exclusive 67 apartment units
in

Modern Contemporary Architecture Design.

Close to shopping centres

like Velocity@Novena Square,

United Square,

Goldhill Shopping Centre

and Chancery Court.

Educational institutions

located nearby include

Anglo-Chinese School (Junior),

Anglo-Chinese School (Pri)

Only 5 minutes from Orchard Road

and

10 minutes from the Central Business District.

Near medical hub

eg Novena Medical Centre,

Thomson Medical Centre

Near reputable schools,

colleges

and International Schools

Easily accessible

to other parts of the island

via PIE, CTE

You Do Not Want to Miss This Opportunity.

Call/SMS Jarene Chuang

@ (+65) 9431 4139 TODAY!!!

Summary:

• The Singapore operations of a Wall Street brokerage that has collapsed as a result of the European debt crisis are to be wound down.
• Accountancy giant KPMG has been appointed as the provisional liquidator to oversee the process, the firm MF Global Singapore said last night.
• Its parent, MF Global, filed for bankdruptcy protection in New York on Monday with debts of US$39.7billion (S$49 billion) – the biggest United States casualty of Europe’s crisis.
• According to the MF Global website, the operation here was the fourth largest derivatives trader on the Singapore Exchange, in terms of trading volume in the year ened Mar 2011.
• It employed between 100 and 200 staff, which makes it an average-sized brokerage in Singapore.
• MF Global Singapore had been operating here since 1996
• Customers could trade in over-the-counter markets in foreign exchange, precious metals and equity derivatives including Contracts for Difference (CFDs). CPDs are a type of financial instrument that allows an investor to bet on the movement of an asset, whether a stock , currency or commodity, without actually having to own the asset itself.
• In the statement, MF Global Singapore said: “The provisional liquidation is intended to safeguard the interests of the customers of the company and ensure that the company does not engage in new trades, as well as the equal treatment of all creditors of the company.”
• Winding down of the firm will not affect customer funds already placed in segregated accounts.
• The troubles at the firm have hit customers of at least one other brokerage in Singapore.
• Kim Eng Securities revealed yesterday that MF Global Singapore was its CFD counterparty. This means that the CFDs Kim Eng offered its customers came from MF Global Singapore and were traded using the US firm’s trading platform.
• When MF Global Singapore halted all trading in CFDs yesterday, it meant Kim Eng and its CFD customers were also unable to access their CFD portfolios and excute trades or close out exisiting positions.
• “KE CFD is, however, confident that it will be able to provide alternative market access for our clients tomorrow to unwind their open positions,” the brokerage said in a statement.

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• Strong economy first 9 months but global economic uncertainty to take toll
• Sales of new private homes may come close to last year’s record high, but they are unlikely to surpass the figure with global economic uncertainty affecting demand, experts say.
• Homes sales for the first 9 months of this year came in at a slightly more robust 12,301 units compared with 12,051 units in the same period of last year
• Experts say a slower final quarter is likely to leave the final below last year’s tally.
• Developers sold a record-breaking 16,292 homes last year as rock-bottom interest rates and pent-up demand from first-timers and upgraders drove the property market to a new high.
• Low interest rates and a sound local economy should underpin private home buying demand.
• However, the gloomy economic outlook has dampened market sentiment.
• The ongoing economic turmoil in the West will rein in demand to some extent.
• The year-end festive season and school holidays could also sideline potential buyers.
• Other experts noted that though cooling measures have cut demand from speculators and short-term investors, demand from genuine buyers has persisted.
• The 3,604 units sold in the 3 months to Sept 30 was the lowest quarterly figure since the market recovery in mid-2009.
• 13,076 resale and subsale units sold in the first 9 months of this year was also 26 percent lower than the corresponding period last year.
• This year’s total new sales were spurred along by the 143 units sold as at yesterday evening at SIm Lian Group’s Parc Vera in Hougang Avenue 7.
• Units were priced at an average of $800psf. Singaporeans made up 80% of the buyers.

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Together with Henry Park Apartments, which is also up for collective sale at between S$170 million and S$180 million, the total value of properties that have come up for sale in October has hit close to S$5 billion.
Developers are looking at collective sales with some caution now and added that any sale will depend on the attributes of the site and the developer’s risk appetite as well as market sentiment.

Government Land Sales Programme is offering developers many alternative sites.

The 677,493 sq ft Laguna Park site with proximity to the seafront would be a key selling point for any new development. Based on the reserve price, the land price comes to about S$954 per square foot per plot ratio.

Laguna Park was put up for sale earlier this year with a reserve price of S$1.33 billion. But the tender closed without a successful bid.

While the downward revision of the reserve price suggests that sellers might be more motivated to sell now, new requirements for en bloc sales allow a development to be put up for sale for one year only after receiving 80 per cent approval from homeowners. When this lapses, sellers have to seek a new mandate. Within this year, no collective sale has been transacted at over S$200 million yet. Generally, the key will be the land price and quantum.

The 99,000 sq ft Henry Park site, based on its asking price, the land price works out to be S$1,216-S$1,287 per square foot per plot ratio.

Still, analyst does not believe that the slew of collective sale sites will mean land prices will fall. Some sellers may have lowered their asking prices but their reserve price has stayed the same.

Barring the worsening in the global economic situation, the property market here should remain stable.

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• A large supply of mass-market homes is set to enter the market by the end of this year.
• These 99-year leasehold projects are mostly from the flood of suburban state land released by the government over the last year as it attempted to cool robust home-buying demand from first-timers and upgraders.
• At least 5 larger suburban projects are expected to be launched by the end of this year. The total number of units is expected to be approximately 3000 units.
• Far East Organization, CapitaLand, City Developments, UOL Group and Sim Lian Group are just some of the developers that have been gathering interest for their projects recently.
• - Sim Lian’s 452 Par Vara at Hougang Avenue 7 was just launched during the weekend. About 70% of the released units were snapped up by mostly local buyers. They were sold at an average of $800psf – $850psf.
• Experts said developers are eager to quicken their pace of launches over fears of a deteriorating economic outlook.
• They said mass-market projects may also be affected by a fresh batch of sub-urban land supply expected to enter the market.
• The Government Land Sales Programme for the first half of next year is expected to be launched by the end of the year.
• With some recent residential tenders attracting lower bids than sites previously sold in the vicinity, this has also sounded alarm bells for some builders.
• Experts said that pricing will be the key in determining if these slates of mass-market launches do well.
• Although mass-market homes have powered new private home sales since the cooling measures were introduced last January, the question is whether this supply can be absorbed continually.
• New private home sales rose a higher-than-expected 31 percent last month, with buyers snapping up 1,631 units.
• Suburban homes made up 81% of total sales.

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• HDB Resale Prices has increased by 3.8% as compared to the previous quarter
• Resale transactions fell by 10% from 6,581 cases in the second quarter to 5,903 cases in the third quarter.
• Overall increase from Q3 2011 is 11.6%, which is an all-time high, i.e. HDB resale prices has been increasing at an average of almost 3% per quarter.
• Since Q1 this year, the quarterly price increase has accelerated, despite HDB’s largest release of new flats this year and next.
• HDB may have increased the supply of new flats launched and it has attracted many first time buyers who are not in a hurry to buy since there is a waiting time of 3 years.
• Demand in the resale market is strong and continues to be strong because it is coming from first-timers and families that have immediate housing needs, singles, PRs, up-graders and down-graders. These buyers make up almost 80 per cent of the resale market.
• On the supply side, the crunch in the resale market continues to cause prices to go up, and this is worsened by the mindset that sellers add on a cash-over-valuation (COV) component despite increasing valuations. They are able to do this as supply is tight and demand is strong.
• Weakened resale transaction volumes is expected by ERA not solely because more buyers have crossed over to the BTO (build-to-order) market. The lack of supply and high prices have made it more difficult to conclude deals.
• HDB will launch 4,200 BTO flats for sale in various towns such as Bedok, Bukit Panjang, Hougang, Punggol and Yishun next month.
• Including units sold under the Sale of Balance Flats (SBF) Exercise in September 2011, HDB’s total flat supply for 2011 will be 28,000 units.
• For 2012, prospective flat buyers can look forward to another 25,000 BTO flats. HDB said more details on that will be given at the launch.
• One reason that the housing supply is tight is that some of the current policies do not incentivise HDB owners to sell.
• A 2003 rule allowing them to rent out their flat, has prompted upgraders to move to a private apartment while keeping their HDB for rental income. And last August, restrictions on dual home ownership meant that those who already own a private home and a HDB flat, were even more reluctant to sell their unit. High rentals have also encouraged owners to hang on to their flats.

