IN YET another twist to the controversy over the collective sale of the Horizon Towers condominium, a High Court bid by minority owners for more time to present their case to the Strata Titles Board has failed.
The minority owners, who object to the sale, wanted a judicial review of the board's decision not to postpone a hearing.
They will now have to present their case next week instead of in September as they had wanted.
The $500 million deal for the two blocks at Leonie Hill, which was struck on Feb 12, has to be finalised by Aug 11. If the High Court had ruled in favour of the minority owners, the deal would have been effectively scuttled.
The 99-year leasehold property has been pledged to be sold en bloc to HPL and two others.
The deal was backed by 84 per cent of the owners. This is above the 80 per cent requirement, but it still needs the approval of the Strata Titles Board. Previously, the board set the hearing for September, but later moved it forward.
Through lawyers from Tan Kok Quan Partnership and Harry Elias Partnership, the minority owners sought leave from the High Court for a judicial review of the board's decision to bring the hearing forward.
But according to court documents filed by the purchasers, the deal would have been scuttled if the objectors' request had been granted.
The purchasers, who were represented by Senior Counsel K. Shanmugam, argued that if this happened, the majority owners who consented to the sale would be unlikely to extend the deadline for the en bloc deal.
Both majority and minority owners alike do not want the deal to go ahead at $500 million. This is because a rise in market prices after the agreement was reached means that there is every possibility that they can now sell the property to another buyer at a significantly higher price.
The minority owners argued in their submissions that the board's decision gave them inadequate time to present their case.
But the purchasers countered that the minority owners actually had three months to prepare, citing the lengthy documents the objectors prepared for yesterday's hearing.
The Straits Times understands that during the High Court chamber hearing, the minority owners failed to convince Justice Tan Lee Meng that they had an arguable case which deserved judicial review.
Friday, July 20, 2007
PUBLIC housing rents have hit a 10-year high as sizzling demand for private property rentals spills over to Housing Board flats.
PUBLIC housing rents have hit a 10-year high as sizzling demand for private property rentals spills over to Housing Board flats.
For the first time in recent memory, monthly rents for some HDB flats have pushed northwards of $2,000 in leases signed in the last couple of months.
These flats are located near the city or MRT stations, but rents for flats in less sought-after areas are rising too, say property consultants.
This growing demand to rent HDB flats is a spillover from the red-hot private rental market, where supply is declining and rents have been escalating, say property experts.
This is partly because of an influx of foreigners on the back of Singapore's booming economy, they say. Also, there is a squeeze on rental units, given the number of private properties that have been sold in en bloc sales.
Recent transactions released to The Straits Times by several property agencies included one four-room HDB flat at Crawford Lane, not far from Lavender MRT station, renting at an eye-popping $2,800 a month.
Even on Singapore's outskirts, leases were signed for $2,400 a month for a Bedok North four-room flat and $2,500 for a three-room flat in Jurong East.
Rentals like these have been unheard of since the last property peak in 1996, said Mr Andy Low, marketing director of property agency EM Services, an HDB subsidiary. Rents slid as the Asian financial crisis took hold in 1997.
But flats fetching these high rents are still in the minority. 'The whole HDB market has not reached that level yet,' said Mr Low.
Flats in good locations, with good views, or those which have been recently refurbished, will command higher prices, he added.
Average rents islandwide are still below $2,000, but they are climbing steadily, said Mr Eric Cheng, senior division director of PropNex.
If private sector rents keep soaring, more tenants will turn to HDB flats - and this will cause a further supply crunch and lead to higher rents.
Mr Cheng said current HDB rents still have a buffer of 10 per cent to 15 per cent before hitting 1996 peak prices. Back then, a five-room flat averaged $2,200. The present average is about $2,000, he said.
The figure cited by Mr Cheng is above HDB's average rental rates for each estate published quarterly on its website. For the second quarter, the average monthly rent for five-room flats ranged from $1,100 to $1,700.
Managing director of C&H Realty, Mr Albert Lu, said the rise in rents, coupled with the HDB's recent relaxation of sub-letting rules, has pushed up rental yields - the annual rent expressed as a percentage of the flat's value.
Yields for many HDB flats are now 5 per cent to 8 per cent - a return considered by property experts to be strong.
In March, HDB announced that flat owners may rent out their entire unit after living in them for just three or five years, depending on how they bought the unit. This means over two-thirds of all flats may be sub-let.
Rental yields for HDB flats have typically been lower than those of private properties - usually 4.5 per cent to 5 per cent.
For example, an executive flat in Woodlands which cost $330,000 can now fetch a monthly rent of $2,200. This gives it a rental yield of 8 per cent, said Mr Lu.
But buying up large numbers of HDB flats to make a fast buck is not an option, said ERA Singapore's assistant vice-president Eugene Lim.
Nobody can own more than one flat, and owners are still required to stay for a minimum period of time.
Mr Lim said public housing is still an attractive alternative for tenants to the rising rents in the private sector.
'In the long run, prices will start to come down when more units come online.'
For the first time in recent memory, monthly rents for some HDB flats have pushed northwards of $2,000 in leases signed in the last couple of months.
These flats are located near the city or MRT stations, but rents for flats in less sought-after areas are rising too, say property consultants.
This growing demand to rent HDB flats is a spillover from the red-hot private rental market, where supply is declining and rents have been escalating, say property experts.
This is partly because of an influx of foreigners on the back of Singapore's booming economy, they say. Also, there is a squeeze on rental units, given the number of private properties that have been sold in en bloc sales.
Recent transactions released to The Straits Times by several property agencies included one four-room HDB flat at Crawford Lane, not far from Lavender MRT station, renting at an eye-popping $2,800 a month.
Even on Singapore's outskirts, leases were signed for $2,400 a month for a Bedok North four-room flat and $2,500 for a three-room flat in Jurong East.
Rentals like these have been unheard of since the last property peak in 1996, said Mr Andy Low, marketing director of property agency EM Services, an HDB subsidiary. Rents slid as the Asian financial crisis took hold in 1997.
But flats fetching these high rents are still in the minority. 'The whole HDB market has not reached that level yet,' said Mr Low.
Flats in good locations, with good views, or those which have been recently refurbished, will command higher prices, he added.