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In this article, the author, Mr Goh mentioned that he had met up with some old friends who are property investors, and they were musing about their property investments in Singapore. His conclusions were that:

1. Making money from the property market is not as easy as it seems.
2. The local property market is like a roller coaster ride.
3. It’s about the timing: like the stock market, the property market moves in cycles and if you are caught in the wrong end of the cycle, it may take years before you see the price you paid for that dream home again.
4. Sometimes, on paper, it would seem like a hefty gain is made on your property but after deducting the interest paid on the mortgage and the sums spent over the years on repairs and maintenance, the returns does not seem to be a risk worth taking, considering the large outlay involved.
5. During bad times, condo rentals can plunge so badly that it was uneconomical for owners to let out the unit.
6. Getting into property investment is far easier than getting out of it.

How true are these statements?

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A stabilizing property market does not mean that the property prices will drop or remain constant. It just simply implies that property prices will climb at a steady, constant pace.

What is driving the property market?

One word can sum it all. FEAR.

With reports on many foreigners coming into Singapore to invest in properties, and stories of how affluent Chinese from China coming into Singapore and sweeping the property market effortlessly, it has caused many people to feel afraid that they might lose out. And whenever there is a report that the property market had slowed down due to a lower percentage rise in resale prices, many people rush in to buy.

PM Lee was implying mainly about the HDB property market. He mentioned that HDB is working building more HDB properties to meet the demand for HDB properties. How does it affect the private property market?

All things constant, it should lead to a stabilizing effect on private property market as well. There will probably be short periods of time where HDB property market is not moving, but private property market is moving and vice versa. This will be due to new buyers (buying for their own usage) buying the more value-for-money properties at that moment in time. Whenever private property prices are deemed as too expensive, these buyers will switch back to buying HDB properties again and vice-versa.

With the “new average” combined income of $10,000 per month, there will be price resistance whenever property prices cross the $1 – $1.2 million mark. Developers know this – hence, the existence of Mickey Mouse apartments. I would expect new developments …..

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Why do I emphasize more on investing according to your investing style?

Because Type A and Type B investors have totally different personalities. Asking Type A to emulate Type B and vice versa, is definitely going to result in disastrous outcomes. It’s akin to trying to make  a square peg fit a round hole.

Let us face it. Do we really think that we are as logical as we like to think we are? In all my years of experiences in selling properties, buyers can have many reasons why they do not want to buy a property but they only need ONE reason to BUY a property. All my investors use logical reasons to explain their illogical feelings. That is why no matter how logical, how right, how filial it seems, as long as your kids do not feel like helping you with the housework, they will not do it.

Let’s use an example. Imagine that the property market is more suitable for quick profits. This type of market is very suitable for Type A investors. In this market, properties have to be sold quickly. Decisions have to be made quickly. A Type A investor is probably one who can make decisions quickly (since he has already unconsciously done his “homework”), and can handle the stress level. He will probably do well in this market since to him, it is not stressful at all. In fact, it is exciting to him.

To a Type B investor, this type of stress is hell to him. It’s not that he can’t make the decision quickly, it’s just that he does not have sufficient information to  make a quick decision (he doesn’t do his “homework” as often as Type A investor probably because his work, and lifestyle does not allow him to. Typically, these investors have young children or run businesses that require their constant attention and would prefer to take a more hands-off approach to investing in properties). And he doesn’t really like to sell a property. He likes to keep the property, he likes to count how many properties he has, rather than how much money he makes. He needs a lot of good reasons to sell the property but in this particular market that favours Type A investors, by the time he makes the decision, the steam has run out. The buyers are all gone, and now, he is stuck wondering why. As time goes on, he is forced to lower his price and in the end, he does not make as much money as Type A investors. In the end, he swore that he will never invest in property again and just because he was investing in the wrong market for himself.

On the other hand, a market where property market is more suitable for accumulating a portfolio of properties requires a different approach. This type of market is very suitable for Type B investors. In this market, many properties are bought over a period of time, and various strategies are used to minimize tax. Type B investors generally are comfortable being a landlord and know the benefits of paying for the services of a tax agent and property manager to manage their property portfolio. As time goes by, they eventually sell off a few properties to pay off their mortgage loan, and eventually enjoy a positive cash flow in their property portfolio. They are aware that the property prices will increase gradually and they are comfortable with it because they want to keep the property and have no intention of selling it. Because it is suitable to the lifestyle and personality of Type B investors, they will do very well in this type of property market.

On the other hand, a Type A investor will do terribly in this market. They do not have the patience for it. They do not like to be a landlord and they find it a hassle. They do not have the patience to understand the tax laws, and some of them might not even want to pay for a tax agent or property manager. The property becomes very poorly managed and they might even have tenants who were so fed-up that they damage the property. Because the property value rises very slowly, Type A investors get even more impatient. In the end, out of frustration, they decided to sell their properties, and swear once again, that they will never invest in property again.

 What you need to know, is what your natural reaction will be. Sure, you can change from Type A to Type B along the way, but it will be a gradual change, not an immediate change. That is known as your personal growth, being able to handle situations that you were not able to previously. But changing overnight, that has never happened. When a person is forced to change, he will simply retreat to his natural state of being. It is a very normal reaction. Hence, you need to know your investing style and be comfortable with it. There is no need to compare with others because they are not in your situation and vice versa. And it’s simply none of your business! You can learn from them, but don’t compare yourself with others. 

Hence, there is no point in investing in your country of residence, or birth, if your investing style doesn’t match.

Once you have identified the market that you are suited to invest it, do understand the procedures of investing before you start. After that, find a reliable realtor and you are good to go!

[End of Part 5: Finding the correct market suitable for your investing style]

[Click here to go back to Part 1: Introduction]

[Click here to go back Part 2: Knowing Your Investing Style]

[Click here to go back to Part 3: Knowing what and where your priorities are]

[Click here to go to Part 4: Knowing, and understanding the characteristics of the property market that you are interested in]

Find out about the following:

1. What is the rental yield? – This will determine as a general rule of thumb how much you can rent out your property.
2. What is the interest rate?
3. Historically, what has been the exchange rate if you are investing in international properties?
4. Who rents? Locals or foreigners? What is the proportion? – This will determine how vulnerable your property is to the economic cycles. For e.g. if more foreigners rent, during the downside of the economy, generally, most foreigners would be the first to leave, hence, affect your rent.
5. What are the vacancy rates for the past 5 years or more? – The more information you can get for this, the better, so that you will know how healthy the property market is during the downturn of the economic cycle.
6. What is the demand and supply of properties in that country? Naturally, if the supply is tight, the demand will be higher.
7. How established are the property laws on rentals? – The more established, the better it is for the landlord and tenants.
8. Is the government stable? – This will in turn affect the economy of the country.
9. How do the government control the property prices? A market that is more easily controlled by the government will be subjected to more fluctuations in the property prices.
10. What are the aims of the government policies? Are they aimed at preventing buyers from buying (long term or short term), or preventing the sellers from selling (long term or short term)?
11. What is the mentality of a mid-range investor? Are they more individualistic or more of like a herd-mentality? – This determines how level-headed a typical investor is. The more level-headed they are, the more stable in property prices.
12. Listen to a typical investor. Do they talk more about make profits in the shortest time frame? Or do they talk about how many properties they acquire?
13. Talk to at least 5 – 10 property agents. Do they invest in properties for long-term profit? Or do they prefer to make short-term profits in the shortest time? What is their rationale? If the property market is healthy and stable, most property agents would invest in properties as their income will be stable. However, if the property market is subjected to fluctuations, most property agents would not invest in properties as their incomes are not stable and they would rather make short-term profits, than to subject themselves to the risk of property ownership.

Some of the information can be obtained from realtors. However, not many is curious enough to take the time and effort to study the trends of the property market (well, maybe except for me). Among those who are curious enough, they will only reveal the information to their long-time clients. After all these are precious information that they had spent time gathering. Hence, most of the time, you may have to do the work yourself. The information is always available. However, without statistical training, knowing the information doesn’t mean that you can interpret it into useful information.

You may notice that I didn’t include information like the GDP, the size and prospects of economy of the country. I’m sure I didn’t need to mention that one shouldn’t invest in a country that doesn’t have a stable government and economy!

Look out for tomorrow’s post on Part 5: Finding the correct market suitable for your investing style!

[End of Part 4: Knowing, and understanding the characteristics of the property market that you are interested in]

[Click here to go back to Part 1: Introduction]

[Click here to go back Part 2: Knowing Your Investing Style]

[Click here to go back to Part 3: Knowing what and where your priorities are]

[Click here to go to Part 5: Finding the correct market suitable for your investing style]

Money is just a method of keeping score. Let us not forget why money was created in the first place. Money is just printed paper, with a value that everyone agrees upon at that point in time. It was created to be used as a form of payment that is convenient in exchanged for better wealth vehicles or other services. In the olden days, barter trade was done: you use 10 pigs in exchange for 5 bags of rice. Or maybe 200 pigs were exchanged for a property. Imagine the difficulties of driving 200 pigs to the new owner. And the owner may not know what to do with it! Hence, money was invented!

Here’s the thing: so, you have made $x amount of money. What happens next? It is what you DO WITH THE MONEY that is important, and NOT how much more money you have with your friends. At the end of the day, you may not really know what your friends are experiencing and vice-versa. Maybe your friends are more motivated than you due to some personal reasons that you are not aware of. After all, you may not know your friends as well as you think. And truth to be told, how much money your friends make is really none of your business. If you think about it, you are certainly not going to use it, so why fret about it? Just focus on your own life and family!

Many of us started out with investing for ourselves (so that we have some cash flow when we retire for our daily expenditures, travels, and medical expenses. Naturally, we would prefer to be as independent as possible for as long as possible.), for our children (for their university fees, as a backup plan for them), and for our parents (so that it will be easier for us to take care of them). Somewhere along the lines, we got too caught up with being afraid to lose out.

This is especially apparent when Type A and Type B investors are having a discussion on property investing. As I mentioned, these 2 types of personality do not mix well. So, whenever a Type B investors tells a Type A investor about how many properties he has and the Type A investor most probably feel a rush of competitiveness, a feeling of fear of losing to his old friend. On the other hand, when a type A investor happily shares with a Type B investor about how much money he made within a short time frame, he will most of the time feel a sense of rush to sell his properties, or he will wonder whether it is the right thing to do by holding on to his property. 

Hence, knowing why and who are you investing for, helps you focus on your goals. Many investors forgot why they are investing. They got caught up in the I-must-not-lose-out-to-my-friends game. Re-look into why you got into investing in the first place! Perhaps you are investing for your family. Make sure you have a picture of your family in your wallet or handbag. Whenever you lose your focus, tap your wallet. Use it as a reminder to focus on your goals. You may also be investing for your round-the-world trip with your spouse when both of you retire. Take a world map and use stickers to mark the places you want to visit. Use your own creativity to focus on your goals. And you need not share this with anyone so it can be whatever you want it to be! You might even want to share your dream with your children!

[End of Part 3: Knowing what and where your priorities are]

[Click here to go back to Part 1: Introduction]

[Click here to go back Part 2: Knowing Your Investing Style]

[Click here to go to Part 4: Knowing, and understanding the characteristics of the property market that you are interested in]

[Click here to go to Part 5: Finding the correct market suitable for your investing style]

What is holding capacity?

In any economy, there are always upturns and downturns. It is during the downturn that everyone should be more mindful of.

During the downturn of the economy, jobs are lost and businesses are slow. The tenant (especially if it is a foreigner), might have to leave the country. If one is forced to sell the property during an economic downturn, it is not surprising for him to make a loss. Hence, your holding capacity is your ability to hang on to your property if there is no rental for 8 – 12 months on top of your personal and family expenditures.

What is your investing EQ on property investing?

Do you prefer to invest quickly, make a certain amount of profit in a short time (within a few months – 1 year or 3 years), and get out of the property market quickly (Type A)? Generally, you do not like to hold on to a property due to the hassle of being a landlord. Also, you like to make money, rather than holding on to the property. Your concern is how much money you can make out of the property in the shortest time frame possible. Sometimes, you might be afraid to hold on to the property because of the financial commitments that you have, or simply, you just prefer to have as little financial commitments as possible.  

Do you prefer to hold the property indefinitely so that it can generate residual income for you, and you can leave it behind to your children (Type B)? Generally, you prefer to hold on to the property indefinitely so that it can generate residual income for you. You are comfortable with being a landlord, and are aware of what your responsibilities are as a landlord. You know the importance of having a tax agent and property manager (if you are investing in Australian’s properties) to manage your property portfolio and your taxes.

As a general rule of thumb, these 2 types of investors do not get along. Type A investors will bring up the fear of losing out in Type B especially during boom times because Type A investors will be making massive profits. And Type B investors will bring out the competitiveness, and worry warts of Type A investors who will realized that all they have is cash and they do not have any properties that will generate long-term residual incomes.

However, if Type A investors tries to invest the way Type B invests, he will become impatient, and get frustrated with the speed of making the profits, and also the responsibilities of being a landlord (sometimes, to the extent of becoming a landlord from hell). On the other hand, if Type B investors tries to invest the way Type A invests, it is either he misses the boat or he will become very stressed over making profits through selling the properties quickly (some of them might even have nightmares).

I think the best way is to be comfortable with your investing style. Type A and Type B will do well to learn from each other. But unless they can find a way to reconcile with their totally different styles of investing, just stick to their style and be comfortable with it.

[End of Part 2: Knowing Your Investing Style]

[Click here to go back to Part 1: Introduction]

[Click here to go to Part 3: Knowing what and where your priorities are]

[Click here to go to Part 4: Knowing, and understanding the characteristics of the property market that you are interested in]

[Click here to go to Part 5: Finding the correct market suitable for your investing style]

Not even the property market “experts” can do it accurately. Why is that so?

Actually, the reason is simple. It is because what property market experts do, is to crunch the numbers. They do not have a “feel” of the consumers who are actually investing or selling their properties. They generally talk about the possible reactions and moves of the consumers.

On the other hand, realtors on the other hand, because they are constantly talking to their clients, are in a better position to know what ARE their demands and expectations. But they do not have the actual numbers to support their opinions of where the market is going.

 So, predicting where the property market is going is actually an art of combining the science of numbers and the knowing of what most investors and property owners are going to do, or will be doing. Note that it is not a prediction of the investors, and property owners’ reactions. Instead, it is the knowledge of what most investors are feeling, and what they will be doing in response to the property market, and it is gained through interactions with them.

Why is knowing the feelings of investors and property owners important?

It is because in property investing, it is STILL the emotions that rule the day, NOT the logic. The property market is driven more by sentiments. Most investors simply JUSTIFY their illogical choices using LOGICAL explanations.

In property investing, there are 4 parts that all investors must be aware of:

1. Knowing your investing style
2. Knowing what your priorities are.
3. Knowing, and understanding the characteristics of the property market that you are interested in
4. Finding the correct market suitable for your investing style (and if it is not in your country of residence, you must find the market that is suitable for you).

With full awareness, the investors can invest in properties successfully!

[End of Part 1: Introduction]

[Click here to go to Part 2: Knowing Your Investing Style]

 [Click here to go to Part 3: Knowing what and where your priorities are]

[Click here to go to Part 4: Knowing, and understanding the characteristics of the property market that you are interested in]

[Click here to go to Part 5: Finding the correct market suitable for your investing style]

This new development is located along Victoria Street in Abbortsford (click here for location), one of the most popular suburbs in Melbourne at a short tram ride of 3.5km away from Melbourne CBD.

Whether you need to do some grocery shopping, require some banking services, or have some fashion emergencies, Victoria Gardens Shopping Centre is just across the road. You can find Ikea is there too, for your favourite Swedish meatballs! Yarra River and Studley Park for nature enthusiasts are located at walking distance from this development.

Expected commencement of construction is in June 2011. Since this development shall be purchased off-the-plan, potential investors will enjoy substantial savings from stamp duties should they invest before construction begins. It is expected to be completed in mid 2013.