Average rents islandwide are still below $2,000, but they are climbing steadily, said Mr Eric Cheng, senior division director of PropNex.
If private sector rents keep soaring, more tenants will turn to HDB flats - and this will cause a further supply crunch and lead to higher rents.
Mr Cheng said current HDB rents still have a buffer of 10 per cent to 15 per cent before hitting 1996 peak prices. Back then, a five-room flat averaged $2,200. The present average is about $2,000, he said.
The figure cited by Mr Cheng is above HDB's average rental rates for each estate published quarterly on its website. For the second quarter, the average monthly rent for five-room flats ranged from $1,100 to $1,700.
Managing director of C&H Realty, Mr Albert Lu, said the rise in rents, coupled with the HDB's recent relaxation of sub-letting rules, has pushed up rental yields - the annual rent expressed as a percentage of the flat's value.
Yields for many HDB flats are now 5 per cent to 8 per cent - a return considered by property experts to be strong.
In March, HDB announced that flat owners may rent out their entire unit after living in them for just three or five years, depending on how they bought the unit. This means over two-thirds of all flats may be sub-let.
Rental yields for HDB flats have typically been lower than those of private properties - usually 4.5 per cent to 5 per cent.
For example, an executive flat in Woodlands which cost $330,000 can now fetch a monthly rent of $2,200. This gives it a rental yield of 8 per cent, said Mr Lu.
But buying up large numbers of HDB flats to make a fast buck is not an option, said ERA Singapore's assistant vice-president Eugene Lim.
Nobody can own more than one flat, and owners are still required to stay for a minimum period of time.
Mr Lim said public housing is still an attractive alternative for tenants to the rising rents in the private sector.
'In the long run, prices will start to come down when more units come online.'
MORGAN Stanley is expected to become the first tenant in what will be Hong Kong's tallest building
HONG KONG - MORGAN Stanley is expected to become the first tenant in what will be Hong Kong's tallest building, amid a property crunch in Asia's leading financial centre.
Like many of its rivals, Morgan Stanley has been expanding on the back of mainland China's economic boom and buoyant Asian markets. The US bank now has just over 1,000 people in Hong Kong, double its headcount five years ago.
It is expected to move at least part of its staff to a new tower being built across the water from Central, the city's traditional financial district, where banks are facing logistical headaches and rising rental costs because of the chronic lack of space.
Over the past year, many have had to lease additional floors in other parts of Central, or at least reconfigure their office space to cram in more desks.
Morgan Stanley, for example, now operates across five separate buildings.
Mr Anthony Ryan, head of Asian real estate investment banking at rival JP Morgan, said that while banks liked to keep staff in one place, it was 'just impossible to get space in Central at the moment', and there was 'no longer such a thing as a spare cubicle or office'.
Hong Kong's new International Commerce Centre (ICC) is due to be completed in 2010. Its 118 floors will make it the third-tallest building in the world, thereby dwarfing Central's highest skyscraper, Two International Finance Centre (Two IFC), where rents have risen almost fivefold since 2003.
By contrast, ICC is initially expected to fetch from HK$30 (S$6) to HK$40 per sq ft, similar to the price of moving into Two IFC back in 2003, according to property advisory firm DTZ.
Mr James Carss, director of banking and financial services for human resources consultancy Hudson, said: 'Pretty much every bank I've dealt with has space problems. It is also not just a matter of existing banks expanding, but also new firms, such as private equity and hedge funds, who are starting from scratch.'
Morgan Stanley would not comment on its lease negotiations, which come at a time when Central office vacancies have fallen to 3 per cent, the lowest in 17 years.
The US bank's move should also have a snowball effect. Mr Andy Yuen of DTZ said that it would 'encourage other firms to look at that area', even as banks were 'increasingly looking beyond Central'.
The Hong Kong real estate situation is also being monitored in other competing financial centres, particularly Singapore, where the Government this month raised taxation on land development to help control property prices.
A Hong Kong banker said: 'The real estate battle is not about whether people will be forced to relocate out of Central but whether banks will decide to transfer more staff to Singapore, where the Government has a much more hands-on approach when it comes to handling a property bubble.'
Central has long been the administrative and financial centre of Hong Kong. Once known as Victoria City, it was also reserved for Westerners during the early part of the British rule.
As the prospect of moving out of the prestigious surroundings of Central is ruffling feathers, most bankers predicted that back-office employees would be asked to relocate first.
Still, some recognised that Hong Kong's compact geography and good transport system would create far less disruption for them than similar relocations in New York or London.
'If you compare the lifestyle change involved for somebody who got transferred from the City (of London) to Canary Wharf, then switching to the ICC really isn't a big deal,' said one banker.
FINANCIAL TIMES
Like many of its rivals, Morgan Stanley has been expanding on the back of mainland China's economic boom and buoyant Asian markets. The US bank now has just over 1,000 people in Hong Kong, double its headcount five years ago.
It is expected to move at least part of its staff to a new tower being built across the water from Central, the city's traditional financial district, where banks are facing logistical headaches and rising rental costs because of the chronic lack of space.
Over the past year, many have had to lease additional floors in other parts of Central, or at least reconfigure their office space to cram in more desks.
Morgan Stanley, for example, now operates across five separate buildings.
Mr Anthony Ryan, head of Asian real estate investment banking at rival JP Morgan, said that while banks liked to keep staff in one place, it was 'just impossible to get space in Central at the moment', and there was 'no longer such a thing as a spare cubicle or office'.
Hong Kong's new International Commerce Centre (ICC) is due to be completed in 2010. Its 118 floors will make it the third-tallest building in the world, thereby dwarfing Central's highest skyscraper, Two International Finance Centre (Two IFC), where rents have risen almost fivefold since 2003.
By contrast, ICC is initially expected to fetch from HK$30 (S$6) to HK$40 per sq ft, similar to the price of moving into Two IFC back in 2003, according to property advisory firm DTZ.
Mr James Carss, director of banking and financial services for human resources consultancy Hudson, said: 'Pretty much every bank I've dealt with has space problems. It is also not just a matter of existing banks expanding, but also new firms, such as private equity and hedge funds, who are starting from scratch.'
Morgan Stanley would not comment on its lease negotiations, which come at a time when Central office vacancies have fallen to 3 per cent, the lowest in 17 years.
The US bank's move should also have a snowball effect. Mr Andy Yuen of DTZ said that it would 'encourage other firms to look at that area', even as banks were 'increasingly looking beyond Central'.
The Hong Kong real estate situation is also being monitored in other competing financial centres, particularly Singapore, where the Government this month raised taxation on land development to help control property prices.
A Hong Kong banker said: 'The real estate battle is not about whether people will be forced to relocate out of Central but whether banks will decide to transfer more staff to Singapore, where the Government has a much more hands-on approach when it comes to handling a property bubble.'
Central has long been the administrative and financial centre of Hong Kong. Once known as Victoria City, it was also reserved for Westerners during the early part of the British rule.
As the prospect of moving out of the prestigious surroundings of Central is ruffling feathers, most bankers predicted that back-office employees would be asked to relocate first.
Still, some recognised that Hong Kong's compact geography and good transport system would create far less disruption for them than similar relocations in New York or London.
'If you compare the lifestyle change involved for somebody who got transferred from the City (of London) to Canary Wharf, then switching to the ICC really isn't a big deal,' said one banker.
FINANCIAL TIMES
Irrational exuberance?
Posted by propertyforesight in Genius Thoughts. add a comment
Will the financial and property markets continue to boom, or do investors need to be more cautious? When, if at all, should the authorities step in?
Sanjay Prabhakaran Director, South-east Asia Baxter Healthcare (Asia) Pte Ltd
I BELIEVE the current financial and property boom will be sustained for a few more years at least. However, the factors that will determine the growth potential of the financial and property sectors will differ.
Singapore has successfully expanded and diversified its financial markets over the past several years. Whether or not the ongoing bull run will continue depends partly on the government’s ability to adjust national policies in response to (or in anticipation of) developments elsewhere. Such tweaks could, for example, be designed to reduce the dependence on the US economy, or to increase our trade surpluses and foreign exchange reserves.
In addition, the current financial boom differs from earlier bull runs in that there is a greater spread of wealth within the investment community. In other words, there are more investors keen on gaining exposure in the markets of their choice. The financial services providers should continue to lower the barriers to investment and make new asset classes available to retail investors, to facilitate the goal of wealth creation.
On the property front, the government has been successful in attracting high-net-worth individuals to Singapore, as well as developing new growth engines - such as biotechnology and healthcare - for the local economy. These should ensure that the residential and rental markets for mid- to high-end properties stay robust. Then again, the government should never allow the market to overheat or the high-net-worth individuals could relocate elsewhere.
What’s fuelling the markets
Charles Reed CEO interTouch
THE boom in the property market is about the same as it was just before the Asian financial crisis almost a decade ago. But the recent Reuters Real Estate Summit in Singapore highlighted that with rentals peaking, investors are not yet done with the lucrative property market, which still holds huge potential. Investors, and now more speculators, are certainly not yet done, but is there still huge potential?
With booming Asian economies, property investment in the region is escalating and with more developers trying to get a piece of the pie, funding in this sector shows no sign of slowing down.
There is demand among the growing middle classes in China, India and in other Asian cities, to invest in their own property markets, thus fuelling the industry further. I find it hard to believe that the growing middle classes in China or India can afford the current runaway prices!
What is fuelling the Singapore property sector and the stock market at the moment is the excessive liquidity in the market from the newly-minted millionaires created by the collective sales fever. Overnight, thousands of people suddenly find themselves with millions of dollars of cash to play with.
Needless to say, the authorities need to observe developments quite closely as policy and regulations are invaluable. However, there is no need to step in as yet as competition is important for the industry to fully reach its potential. The way forward is greater liberalisation and openness from industry regulators to attract healthier competition.
Derek Goh Executive Chairman/Group CEO Serial System Ltd
ECONOMIC cycles are part and parcel of the system that the world economies operate in. These are economic forces (micro and macro) that influence the daily lives of every individual.
The financial and property markets are booming because of the bigger appetite of fast growing economies like China, India and Japan. Though each economic cycle lasts an average of 10 to 12 years, the asset bubble is not going to burst just yet.
Government intervention in the markets is unnecessary as the Asian economies are now more resilient and able to withstand bigger swings.
Businesses are not expecting any downturn in the next 12-18 months as major events on the horizon are stabilisers for the global economy, namely, the Beijing Olympics in August 2008 and the US presidential election in December 2008.
Beyond 2008, there is less certainty, as the US economy is losing momentum and China’s trade surplus would be too huge for the US balance of trade. Potential trade wars may be triggered by an aggressive new US president then.
For 2007 and 2008 overall, the Singapore economy will not be greatly shaken by any financial or property tsunami.
Tan Kok Leong Principal TKL Consulting
THE current property and financial market boom should probably be viewed as the upswing of a business cycle, in the wake of globalisation and technological changes. It is a feature of capitalism at work. The outlook for the introduction and spread of technologies remains favourable while relatively low interest rates favour investment, purchase of homes and consumer durables.
The financial crisis 10 years ago was probably caused by volatile short-term capital flows which attacked weaknesses in foreign reserves, the international exchange rate system and capital markets simultaneously. Future problems, perhaps, are likely to be caused more by disorderly unwinding of global imbalances.
A word of caution
Alfred Wong Managing Director/Architect WongPartnership
THERE is definitely a feeling of euphoria in Singapore.
The rate at which residential property prices are rising does not reflect the increase in the earning power of Singaporeans. This is, of course, with the exception of those in the finance and real estate sectors. However, judging by car sales at the car show on July 8 when $31 million worth of cars were sold, it would appear that the average Singaporean is riding on a wave of positive expectations from the integrated resorts and the projected population growth.
I think that many investors do not remember the lessons of the last Asian crisis. I also expect the authorities to step in if the situation approaches a critical point.
Sam Yap S G Executive Chairman Cherie Hearts Group
THE property market is currently overheating from speculative pressure, with prices soaring to levels not backed by economic fundamentals. This is sustained by easy credit from banks to speculators and property developers. Once the bubble bursts, a potentially destructive impact could be unleashed on our economy, with home buyers, property developers and banks being the likely victims.