Comparative Rental of surrounding areas: $350 – $370 AUD / week (based on Apr 2011 on surrounding areas)

Abbortsford is popular among professionals, young couples and singles. Being just the right distance away from CBD, with ample facilities, and yet close to nature, it is the ideal living place for a start-up family and young professionals – your ideal tenants.

Deposit required: 10% for initial deposit +10% upon settlement

Prices start from $439,000 AUD for a single bedroom unit with car park.

The number of single bedroom units with car park is limited!

Interested parties, please call me at (+65) 9431 4139 for more details.

I was meeting a client, explaining to him about property investing in Melbourne. There are certainly many differences between investing a property in Melbourne and Singapore. But one question that is constantly asked is: If I pay for property management (to a property manager) and tax management (to a tax agent), doesn’t it increase my cost of owning the property? Can I ask my friend who is staying in Melbourne to do it for me to save costs?

Quality products do not come cheap. Cheap products are never good.

I have never believed in free things. Quality products do not come cheap. Cheap products are never good. I had a reply to that before. Someone told me that hawker food is cheap and good. Not neccessarily so, I replied. When we go to a restaurant, we are not just paying for the food: we are paying for the ambience, the lighting, the comfort, the cool air, and the pleasure of being served. All these come with a price. If we do not or unwilling to pay for the cost, the restaurants would just close down. And we will not be able to enjoy it anymore. Hawker food is cheap precisely because their cost of operation is low!

Would you work for your boss if today, he tells you he will only pay 50% of your income?

Something or even some knowledge that anyone has spent time and effort is doing,  making or researching, has to be paid accordingly. If he isn’t paid accordingly, he will not be able to sustain his life. Who doesn’t have a family to feed, children to raise, parents to look after or even other responsibilities? Or, let’s put it this way.  If your boss asked you to work for half of your income, would you do it? Or would you agree to it, but spend 50% of the time surfing the internet, or selling and buying your shares? Isn’t it a natural response if you are not paid accordingly for YOUR services rendered? If so, why would you do the same to another person?

The Value of a Tax Agent and Property Manager

I think at the end of the day, it is the value of having a tax agent, a property manager or even a surveyor that some of my clients seem to be missing out. For example, the value of having a tax agent is tremendous: he basically helps the owner save money by providing services to his clients regarding liabilities and entitlements under taxation laws. He advises clients or represents them in dealing with the Commissioner of Taxation. He also prepares tax documents and lodges them for assessment, determination, notice or decision. In this way, he makes sure that your tax is correctly paid and all your deductions are correct. If you tried to do this yourself, you may missed out some tiny detail, or you didn’t know that you can claim for this deduction so you might be taxed more due to a larger taxable income.

A property manager helps you with your rental. If your tenant decided to break lease, he will help you to get the next tenant quickly. He monitors the rental around your property, so that if it increases, you will know and decide whether you want to increase the rental (sometimes, you may not want to increase it if you have a very good tenant). Don’t you think all these services needs to be paid accordingly?

The Right to Demand

The most important thing about paying for services is this: if you pay for a services, you have a right to demand or ask for services. If you are not paying for the services, you do not have the right to demand. The ladies would know of this: when you have free samples for your cosmetics, how many can you ask for? Only 1, isn’t it? And the amount is so little, it’s barely enough for you to use, isn’t it?

Asking your relative to manage your property in another country, is the same thing! Your relative is probably busy working. Will he have the time to monitor the rental rates? Will he have the time to travel to your property (let’s not forget that Melbourne is much, much bigger than Singapore!) When tenants break lease unexpectedly, will he know what to do? Well, since you are not paying him to manage your property, then, you can’t really demand much from him, isn’t it?

Vast Difference between Fundamentally refusing to pay VS Inquiring about the Price of Services.

Someone who is asking for the price of these services knows the value of these services. Basically, he just wants to compare the prices, and input these figures as part of the cost of investing a property.

A person who fundamentally refuses to pay for these services might not even have the means to pay for the monthly instalments. Hence, he is just trying to cut the cost of ownership to a price that he is comfortable with. Sometimes, these people do not even have the recommended emergency funds set aside for investing in a property investing (it is 8 – 10 months of the monthly instalment for the property. Naturally, the more properties one invest in, the more funds one will have to set aside.).

To these clients, maybe you are just not ready to invest in property – it might be insufficient knowledge, finances and many other reasons.

How do I know that I am ready to invest in property?

You will know whether you are comfortable to invest in properties: You are excited, willing to pay for the necessary services, did your calculations etc. Generally, you feel good about investing.

How do I know that I am not ready to invest in property?

You will know. 

Your instincts will tell you.

You feel uneasy and nervous.

However, you have to ask yourself, honestly and truthfully, why you are uneasy. Asked yourself whether it is just unfounded fears or genuine fears? Are you:

• afraid of the risks of property investing? (Not a genuine fear because all investments are subjected to some risks and property investing is the safest investment. The return for property investing is a long term process. Hence, one must ensure that one has calculated his sums properly before investing.)
• afraid that you are not able to keep up with the monthly instalments? (Genuine fear. Hence, financial calculations must be done before investing in properties.)
• afraid that you make the wrong choice? (Not a genuine fear.There is no such thing as a perfect choice. There is pros and cons. It is through knowing clearly what you want for your children, your parents, your spouse and yourself, that you can make the right decision. Know that for every investment, there is a risk. Ask yourself: can you manage the risk? If you can, then go ahead. If you cannot, then you will have to let it go. After that, be at peace with your decision.)

So, if you are feeling uneasy, ask yourself  why and find the reasons behind the uneasiness. One of my clients felt uneasy about investing in Melbourne because she was afraid that the floods will damage her property, until I reminded her that Melbourne is 8,800 sqkm and the flood was not in Melbourne CBD!

So, not wanting to pay for services, is just a cover-up for your genuine or unfounded fears!

A Summary of URA’s regulations:

1. Holding Period for Seller’s Stamp Duties from 3 years to 4 years

2. Seller’s Stamp Duties imposed on properties bought after 14 Jan 2011:

- properties that are sold within:

• 0 – 1st Year of Purchase: 16% of selling price
• 1st – 2nd Year of Purchase: 12% of selling price
• 2nd – 3rd Year of Purchase: 8% of selling price
• 3rd – 4th Year of Purchase: 4% of selling price
• after 4th Year of Purchase: 0%

3. Loan to Value (LTV) limit on housing loan granted by financial institutions regulated by MAS for residential property purchasers who are not individuals is lowered to 50%.

“With effect from 14 January 20117, an LTV limit of 50% will apply to all residential property purchasers who are not individuals. This includes corporations, trusts and collective investment schemes, among others. The 50% LTV limit for housing loans will also apply to joint property purchases by an individual and a purchaser who is not an individual.

‘Purchasers who are not individuals’ refer to purchasers who are not natural persons.  These include but are not limited to corporations, trusts and collective investment schemes.

The 50% LTV limit will apply to transactions where the date on which the option to purchase (OTP) was granted falls on or after 14 January 2011; or if there is no OTP, where the date of the Sale & Purchase agreement falls on or after 14 January 2011. ” Source: URA

4. LTV limit on housing loans granted by financial institutions regulated by MAS lowered from the current 70% to 60% for residential property purchasers who are individuals with one or more outstanding housing loans at the time of the new housing purchase.

- effective from 14 Jan 2011

- for borrowers who are individuals and have one or more outstanding housing loans (whether from HDB or a financial institution regulated by MAS) at the time of applying for a housing loan for the new property purchase.

However , for housing loans granted by financial institutions for private residential properties, Executive Condominiums, HUDC flats and HDB flats (including DBSS flats):

- borrowers who can show evidence that they have sold their existing properties will not be subject to the lower LTV limit when they buy a new property.

- If existing property is a private property, he can show a signed Sale & Purchase (S&P) agreement with the IRAS certificate showing that stamp duty has been paid on it.

- If the existing property is a HDB flat, he can show HDB’s approval letter to sell the flat, that HDB will issue within 2 weeks of the First Appointment.

- These borrowers will still be able to borrow at an 80% LTV from financial institutions.

- Borrowers without any outstanding housing loans continue to have a LTV cap of 80%.

Loans granted by HDB for HDB flats (including DBSS flats) will still have a LTV cap of 90%.

- HDB loans are offered to eligible Singapore citizens buying their first homes or right-sizing their flats to meet their housing needs.

- HDB loan applicants are required to utilise all the balance in their CPF Ordinary Account before HDB loans will be granted.

- Those taking a second concessionary HDB loan must use the CPF refund and 50% of the cash proceeds from the sale of their previous flat before they are granted an HDB loan.

- This is to ensure that eligible buyers, especially first-time buyers, purchase public housing in a financially prudent manner.

Additional Information:

1. The date of purchase for computation of the holding period for SSD shall be the date when a buyer (i.e. Buyer A) exercises the option to purchase the property, or signs the sale and purchase agreement, whichever is earlier. The date of sale of the property shall be the date when the subsequent buyer (i.e. Buyer B) exercises the option to purchase the property from Buyer A, or signs the sale and purchase agreement, whichever is earlier.
2. SSD is to be paid within 14 days of the execution of the Agreement (i.e. exercise of Option or signing of Agreement). If the Agreement is executed overseas, upon receipt of the Agreement in Singapore, the SSD must be paid within 30 days.
3. The 50% LTV limit will apply to transactions where the date on which the option to purchase (OTP) was granted falls on or after 14 January 2011; or if there is no OTP, where the date of the Sale & Purchase agreement falls on or after 14 January 2011.
4. The 60% LTV limit will apply to transactions where the date on which the option to purchase (OTP) was granted falls on or after 14 January 2011; or if there is no OTP, where the date of the Sale & Purchase agreement falls on or after 14 January 2011. 

Source: URA

CDL chief points to some good buys as panic-sellers offload, but he’s not alarmed

(SINGAPORE) City Developments Ltd (CDL) executive chairman Kwek Leng Beng yesterday acknowledged that there have been some cases of high-end property buyers resorting to panicselling in the secondary market. These are people who’d bought their units during the early stages of the property boom ‘It is not as alarming as what some people think. Just bear in mind, because of a couple of transactions, these few swallows do not make a summer,’ he told analysts and journalists at a briefing to announce CDL’s second quarter results.
In some cases, these desperate sellers are offloading their units at prices that may be 20-30 per cent
below current market values, providing attractive bargains for astute property investors, Mr Kwek
said.

‘There are what I call bargains because some buyers, towards Temporary Occupation Permit or even
before TOP, just want to get out as long as they make $100 psf profit. ‘As an example, there were some projects launched at $2,200 psf. Then (the price) went up to $3,400-3,500 psf. Today there are some people who have gotten so frightened, they will sell off at $1,700 psf. That is the time, if you are smart enough, you can pick up (a bargain)! Buying property is not short term. Buying property is medium to longer term.’
High-end home prices are in a period of consolidation after a sharp escalation. ‘What has gone up in
a straight line will also come down,’ as Mr Kwek put it.
‘My key advice to you is as long as you can service your instalment and with the (current) cost of
construction so high, how can you be worse off than during the bad times in ’96 and ’97? If you are
smart enough to pick up (a property) when some people want to commit suicide, you just pick (it) up
cheap – keep it, rent it, stay – there’s your chance.’

Saying he was not too worried about the current consolidation, he added: ‘This is the time you should
buy. This is not the time you should get out, unless of course circumstances dictate that you should
get out.’

Regaling his audience with an anecdote, Mr Kwek said: ‘For example, The Sail @ Marina Bay, we
started selling at $900 psf, and the price went up to $3,000 psf-plus. The other day, somebody told
me that his friend, a broker, said there’s one unit, ninth floor, $1,800 psf. He asked me: ‘Do you want
to buy?’ I said: ‘Which unit? I want to check. I am going for a meeting. When I come back, we’ll talk
about it.’ By the time I came back, the whole thing was gone.’

The high-end residential sector will recover ‘when the sub-prime crisis is over and the integrated
resorts are in operation’, Mr Kwek said. ‘You’ll have a lot of high rollers coming in. They come in, they
like Singapore – very clean, things get done. We have a lot of (positive) attributes but we’re always
taking them for granted.’

Mr Kwek, who is also chairman and managing director of Hong Leong Finance, said that although ‘we
don’t have Freddie Mac and Frannie Mae’ here, Asia will be hit to some extent by the sub-prime crisis.
‘However, our banks are well capitalised. Monetary Authority of Singapore is monitoring closely.’
He also recalled Minister for National Development Mah Bow Tan’s comments that ‘they don’t want to
see property prices going (up) in a straight line nor do they want to see it going down in a straight line.
So I am confident they are monitoring the whole situation’.

Much of CDL’s land bank, even in the high-end, was acquired at relatively cheap cost. ‘As an
example, for the Lucky Tower site (at Grange Road), if I were to launch my project tomorrow at
$2,500-$2,600 psf, I can still make very healthy profit compared to Cliveden (nearby) which we sold at
$3,750 psf. It’s a question of whether I want to let go at $2,500 psf or whether I should keep it.

‘Don’t forget if you go ahead and construct, you incur two sets of interest costs – on land and
construction. By the time the market improves, the (unit) sizes and the design may be outdated, so
you cannot maximise the profit from that. It’s better to keep the land and wait for a better opportunity
before you sell.

‘I’m sure some (other) developers feel the same way. I will guarantee you many of these people will
not go ahead with construction,’ Mr Kwek said.

CDL, in its results statement, also cited other reasons why a feared oversupply of new private home
completions may not materialise. Tight bank financing is making developers more cautious in their
land purchases. The sharp hike in construction costs means developers who delay their launches
may hold back their construction plans as well. Given tight construction resources, contractors may
continue to find it hard to complete projects on schedule.

THE property slowdown was clear for all to see yesterday when the tender for a condo site overlooking Bedok Reservoir closed with just one bid – and at a price well below expectations.

The Urban Redevelopment Authority (URA) will likely refuse to award the 3.2ha site, given the poor offer, consultants said.

Boon Keng Development bid $84.6 million, or $118 per sq ft (psf), for the 99-year leasehold site but consultants had expected anything from $150 to $230 psf.

Apartments on the site could sell for up to $700 psf, they said.

If Boon Keng does secure the site at the junction of Tampines Avenues 1 and 10, its break-even would be about $480 to $500 psf. It would then be able to sell the apartments for around $600 psf, said Knight Frank’s director of research and consultancy, Mr Nicholas Mak. But he does not expect the URA to sell the land at such a low price.
The increasingly cautious mood among developers explains why the site drew only one bid.

‘If this site was not on the confirmed list, it may not be triggered for tender,’ said Mr Mak.

Confirmed list sites are tendered out at pre-determined dates regardless of whether developers have shown interest.

‘If confirmed list sites were launched for tender in an increasingly uncertain market, they would attract opportunistic bids, such as the one we witnessed today,’ said Mr Mak.

Savills Singapore’s director of business development and marketing, Mr Ku Swee Yong, who had tipped bids of $150 to $180 psf for the site, said: ‘Most developers have ample land, so unless a choice plot is available, they won’t bid.’

Rising building costs are forcing developers to look for cheaper land. In such a climate, the Government has to decide whether to lower reserve prices to ensure a steady supply of mass-market private housing, or maintain the value of plots on the sales list as they form part of the nation’s reserve, said Mr Mak.

He does not expect any residential site on the government sales list to be triggered for tender unless reserve prices are lowered. If not, there could be a sharp drop in the sale of residential land from the Government this year.
Singapore tenders out land on the reserve list if developers indicate interest by committing to a minimum bid acceptable to them.

Price fears ease but Q2 growth down to 2.1% on pharma swings and electronic weakness

(SINGAPORE) Concern here over price pressures will likely take a back seat to growth risks in the
months ahead, as global inflation looks to be peaking but no quick economic rebound is expected
anytime soon in the major economies.
A senior Ministry of Trade and Industry (MTI) official yesterday described the Singapore economy -
which grew just 2.1 per cent in the second quarter – as being in a ‘stretched-U’ slowdown, with
sluggish growth and probably no pickup for a while.