The steps taken by the government to ease the pressure, while encouraging, are insufficient. More proactive measures, such as releasing more land for residential and commercial development and stricter guidelines on bank lending may be needed. Urgent action is required for a soft landing.
Annie Yap CEO The GMP Group
COMPARED with a decade ago, we can confidently say that in terms of business or leisure, Singapore can appeal to almost anyone today. Financially speaking, with greater collaboration with China, India and the Middle East, Singapore’s financial environment is more diversified than ever. Having our eggs in more baskets means we are more resilient and stable. With upcoming developments in the works, we will see Singapore attract interest from an increased breadth and depth of investors.
But we cannot let lofty enthusiasm become dangerous. Over-speculation can jeopardise Singapore’s plans for growth. Therefore, regulatory bodies should take up the role of observers, engaging in soft policing to calm over-excitement before sectors overheat. That way, markets operate smarter without compromising their autonomy. For example, the use of media in encouraging balanced discussions about the property market has helped in making the sector and the general public pause to take stock.
Lars Ronning President, North & South-east Asia, India, Australia & New Zealand Tandberg
AS financial and property markets continue to boom, caution should be exercised to establish that the current situation is a true reflection of economic growth and not just a result of speculative buying by over-zealous investors.
Amid the air of optimism and euphoria, the authorities need to prevent such inflationary pressures from increasing the cost of doing business here and eroding Singapore’s attractiveness as a business hub to foreign and local investors.
Tan Ser Giam Chairman Eastern Navigation Pte Ltd
SINGAPORE’S financial market is flush with funds and this will continue to push the stock market higher, barring unforeseen events. The property market will likewise be strong, although the risk of the government stepping in to cool the market remains high. There are rumblings from businesses about rising rentals adding to the cost of doing business. One of the things to watch is the US economy. If it goes into recession, all bets on the stock and property markets are off.
Joel G. Momberger Managing Director Informatica SEA Pte Ltd
AS a small open economy, Singapore is extremely vulnerable to external developments, especially in the surrounding region. While it has withstood the Asian financial crisis 10 years ago and even maintained a relatively favourable economic performance, its close links with the regional economies suggest it will not get away completely unscathed should anything untoward happen.
However, Singapore’s track record of prudent fiscal and monetary policies has been a great asset and this will help reassure investors of its commitment to consolidate its position as a financial centre for the region.
On government intervention
Lim Soon Hock Managing Director Plan-B ICAG Pte Ltd
WHAT goes up must come down, and this applies to both the financial and property markets, as has been proven in the past. Astute investors will watch the cycle very carefully to look for early signals of correction and downturn.
The wild card amid the optimism and euphoria is the US dollar. Should the US dollar depreciate sharply, there will be shock waves throughout the global economic system. While countries in Europe and Asia may benefit from the weakening of the US dollar, it will only be temporary; the US being the economic engine and technology innovator of the world will import less, because it will cost more. This will have adverse repercussions on the economies of these countries, and as a consequence, on the financial and property markets.
Our authorities should only step in where necessary to prevent a crisis. For example, to prevent an over-strengthening of the Singapore dollar, or property prices escalating beyond the means of the man in the street. I am confident the government will do everything possible to ensure that the gap between the rich and the poor will not be left to widen without timely intervention.
Wee Piew CEO HG Metal Manufacturing Ltd
THERE are a lot of positives going for the Singapore economy, which has been posting strong growth in the last couple of years. In the coming years, we are likely to see continued growth in the services sector - like financial services and tourism - with the opening of the integrated resorts.
Hence, the current boom in property and financial services is not without fundamentals. There is definitely more capital flowing into Singapore to take advantage of its growth in the coming years. As such, I do not see an asset bubble at this point in time. After all, the property market has only just been on an uptrend in the past year or so while a property boom typically lasts for a few years.
However, if the recent sharp rise continues next year - especially if it spreads to mass market residential property and the HDB market - then I think the authorities should consider taking some steps to ensure more supply of land for developers. On the other hand, I think stricter measures like those imposed in 1996 should be avoided as it is better left to the market to find a price equilibrium.
Eric Hoh Vice-President, Asia South Region Symantec
IT is heartening to see how Singapore has accelerated in terms of economic growth which comes amid a thriving stock market, a strong economy and a property boom. Singapore is likely to continue on its economic upswing with the much anticipated launch of the integrated resorts and hosting of the Formula 1 Grand Prix race.
As many continue to leverage on the increasing attractiveness of Singapore as a global city, I feel that the property and financial boom will continue in the short to medium term. For now, I agree with Senior Minister Goh Chok Tong that we should not be overly concerned and let the market find its own level.
Ng Kong Yeam Group Executive Chairman Sino-America Tours Corporation Pte Ltd
BOOMS and busts will always occur, if one reads economic and financial history. In 1985, property prices in Singapore were very low, nothwithstanding efforts by developers to promote sales. Ten years later, in 1995, prices shot up. Then in 1997, the property and stock markets fell due to the Asian financial crisis.
Supply and demand dictate the rise and fall of prices of stocks and properties. Expensive goods are sold based on wants rather than needs. In my view, the boom in Singapore will last two more years, and then a bust will begin to take place. In the US, the housing bust has already started. Investors should figure out for themselves when they should be cautious. Authorities cannot possibly regulate the rise and fall of prices.
Wong Teek Son Executive Chairman and CEO Riverstone Holdings Ltd
THERE is a tripartite relationship between businesses, authorities and investors for the market to continue to boom.
Businesses need to build credible operating models to withstand the economic fluctuations. Riverstone, for example, builds its foundations on value propositions by customising products to fit every customer’s needs, leading to long-term relationships.
Investors need to examine their options carefully when making their investment decision. Singapore has a good corporate governance structure and investors have data available for them to make educated decisions. The authorities need to continuously work with the market to ensure that information is transparent, adequate and responsibly reported, and leave the decision making to the open market.
Source: The Business Times, 16 July 2007
Posted by propertyforesight in Genius Thoughts. add a comment
Will the financial and property markets continue to boom, or do investors need to be more cautious? When, if at all, should the authorities step in?
Sanjay Prabhakaran Director, South-east Asia Baxter Healthcare (Asia) Pte Ltd
I BELIEVE the current financial and property boom will be sustained for a few more years at least. However, the factors that will determine the growth potential of the financial and property sectors will differ.