The Q2 growth – slowest in five quarters – brings GDP growth in the first half to 4.5 per cent, which
also happens to be the midpoint of the newly-downgraded 2008 growth forecast of 4-5 per cent. This
has been narrowed from an earlier estimate of 4-6 per cent.

With weak external demand, the 2008 forecast for Singapore’s non-oil domestic exports (NODX) has
also been slashed – by six percentage points. From growing 2-4 per cent this year, NODX are now
expected to fall by that range. It would be the first contraction in the key trade indicator since 2001.
But ‘this is not looking like a very sharp slowdown’, MTI second permanent secretary Ravi Menon said
at a media conference on the Q2 economic results. ‘So you’re not looking at a V-shape kind of
situation where there’s a sharp plunge and a sharp rebound.’

In other words, there also isn’t ‘the kind of decisive turnaround that you see in previous business
cycles’, he added. ‘It’s probably going to take a bit of time this time around. It looks like this slowdown
will continue into 2009.’

The global economic dynamics will remain fluid over the next 12-18 months, Mr Menon reckons, with recovery hinging on the state of global credit and asset markets.

‘Credit remains tight; financial institutions have become more riskaverse, weighed down by weak balance sheets which will take some time to repair,’ he notes. ‘The (US) housing market has continued to decline and probably has some way to go.’ As a result, consumer sentiment and domestic demand in the industrial economies are dampened.

Against the preceding Q1, Singapore’s GDP fell 6 per cent in Q2 in adjusted, annualised terms. A negative Q3 would spell a technical recession. While MTI does not expect one, Mr Menon said it cannot be ruled out.
‘All you need is an industry or sector to swing wildly and that could happen,’ he said. As it is, the Q2 slowdown is due largely to a sharp fall in biomedical manufacturing as the pharmaceutical companies here switched to products with lower value in the quarter.
If pharma output were excluded, GDP growth in Q2, instead of 2.1 per cent, would possibly have
been almost twice as high. DBS Bank economist Irvin Seah has estimated it at 3.6 per cent.

Electronics output was also virtually flat in Q2 in the face of weak global demand. As a result, the manufacturing sector contracted 5.2 per cent in the quarter. If the downturn persists, there would ‘probably’ be some job losses in manufacturing, Mr Menon said.

MTI expects the electronics industry to remain soft in the second half of 2008. And pharma output is
expected to be hit by competition from generic drugs and delays in new product approvals, even if the
industry’s medium-term outlook is bright. But wholesale trade and the services are ‘likely’ to remain
robust and help shore up economic growth.

And while inflationary pressures have eased, Mr Menon warned that ‘we’re not yet out of the woods’.
So ‘we’re in for a rough ride but we should stay above the water’, he said, adding that GDP growth in
the second half of the year should be ‘broadly similar’ to the first half. Full-year growth will likely come
in within the lower half of the revised forecast, he added.

Most economists here have largely ‘priced in’ the poor outlook in their forecasts, though a few – such
as the United Overseas Bank team – cut their GDP growth forecasts yesterday following the Q2
release.

Even more bearish, Standard Chartered Bank’s economists believe a technical recession here is on
the cards, and see the Singapore economy growing only 3.5 per cent in 2008. They also expect the
Monetary Authority of Singapore to start shifting – from its appreciation stance over the past 10
months – to a neutral bias on the Sing dollar.

The parcel has a land area of 104,044 sq ft and GFA of 54,864 sq ft

HOTEL operators can look forward to another state property to develop – this time at Changi.
The Singapore Land Authority (SLA) yesterday launched the plot – part of a former military camp – for
public tender.

The tenancy, for an initial three years, is renewable up to 2018. The guide rental is $28,500 a month.
The parcel has a land area of 104,044 sq ft and a gross floor area (GFA) of 54,864 sq ft. It comprises
two three-storey buildings and a shed.

‘SLA is offering a number of vacant state properties for adaptive re- use, such as hotels and lifestyle
attractions, in line with the government’s vision for Changi Point as a seaview hotel, resort and
recreational destination,’ said Teo Cher Hian, SLA’s director for land operations (private).

Since last year, SLA has awarded four state properties in the Changi area for adaptive commercial reuse. Two are now restaurants, while the former Changi General Hospital is being turned into a spa resort.

Groundbreaking takes place next month and the resort is expected to be ready by next year.
The Singapore Tourism Board (STB) says leading hoteliers have expressed keen interest in the latest
property.

According to STB, mid- tier and economy hotels enjoyed average room occupancy rates of 85 and 87
per cent respectively in the first half of 2008.

Nicholas Mak, director of research and consultancy at Knight Frank, said the successful tenderer for
the Changi plot will have to come up with a unique concept.

He said the hotel needs to play on Changi’s laid- back character and is likely to be mid-tier.
The first state property to be converted for hotel use, at Chin Swee Road, is a boutique establishment
with 140 rooms. It officially opened in mid-May, with an initial occupancy rate of about 50 per cent.

SINGAPORE – Singapore’s economy grew at the slowest pace in five years. The gross domestic product expanded 2.1 per cent in the second quarter, after growing 6.9 per cent in the first quarter.

The Ministry of trade and Industry said on Monday the economy was hurt by a plunge in drugs output and stagnant growth in the electronics industry.

‘The lower growth in the second quarter was mainly the result of a sharp contraction in biomedical manufacturing value-added, reflecting a switch in product mix to pharmaceutical ingredients with lower values compared to a year ago,’ MTI said in a press release.

It also said the economy shrank at a annualised rate of 6 per cent in the three months to June, the second contraction in three quarters.

The latest GDP figure was better than an advance official estimate of 1.9 per cent growth. Manufacturing shrank 5.2 per cent in the second quarter from a year earlier, while construction increased 17.4 per cent.

The service sector continued to grow at a healthy pace, thought slightly slower than in the first quarter. The financial services sector expanded 10.2 per cent while the business services was up 7.5 per cent.

The Ministry said the full-year growth target for 2008 has been cut to 4.0-5.0 per cent from 4.0-6.0 per cent, a downward revision first announced by Prime Minister Lee Hsien Loong in his National Day message on Friday.
It said the revised growth target ‘is consistent with the moderation in economic growth seen in the second quarter.’

It said the outlook for the second half of the year was not expected to improve much with major economies seeing a slowdown that would in turn affect exports from Asia, including Singapore.

MTI said it expected the ‘electronics industry to remain soft in the second half of 2008, reflecting weak demand for semiconductors.
On the short-term outlook of biomedical manufacturing, it said the sector ‘will be weighed down by global trends such as strong competion from generic drugs and delays in approvals for new pharmaceuticals.’

Apart from a surge in tourism, jobs and tax receipts, Singapore’s two integrated resorts could bring in new investors

WITH expectations of a big boost to the economy, more buzz and the promise of thousands of jobs, it
is no wonder we are all a little anxious to see Singapore’s two integrated resorts (IRs) completed.

Citi analyst Chua Hak Bin believes that the biggest challenge facing the IRs now is ‘probably to
contain costs given the run-up in building material prices and completing the resorts on schedule’.
‘Getting the resorts up and ready by late 2009 or early 2010 would be regarded as a big success,’
added Dr Chua. ‘The greenlight for the integrated resorts was an important turning point for the
economy and property market. Investors could see the potential upside given the stunning growth
seen in Macau and Las Vegas,’ notes Dr Chua.

Will the IRs deliver?
Dr Chua believes that the impact from the IRs will come in two phases. ‘The first phase comes from
construction spending and improved sentiment, particularly from enhanced property values,’ he says.
‘The gains in the second phase comes from the surge in tourism, jobs and tax receipts,’ he adds.
Many have already benefited from ‘enhanced property values’ especially those who bought property
around Marina Bay and Sentosa in 2005 and 2006. But as investors now know, this ‘sentiment’ driven
boost has not really been sustainable.

Dr Chua also notes that recent tourism figures suggest that visitor arrivals are being hit by a global
slowdown, stronger Singapore dollar, and higher travel costs. ‘Annual visitor arrivals could rise
sharply from the current 10.4 million, but may fall short of the government’s target of 17 million by
2015,’ he adds.

In 2006, before the sub-prime crisis set in, it was estimated that Marina Bay Sands (MBS) and
Resorts World at Sentosa (RWS) could each generate about $2.7 billion of value-add – about 0.8 per
cent of Singapore’s GDP – by 2015.

Dr Chua believes the IRs will still be a stimulus and expects GDP growth of about 0.3-0.5 percentage
points in 2010-2015. In this light, the casinos will have to perform.

The casino licence was very much the sweetener for both IR operators to pump in over $10 billion to
build the resorts. But now, even the outlook for gaming is not so certain with gaming revenues in Las
Vegas expected to fall this year.

Jonathan Galaviz of Globalysis, a Las Vegas-based boutique travel and leisure sector strategy
consultancy, says that while the casino gaming industry has been traditionally recession resistant, ‘it
is not recession proof’.

‘This is especially the case when an industry, such as airlines, indirectly inhibits the ability of tourists
to visit a destination like Las Vegas due to higher airfares,’ he adds.

And this does not bode well for other gaming capitals. ‘If East Asia were to experience a significant
economic downturn, then Macau would surely be affected, the question would only be by how much,’
says Mr Galaviz.

Singapore’s IRs are also very much modelled after the mega resorts of Las Vegas and the new
developments in Cotai, Macau. And the success of this model is still pending. ‘It will take a long period
of at least 5-10 more years to see whether the integrated resort model of entertainment in Macau has
been a successful strategic endeavour,’ Mr Galaviz says.

In the mean time, work on the IRs here continues. With barely a year to go, MBS says that, ‘a great
majority of construction works have been awarded’.

RWS said it has given out more than $2 billion worth of contracts. It added that rides and attractions
for Universal Studios Singapore are currently being designed and pre-fabricated off-site in places
such as the US and Europe.

When the IRs are up, the much anticipated ‘second phase’ economic euphoria can begin. Savills
Singapore has analysed the impact of new gaming resorts on property markets and concluded that
while Singapore has undergone major structural changes, with new concepts such as waterfront
housing, integrated hotels and new retail formats, some of the impact has already been priced in.
Still, Savills director (marketing and business development) Ku Swee Yong says: ‘The publicity and
attention from tourists and high rollers could bring in new investors and many more jobs. With
Singaporeans almost fully employed, the foreign talents needed to fill these jobs add to demand for
residential units and office space.’

But Mr Ku adds: ‘The period and degree of sustainability will depend on the money spent by the
tourists, MICE groups and the spin-off they create for the economy and the financial services and
tourism sectors.’

The good news is that both are scheduled to open on time. MBS maintains that it will be completed by
December 2009 and RWS confirms it will open in early 2010. ‘As our resort is massive at 49 ha with
varied offerings, we are indeed opening in progression, starting with Universal Studios Singapore,
Hotel Michael, Maxims Residences, Hard Rock Hotel, Festive Hotel, FestiveWalk, as well as the
casino in early 2010. The rest will open progressively,’ adds RWS assistant vice president,
(communications) Robin Goh.

One of the bigger challenges at the IRs is labour. Mr Goh says: ‘Finding talent, training them, and
then retaining them – is no walk in the park.’

MBS managing director George Tanasijevich adds: ‘We are working closely with the Singapore
government and relevant government agencies to ensure there is a proper balance in the labour pool
in order to maintain a stable and competitive labour market overall. Priority will be given to
Singaporeans for all roles.’

That the IRs are projects on a national scale is not lost on the operators either.
RWS’s CEO says: ‘Singapore’s founding fathers built this country into what it is today, with very little
and within a very short time. Resorts World at Sentosa strives to replicate her success, and make
Singapore proud with a destination that will rank as Asia’s No 1 leisure spot when it opens in 2010.’

THE Singapore property market has weathered the storm from the US sub-prime crisis, soaring oil
prices and overall inflation, pretty well.

Runaway increases in property values in the high-end residential and prime office sectors seen in the
past couple of years, for instance, have started to ease. But they have not dived, and panic has not
set in, at least not so far.

Knight Frank managing director Tan Tiong Cheng says: ‘To some, this is a welcome breather from the
breakneck pace of increases recorded in the last 24 months.’

CB Richard Ellis chairman (Asia) Willy Shee too observes: ‘The overall market has displayed some
resilience. In the office market, there’s still demand for office space with occupiers still looking to precommit office space in yet-to-be completed buildings.’ While the private housing market is not as
buoyant as last year, transaction volumes have picked up in second quarter this year with
encouraging sales from mid and mass-market projects, he adds.

Market watchers feel that in the short-term, property values could head south, driven by near-term
fundamentals. However, the mid-term prospects for Singapore’s real estate sector are generally
considered sound. As a major developer puts it: ‘Population growth, global and regional wealth
creation, sustained government investment in infrastructure, the perennial sharpening of Singapore’s
competitive edge, limited land, security and political stability, internationalisation of the property
market – all these must be good for Singapore real estate prices in the long run.’

The Remaking of Singapore has helped create sound fundamentals for the local property market. The
government’s decision to break from the past and go ahead with developing two integrated resorts
with casinos as well as its efforts to position Singapore as a leading contender in the race among
global cities to attract wealth and talent have boosted the island’s prominence on the radars of
international property investors.

New engines for growing the Singapore economy have also been put in place and this to some extent
may also help shield the island and its property market from the full impact of what’s happening in the
US.

Investments and job creation from the IRs, Sports Hub, expansion plans for rail network and other
infrastructure projects, Singapore’s policy of welcoming foreign talent to its shores, and the strategy of
positioning Singapore as a hub for various industries – financial industry/wealth management, tourism,
education and healthcare – are expected to provide momentum for Singapore’s economy.

‘The IRs, F1, Sports Hub and Youth Olympic Games surprised observers who think that Singapore is
only a clean and safe place to do business but never a place where you can let your hair down,’
observes Knight Frank’s Mr Tan.

‘What do these initiatives mean to savvy investors? They mean that we are perceptive in discerning
changes in the global world, have the will to question old assumptions and have the courage to move
a population to accept initiatives that can be potentially divisive.

‘That the government and its people can move together to tackle challenges ahead demonstrates the
inherent strength of the country as a global city to do business and a place to live,’ Mr Tan added.
DTZ executive director Ong Choon Fah said: ‘Wealth management industry is still a very big thing
here. Wealth from high networths in Asia – China, India – is flowing into Singapore. With IRs and the

F1 race, Singapore is being marketed as a playground for the rich and famous. Family offices and
philanthropy are fast being added to the suite of services offered by private bankers.
‘The removal of estate duty has been a major boost to Singapore’s ambitions to be a wealth
management hub.’

New challenges
But the road ahead for the local property market is paved with challenges. Colliers International
director of research and advisory Tay Huey Ying argues that the ‘mid-term optimism for the Singapore
property market is underpinned by the IRs and the Marina Bay Financial Centre (MBFC). ‘If these
projects do not deliver, confidence may be shaken,’ she warns.

To be considered successful, the IRs will have to be able to continuously attract visitors year after
year and not fizzle out after the initial novelty wears off. Similarly, the MBFC can be truly considered
an achievement for Singapore’s aspirations to be a leading financial centre if the movement of tenants
into MBFC does not create a vacuum in existing office buildings that can’t be filled within a short span
of time; otherwise, it may just show there’s not that much depth in Singapore’s financial industry, Ms
Tay reckons.

In the residential property market, a short-term challenge that could materialise is if substantial
numbers of home buyers who’ve purchased private homes on deferred payment schemes in the past
few years begin to panic and dump their properties as the projects’ completion dates loom closer.
That would be the time when these buyers have to pay the bulk of the purchase price to developers,
and if some of them think they may have difficulty finding home loans, especially if they are still
holding on to several such units, they may panic and dump their properties at lower than current
market prices.

Such a scenario would be a house hunter’s dream, but could destroy wealth for the majority of
Singaporeans who already own their own homes.

‘Instead of subjecting themselves to panic selling, these property owners may wish to bear in mind
Singapore’s mid-term prospects and should try to hold their properties by securing a financing
package or a tenancy for their property,’ Ms Tay suggests.

Escalating construction costs
Escalating construction costs are another big concern going ahead. ‘The high construction costs
could translate into high purchase cost for buyers and investors of private property assets as well as
contribute to inflationary pressure for end-users of public infrastructure,’ says CBRE’s Mr Shee.
‘The high construction costs would also eat into developers’ profit margins and hence reduce the
incentive for developers to undertake new projects or acquire sites from the Government Land Sales
programme,’ he adds.