Singapore has successfully expanded and diversified its financial markets over the past several years. Whether or not the ongoing bull run will continue depends partly on the government’s ability to adjust national policies in response to (or in anticipation of) developments elsewhere. Such tweaks could, for example, be designed to reduce the dependence on the US economy, or to increase our trade surpluses and foreign exchange reserves.
In addition, the current financial boom differs from earlier bull runs in that there is a greater spread of wealth within the investment community. In other words, there are more investors keen on gaining exposure in the markets of their choice. The financial services providers should continue to lower the barriers to investment and make new asset classes available to retail investors, to facilitate the goal of wealth creation.
On the property front, the government has been successful in attracting high-net-worth individuals to Singapore, as well as developing new growth engines - such as biotechnology and healthcare - for the local economy. These should ensure that the residential and rental markets for mid- to high-end properties stay robust. Then again, the government should never allow the market to overheat or the high-net-worth individuals could relocate elsewhere.
What’s fuelling the markets
Charles Reed CEO interTouch
THE boom in the property market is about the same as it was just before the Asian financial crisis almost a decade ago. But the recent Reuters Real Estate Summit in Singapore highlighted that with rentals peaking, investors are not yet done with the lucrative property market, which still holds huge potential. Investors, and now more speculators, are certainly not yet done, but is there still huge potential?
With booming Asian economies, property investment in the region is escalating and with more developers trying to get a piece of the pie, funding in this sector shows no sign of slowing down.
There is demand among the growing middle classes in China, India and in other Asian cities, to invest in their own property markets, thus fuelling the industry further. I find it hard to believe that the growing middle classes in China or India can afford the current runaway prices!
What is fuelling the Singapore property sector and the stock market at the moment is the excessive liquidity in the market from the newly-minted millionaires created by the collective sales fever. Overnight, thousands of people suddenly find themselves with millions of dollars of cash to play with.
Needless to say, the authorities need to observe developments quite closely as policy and regulations are invaluable. However, there is no need to step in as yet as competition is important for the industry to fully reach its potential. The way forward is greater liberalisation and openness from industry regulators to attract healthier competition.
Derek Goh Executive Chairman/Group CEO Serial System Ltd
ECONOMIC cycles are part and parcel of the system that the world economies operate in. These are economic forces (micro and macro) that influence the daily lives of every individual.
The financial and property markets are booming because of the bigger appetite of fast growing economies like China, India and Japan. Though each economic cycle lasts an average of 10 to 12 years, the asset bubble is not going to burst just yet.
Government intervention in the markets is unnecessary as the Asian economies are now more resilient and able to withstand bigger swings.
Businesses are not expecting any downturn in the next 12-18 months as major events on the horizon are stabilisers for the global economy, namely, the Beijing Olympics in August 2008 and the US presidential election in December 2008.
Beyond 2008, there is less certainty, as the US economy is losing momentum and China’s trade surplus would be too huge for the US balance of trade. Potential trade wars may be triggered by an aggressive new US president then.
For 2007 and 2008 overall, the Singapore economy will not be greatly shaken by any financial or property tsunami.
Tan Kok Leong Principal TKL Consulting
THE current property and financial market boom should probably be viewed as the upswing of a business cycle, in the wake of globalisation and technological changes. It is a feature of capitalism at work. The outlook for the introduction and spread of technologies remains favourable while relatively low interest rates favour investment, purchase of homes and consumer durables.
The financial crisis 10 years ago was probably caused by volatile short-term capital flows which attacked weaknesses in foreign reserves, the international exchange rate system and capital markets simultaneously. Future problems, perhaps, are likely to be caused more by disorderly unwinding of global imbalances.
A word of caution
Alfred Wong Managing Director/Architect WongPartnership
THERE is definitely a feeling of euphoria in Singapore.
The rate at which residential property prices are rising does not reflect the increase in the earning power of Singaporeans. This is, of course, with the exception of those in the finance and real estate sectors. However, judging by car sales at the car show on July 8 when $31 million worth of cars were sold, it would appear that the average Singaporean is riding on a wave of positive expectations from the integrated resorts and the projected population growth.
I think that many investors do not remember the lessons of the last Asian crisis. I also expect the authorities to step in if the situation approaches a critical point.
Sam Yap S G Executive Chairman Cherie Hearts Group
THE property market is currently overheating from speculative pressure, with prices soaring to levels not backed by economic fundamentals. This is sustained by easy credit from banks to speculators and property developers. Once the bubble bursts, a potentially destructive impact could be unleashed on our economy, with home buyers, property developers and banks being the likely victims.
The steps taken by the government to ease the pressure, while encouraging, are insufficient. More proactive measures, such as releasing more land for residential and commercial development and stricter guidelines on bank lending may be needed. Urgent action is required for a soft landing.
Annie Yap CEO The GMP Group
COMPARED with a decade ago, we can confidently say that in terms of business or leisure, Singapore can appeal to almost anyone today. Financially speaking, with greater collaboration with China, India and the Middle East, Singapore’s financial environment is more diversified than ever. Having our eggs in more baskets means we are more resilient and stable. With upcoming developments in the works, we will see Singapore attract interest from an increased breadth and depth of investors.
But we cannot let lofty enthusiasm become dangerous. Over-speculation can jeopardise Singapore’s plans for growth. Therefore, regulatory bodies should take up the role of observers, engaging in soft policing to calm over-excitement before sectors overheat. That way, markets operate smarter without compromising their autonomy. For example, the use of media in encouraging balanced discussions about the property market has helped in making the sector and the general public pause to take stock.
Lars Ronning President, North & South-east Asia, India, Australia & New Zealand Tandberg
AS financial and property markets continue to boom, caution should be exercised to establish that the current situation is a true reflection of economic growth and not just a result of speculative buying by over-zealous investors.
Amid the air of optimism and euphoria, the authorities need to prevent such inflationary pressures from increasing the cost of doing business here and eroding Singapore’s attractiveness as a business hub to foreign and local investors.
Tan Ser Giam Chairman Eastern Navigation Pte Ltd
SINGAPORE’S financial market is flush with funds and this will continue to push the stock market higher, barring unforeseen events. The property market will likewise be strong, although the risk of the government stepping in to cool the market remains high. There are rumblings from businesses about rising rentals adding to the cost of doing business. One of the things to watch is the US economy. If it goes into recession, all bets on the stock and property markets are off.