On the macro political front, Knight Frank’s Mr Tan says an immediate challenge is the confluence of
unstable political situations in three neighbouring countries – Malaysia, Thailand and Indonesia (which
will have a election next year). ‘Put simply, we’re a good property in a bad neighbourhood,’ he said.
CBRE predicts that office rentals are approaching a peak. The average monthly Grade A rental value
rose to $18.80 per square foot in Q2 this year, an increase of 43.5 per cent from the same period last
year. With completions of major office projects from 2010, including MBFC Phase 1 and 50 Collyer
Quay, the property consultancy group predicts the average Grade A office rental will ease to $12-15
psf post-2010.

On a more optimistic note, it highlights that with all the new office developments coming up, a
significant amount of future office stock will constitute world-class modern Grade A buildings. ‘Around
64 per cent of the office completions in the next five years will be Grade A quality,’ Mr Shee says.
For the private residential sector, CBRE has said a correction of residential prices to the tune of 5 to
10 per cent in the second half of this year is likely as the global economy suffers the continued
onslaught from the sub-prime mortgage meltdown and inflation.

Riding the turbulence
Colliers’ Ms Tay highlights the importance of a sound government land supply policy – ‘not just shortterm reactions’ – will help the local property market to ride out the challenges ahead.

‘For individual home buyers and sellers, they should arm themselves with the right information instead
of succumbing to herd instinct or following their emotions,’ she adds.

Knight Frank’s Mr Tan says: ‘Demand for real estate is dependent on economic prospects. With
strong economic fundamentals, I have no doubt that interest in real estate in Singapore by local and
foreign institutional investors will return once the current market turmoil blows over.

In similar vein, CBRE’s Mr Shee says: ‘Fundamentally, the long-term development of the office, retail,
residential and hospitality sectors will not change in spite of the present global financial worries.

‘It was all these government initiatives that attracted a fresh wave of foreign investment into
Singapore in the last 24 months, and it will be these developmental drivers that will continue to attract
investment from various parts of the world to Singapore.’

ONE year ago, economic and business sentiment in Singapore was probably at an all-time high: The
property market was on a roll, banks and finance houses went on a hiring spree, and the economy,
flush with liquidity, looked headed for a fourth year of 7-9 per cent growth.

The signs spelt Boom Town everywhere you looked, and economists predicted that Singapore, restructured and reinvented, would trail only China and India among Asia’s fastest-growing economies for years to come. Whiffs of (near-irrational) exuberance were much in the air. Then, bang! Just days before National Day 2007, a global financial market meltdown threatened the party mood. The balloons popped, but as it turned out, the Singapore economy’s strong first-half momentum was enough to see it through the year. Gross domestic product (GDP) growth for 2007 still turned in at a robust 7.7 per cent.

Twelve months on, the mood is decidedly more sombre. Overnight, it seems, the property bubble (of
‘exuberance’, not so much ‘excess’ this time) burst, the buzz in the finance sector has all but fizzled,
hot hiring has cooled (with even talk of selective retrenchment in some segments), and the economy
has now seen its slowest quarter in five years.

Has there been a crack in the domestic underpinnings somewhere, or is – as is widely assumed – the
small open economy just taking hits from external headwinds?
The much-heralded US economic slowdown has finally come to pass, compounded by a sub-prime
mortgage crisis that continues to wreak havoc through not only the American economy but pretty
much globally, in second or third-round hits.
Slower growth has also set in elsewhere in the developed world, following several years of robust
performance. Not least, a surge in global energy and food prices has pushed inflation to the fore of
policy concerns in just about every part of the world.

And latest analyses by economists list more than several major economies ‘navigating towards (or
through) recession’ – including the US, Canada, Spain, Ireland, Italy, the UK and New Zealand.
Germany, France and Japan are also seen to be teetering on the brink of recession. In other words,
as RGE Monitor notes, a full-fledged G-7 recession in the making.

With this outlook, coupled with ever-present risks of yet another bout of global financial turbulence, it
is interesting to see some fairly upbeat forecasts of East Asian resilience, like the Asia Development
Bank’s (ADB) that expects the region to weather the global economic turmoil ‘relatively well’ and grow
7.6 per cent this year and next.

ADB has the Singapore economy growing 4.9 per cent in 2008 and 5.8 per cent in 2009 – probably a
little more bullish than the consensus here at this point – on the back of strong domestic demand
(driven by business investment) and buoyant exports. It’s not apparent that Singapore’s exports will
be too ‘buoyant’ this year – the official forecasts of 2008 export growth were pared a few months ago,
and still the May and June trade figures proved unexpectedly bad. Economists also generally see
Singapore – given its size, structure and exposure – as the region’s most vulnerable to a global
downturn.

Has the slowdown exposed, or widened, Singapore’s fault lines? Sure, inflation surged through the
economy, price pressures piled up. But apart from ever greater external uncertainties and a fall in
sentiment, fundamentally what has changed in the six months or so between Boom Town exuberance
in 2007 and sombre caution in 2008? Problems such as structural joblessness in older Singaporeans
and a growing income disparity have not and cannot be swept away overnight.

That said, none other than Minister Mentor Lee Kuan Yew has declared that the next five to 10 years
will be Singapore’s most promising yet as it stakes its place among the world’s top cosmopolitan
global cities.

‘We are moving to a new plateau, a new platform. You can see it visibly before your eyes,’ Mr Lee
said last month.

It’s surely a vision to inspire all Singaporeans. But, for all the spin around Singapore’s restructuring
and transformation, enhanced by a huge influx of foreign skills, some believe that its fortunes – and
Asia’s – will, for the foreseeable future, still largely be tied to the global economy. Which also means
that Singapore can and will ride on the next upturn, when – or if – it comes.

Business Times – 09 Aug 2008

GROWTH in office occupancy costs in Singapore has started to taper off after the meteoric rise last year, reflecting the increased resistance to higher occupancy costs, according to a new report.

‘Apart from Raffles Place, Shenton Way/ Robinson Road/Cecil Street and decentralised areas, growth in occupancy costs in other areas like Marina Centre and Orchard Road was flat in 2Q 2008,’ said DTZ in its second-quarter office market brief.

Average occupancy cost of prime office space in Raffles Place grew only 1.1 per cent quarter on quarter to $19 per square foot per month (psf pm) in the second quarter of 2008. In the Shenton Way/Robinson Road/Cecil Street area, the average office occupancy cost rose by 2.6 per cent quarter on quarter to $11.80 psf pm, while office buildings in HarbourFront enjoyed a higher growth of 5.3 per cent to $10 psf pm.

By contrast, in the first quarter of 2008, occupancy costs continued to rise amid a dearth of supply. Prime occupancy cost in Raffles Place gained 13.9 per cent quarter on quarter to $18.80 psf pm in the first quarter of 2008, for example.

‘As more new supply come on stream, office occupancy is likely to ease and limit growth in occupancy costs in the CBD for the rest of 2008,’ said DTZ, referring to the Central Business District.

However, the report also said that the cautious business outlook and companies gravitating towards cheaper premises like decentralised office buildings, industrial properties, business parks and disused state properties are putting a downward pressure on office occupancies.

Islandwide, average occupancy eased by 0.2 percentage point quarter on quarter to 96.9 per cent in Q2 2008. As a result of occupiers moving out to cheaper locations after lease expiration, office occupancies in
Raffles Place and Marina Centre dropped by 0.3 percentage point to 97.4 per cent and 1.2 percentage points to 98.6 per cent respectively.

But over in decentralised areas like Novena and HarbourFront, occupancy levels rose by 0.4 percentage point to 99.0 per cent and 1.1 percentage points to 98.7 per cent respectively, supported by lower occupancy costs.

DTZ also released its Q2 2008 office report for Kuala Lumpur yesterday. Gross occupancy costs for prime buildings in the Malaysian city rose 3.9 per cent quarter on quarter to RM6.32 (S$2.65) psf pm in the second quarter of this year, the property firm said.

But despite this, financial institutions with presence in Singapore are considering locating call centres
in Kuala Lumpur because of cost differential and special tax breaks, DTZ said in response to a query
from BT.

Source: Business Times 5 Aug 08