Joel G. Momberger Managing Director Informatica SEA Pte Ltd
AS a small open economy, Singapore is extremely vulnerable to external developments, especially in the surrounding region. While it has withstood the Asian financial crisis 10 years ago and even maintained a relatively favourable economic performance, its close links with the regional economies suggest it will not get away completely unscathed should anything untoward happen.
However, Singapore’s track record of prudent fiscal and monetary policies has been a great asset and this will help reassure investors of its commitment to consolidate its position as a financial centre for the region.
On government intervention
Lim Soon Hock Managing Director Plan-B ICAG Pte Ltd
WHAT goes up must come down, and this applies to both the financial and property markets, as has been proven in the past. Astute investors will watch the cycle very carefully to look for early signals of correction and downturn.
The wild card amid the optimism and euphoria is the US dollar. Should the US dollar depreciate sharply, there will be shock waves throughout the global economic system. While countries in Europe and Asia may benefit from the weakening of the US dollar, it will only be temporary; the US being the economic engine and technology innovator of the world will import less, because it will cost more. This will have adverse repercussions on the economies of these countries, and as a consequence, on the financial and property markets.
Our authorities should only step in where necessary to prevent a crisis. For example, to prevent an over-strengthening of the Singapore dollar, or property prices escalating beyond the means of the man in the street. I am confident the government will do everything possible to ensure that the gap between the rich and the poor will not be left to widen without timely intervention.
Wee Piew CEO HG Metal Manufacturing Ltd
THERE are a lot of positives going for the Singapore economy, which has been posting strong growth in the last couple of years. In the coming years, we are likely to see continued growth in the services sector - like financial services and tourism - with the opening of the integrated resorts.
Hence, the current boom in property and financial services is not without fundamentals. There is definitely more capital flowing into Singapore to take advantage of its growth in the coming years. As such, I do not see an asset bubble at this point in time. After all, the property market has only just been on an uptrend in the past year or so while a property boom typically lasts for a few years.
However, if the recent sharp rise continues next year - especially if it spreads to mass market residential property and the HDB market - then I think the authorities should consider taking some steps to ensure more supply of land for developers. On the other hand, I think stricter measures like those imposed in 1996 should be avoided as it is better left to the market to find a price equilibrium.
Eric Hoh Vice-President, Asia South Region Symantec
IT is heartening to see how Singapore has accelerated in terms of economic growth which comes amid a thriving stock market, a strong economy and a property boom. Singapore is likely to continue on its economic upswing with the much anticipated launch of the integrated resorts and hosting of the Formula 1 Grand Prix race.
As many continue to leverage on the increasing attractiveness of Singapore as a global city, I feel that the property and financial boom will continue in the short to medium term. For now, I agree with Senior Minister Goh Chok Tong that we should not be overly concerned and let the market find its own level.
Ng Kong Yeam Group Executive Chairman Sino-America Tours Corporation Pte Ltd
BOOMS and busts will always occur, if one reads economic and financial history. In 1985, property prices in Singapore were very low, nothwithstanding efforts by developers to promote sales. Ten years later, in 1995, prices shot up. Then in 1997, the property and stock markets fell due to the Asian financial crisis.
Supply and demand dictate the rise and fall of prices of stocks and properties. Expensive goods are sold based on wants rather than needs. In my view, the boom in Singapore will last two more years, and then a bust will begin to take place. In the US, the housing bust has already started. Investors should figure out for themselves when they should be cautious. Authorities cannot possibly regulate the rise and fall of prices.
Wong Teek Son Executive Chairman and CEO Riverstone Holdings Ltd
THERE is a tripartite relationship between businesses, authorities and investors for the market to continue to boom.
Businesses need to build credible operating models to withstand the economic fluctuations. Riverstone, for example, builds its foundations on value propositions by customising products to fit every customer’s needs, leading to long-term relationships.
Investors need to examine their options carefully when making their investment decision. Singapore has a good corporate governance structure and investors have data available for them to make educated decisions. The authorities need to continuously work with the market to ensure that information is transparent, adequate and responsibly reported, and leave the decision making to the open market.
Source: The Business Times, 16 July 2007
Former ‘remiser king’: equities still have legs
Former ‘remiser king’: equities still have legs
Posted by propertyforesight in Community Voices. add a comment
Peter Lim, the man formerly known as the ‘Remisier King’ and who is estimated to be worth more than $2 billion today, reckons the stock market still has two good years to go. But he is getting concerned about the property market.
‘The market won’t collapse for the next two, three years. It’s all sentiment-driven. People are making more money, and so long as people are spending, we are OK. But one has got to start to think how to exit at the end of 2-3 years - 2009, before the casino starts operating,’ he said.
Mr Lim is, of course, well known as an influential stockbroker and deal-maker in the Singapore and Malaysian markets in the early 1990s. That was also when he made his millions, but quit at his peak to take care of divorce proceedings.
Despite being out of the industry, it was in the last few years that his fortunes took a leap forward, thanks to the booming stock market. He was recently in the news for agreeing to put $150 million into Rowsley for its reverse takeover of a China solar company.
In a near four-hour interview with BT to talk about his market views and investment philosophy, Mr Lim said a lot of the big companies listed on the Singapore Exchange (SGX) today have a global presence.
Like Keppel Corp, for instance; it can’t fulfil all the orders for its oil rigs. So even if there is a shift in investor sentiment and the market corrects severely, investors can still ride out the whole cycle, said Mr Lim - barring a global recession, of course.
The danger, he said, is in the small-cap sector. ‘Some of these stocks have gone up a lot. Much of the potential has been priced in. If this potential is cut short by any unexpected unfortunate event, they will come down like a rock.’
Small-cap stocks run up fast because of their small float. But when the sentiment turns, everyone is a seller, he said.
As for the property market, Mr Lim thinks prices have gone up too fast. The sharp increase has taken everyone by surprise, even the government. ‘Actually, it’s quite simple. Singapore is small. You get a small bucket, and pour a lot of water, it’ll overflow. This is what’s happening. I think the demand just comes together at the same time. I don’t think it’s sustainable.’
Demand is so strong that people are knocking down buildings, and that’s curtailing supply even more.
But the thing is, the buildings knocked down will have three times more apartments when they get rebuilt a few years down the road. ‘When the supply comes out, property prices will drop,’ he said.
Comparisons have been drawn between Singapore and London. ‘But you tell me: how many en bloc (redevelopments) do they have in London? No en blocs means no additional supply.’ he said.
Mr Lim is worried about the impact of high rentals on businesses - office rentals have gone up by 200-300 per cent in the last few years. ‘Costs are going to bloat . . . most businesses’ margins are going to be eaten up by costs.’
At the moment, many individuals and companies are making money from asset inflation, he said. ‘You hope that this asset inflation becomes an income, becomes regular. But I don’t think so. These are all situational. But it will go one day.
‘I’m not a pessimist, but this is how I see it. That’s why at the end of a bull market, you see a new generation coming up. Because all the old ones die. Now and then, you see one of those who stays - then he becomes a legend. And if you observe those legends, most of the time, they spend their time scolding people: ‘don’t gear, don’t gamble’.’
And that exactly was the message that he kept harping on during the interview.
‘A lot of people get it wrong. When the bull market is here, they build debts. Bull market is the time to build cash. Because today’s market turns very quickly. When the market turns, you cannot sell, especially for the property market. You can only sell when things are going up.
‘So I always tell my friends: ‘Make sure you stay alive. The market won’t die, so there’s always a next time.’ ‘
By BT’s estimates, Mr Lim is worth in excess of $2 billion. He has just under 5 per cent in Wilmar International. Based on the company’s current market capitalisation of $22 billion on SGX, that stake alone is worth $1.11 billion. He has about 11 per cent in FJ Benjamin, and that’s worth $52.6 million. Meanwhile, his 25 per cent stake in Rowsley has a market value of $37 million. So his Singapore equities alone are worth $1.2 billion. On top of that, he has some Australian mining stocks bought in the 1970s and ’80s.
Mr Lim says 50 per cent of his portfolio is now in equities, another 10 per cent in properties and the remaining 40 per cent in cash. The cash is from the dividends he received, which he has not reapplied to the market. So all in, he’s worth more than $2.4 billion.
The 54-year-old believes that the fortune he has today is pre-destined. ‘This size - substantially, it’s your destiny. If today I have $10 million, I’d say over 90 per cent is due to my hard work. But getting it right is not $1 billion. Maybe it’s $100 million. How that $100 million becomes $1 billion, you know it’s because somebody likes you. You must believe it’s somehow a path that’s been drawn.’
The bulk of his net worth is in Wilmar, in which he was asked to pump in under $10 million in the early 1990s. By the second half of the decade, he had totally written off that investment. That was when the Indonesian currency fell from 2,500 rupiah against the US dollar (the exchange rate he invested in Wilmar), to 16,000 rupiah, and president Suharto was ousted. There were riots in Indonesia. There was no way of cashing out the assets. But in a few years, things stabilised in Indonesia and the pieces began to come together for Wilmar. Its China operations began to pick up, businessman Robert Kuok decided to inject his Malaysian palm oil operations into Wilmar and palm oil prices started to go through the roof because of the scramble to produce biofuels.
‘My Indonesian partner was asking me the other day: ‘How the hell did we make so much money?’ ‘
‘Up to a point after people tell you a story and a vision, don’t write it off. Sometimes it comes true. You just make sure that if it doesn’t come true, you don’t get hurt too much,’ he said.
The most important factor to consider when investing in a company is the person running it; you look at whether the person is honest, and whether he or she is master of their trade.
‘It works. It’s a tested method of assessing companies,’ Mr Lim said.
Wilmar is not his only lucky break. He escaped the Asian crisis as he had quit the broking profession in 1996 to prepare for his divorce proceedings. And he spent the next six months liquidating most of his stock positions. So when the crisis hit, he was mostly in cash.
He was also not in the market during the dotcom bubble as the hearing on the division of matrimonial assets dragged on until 2001. He thanks his lucky stars for having avoided the Asian financial crisis, but thinks he would not have been caught in the insanity of the dotcom bubble.
Nowadays, Mr Lim spends his time dispensing advice to deal-makers in the industry - and sends them a bill of $300,000 or more for it. He still gets a thrill out of structuring deals, which he says is similar to a chess game.
He described the recent Rowsley deal to acquire a solar energy company in China as ‘beautiful’, as one which allows existing shareholders to ‘lock in the upside, but hedge the downside’.
He’s also having to cope with the problems of having too much money. He worries if his children, a 15-year-old girl and 13-year-old boy, will be spoilt by his wealth. He reckons he may give the bulk of his money to charity eventually.
But going by the four-hour lunches that he takes - with Imperial Treasure at Great World City being his Canteen No 1 and Kuriya his Canteen No 2 - and sometimes squeezing in a game of tennis or two before dinner, the money problem can’t be all that bad.
HIS VIEWS ON . . .
Cutting deals
Maybe it’s in the blood. It’s quite exciting to pitch a deal, to make sure that you don’t catch me. It’s like a chess game: you make this move, the next one I make. I don’t want to get checkmate.
Wealth
Money is a funny thing. When you don’t have it, you want it. But when you have it, you have a lot of problems. I believe that if I’d had no money, I wouldn’t have had my divorce. Things wouldn’t be good, but it wouldn’t end up in a divorce.
Growing old
Once you are old, every year makes a lot of difference. Your lease gets shorter, there’s no extension. You go, you go.
Death
Some of my school mates have passed away. So once you start to see all these things, your perspective on life becomes more measured, more considered.
Making money
It’s very difficult to make money from trading. People who get rich are those who buy a company, build it, run it. Most of the traders, they come, they make money, because they have this gambling instinct. They take the money and spend it. The minute they lose money, they got no money to pay up.
The next downturn
Today’s bull run can get cut short by a number of things. Just like our recent experience with Sars, or a bomb drops on the wrong person’s head. Like anything else, the least expected thing can happen at the wrong time. I got a feeling the next downturn will be very severe.
Source: The Business Times, 16 July 2007
Posted by propertyforesight in Community Voices. add a comment
Peter Lim, the man formerly known as the ‘Remisier King’ and who is estimated to be worth more than $2 billion today, reckons the stock market still has two good years to go. But he is getting concerned about the property market.
‘The market won’t collapse for the next two, three years. It’s all sentiment-driven. People are making more money, and so long as people are spending, we are OK. But one has got to start to think how to exit at the end of 2-3 years - 2009, before the casino starts operating,’ he said.
Mr Lim is, of course, well known as an influential stockbroker and deal-maker in the Singapore and Malaysian markets in the early 1990s. That was also when he made his millions, but quit at his peak to take care of divorce proceedings.
Despite being out of the industry, it was in the last few years that his fortunes took a leap forward, thanks to the booming stock market. He was recently in the news for agreeing to put $150 million into Rowsley for its reverse takeover of a China solar company.
In a near four-hour interview with BT to talk about his market views and investment philosophy, Mr Lim said a lot of the big companies listed on the Singapore Exchange (SGX) today have a global presence.
Like Keppel Corp, for instance; it can’t fulfil all the orders for its oil rigs. So even if there is a shift in investor sentiment and the market corrects severely, investors can still ride out the whole cycle, said Mr Lim - barring a global recession, of course.
The danger, he said, is in the small-cap sector. ‘Some of these stocks have gone up a lot. Much of the potential has been priced in. If this potential is cut short by any unexpected unfortunate event, they will come down like a rock.’
Small-cap stocks run up fast because of their small float. But when the sentiment turns, everyone is a seller, he said.
As for the property market, Mr Lim thinks prices have gone up too fast. The sharp increase has taken everyone by surprise, even the government. ‘Actually, it’s quite simple. Singapore is small. You get a small bucket, and pour a lot of water, it’ll overflow. This is what’s happening. I think the demand just comes together at the same time. I don’t think it’s sustainable.’
Demand is so strong that people are knocking down buildings, and that’s curtailing supply even more.
But the thing is, the buildings knocked down will have three times more apartments when they get rebuilt a few years down the road. ‘When the supply comes out, property prices will drop,’ he said.
Comparisons have been drawn between Singapore and London. ‘But you tell me: how many en bloc (redevelopments) do they have in London? No en blocs means no additional supply.’ he said.
Mr Lim is worried about the impact of high rentals on businesses - office rentals have gone up by 200-300 per cent in the last few years. ‘Costs are going to bloat . . . most businesses’ margins are going to be eaten up by costs.’
At the moment, many individuals and companies are making money from asset inflation, he said. ‘You hope that this asset inflation becomes an income, becomes regular. But I don’t think so. These are all situational. But it will go one day.
‘I’m not a pessimist, but this is how I see it. That’s why at the end of a bull market, you see a new generation coming up. Because all the old ones die. Now and then, you see one of those who stays - then he becomes a legend. And if you observe those legends, most of the time, they spend their time scolding people: ‘don’t gear, don’t gamble’.’
And that exactly was the message that he kept harping on during the interview.
‘A lot of people get it wrong. When the bull market is here, they build debts. Bull market is the time to build cash. Because today’s market turns very quickly. When the market turns, you cannot sell, especially for the property market. You can only sell when things are going up.
‘So I always tell my friends: ‘Make sure you stay alive. The market won’t die, so there’s always a next time.’ ‘
By BT’s estimates, Mr Lim is worth in excess of $2 billion. He has just under 5 per cent in Wilmar International. Based on the company’s current market capitalisation of $22 billion on SGX, that stake alone is worth $1.11 billion. He has about 11 per cent in FJ Benjamin, and that’s worth $52.6 million. Meanwhile, his 25 per cent stake in Rowsley has a market value of $37 million. So his Singapore equities alone are worth $1.2 billion. On top of that, he has some Australian mining stocks bought in the 1970s and ’80s.
Mr Lim says 50 per cent of his portfolio is now in equities, another 10 per cent in properties and the remaining 40 per cent in cash. The cash is from the dividends he received, which he has not reapplied to the market. So all in, he’s worth more than $2.4 billion.
The 54-year-old believes that the fortune he has today is pre-destined. ‘This size - substantially, it’s your destiny. If today I have $10 million, I’d say over 90 per cent is due to my hard work. But getting it right is not $1 billion. Maybe it’s $100 million. How that $100 million becomes $1 billion, you know it’s because somebody likes you. You must believe it’s somehow a path that’s been drawn.’
The bulk of his net worth is in Wilmar, in which he was asked to pump in under $10 million in the early 1990s. By the second half of the decade, he had totally written off that investment. That was when the Indonesian currency fell from 2,500 rupiah against the US dollar (the exchange rate he invested in Wilmar), to 16,000 rupiah, and president Suharto was ousted. There were riots in Indonesia. There was no way of cashing out the assets. But in a few years, things stabilised in Indonesia and the pieces began to come together for Wilmar. Its China operations began to pick up, businessman Robert Kuok decided to inject his Malaysian palm oil operations into Wilmar and palm oil prices started to go through the roof because of the scramble to produce biofuels.
‘My Indonesian partner was asking me the other day: ‘How the hell did we make so much money?’ ‘
‘Up to a point after people tell you a story and a vision, don’t write it off. Sometimes it comes true. You just make sure that if it doesn’t come true, you don’t get hurt too much,’ he said.
The most important factor to consider when investing in a company is the person running it; you look at whether the person is honest, and whether he or she is master of their trade.
‘It works. It’s a tested method of assessing companies,’ Mr Lim said.
Wilmar is not his only lucky break. He escaped the Asian crisis as he had quit the broking profession in 1996 to prepare for his divorce proceedings. And he spent the next six months liquidating most of his stock positions. So when the crisis hit, he was mostly in cash.
He was also not in the market during the dotcom bubble as the hearing on the division of matrimonial assets dragged on until 2001. He thanks his lucky stars for having avoided the Asian financial crisis, but thinks he would not have been caught in the insanity of the dotcom bubble.
Nowadays, Mr Lim spends his time dispensing advice to deal-makers in the industry - and sends them a bill of $300,000 or more for it. He still gets a thrill out of structuring deals, which he says is similar to a chess game.
He described the recent Rowsley deal to acquire a solar energy company in China as ‘beautiful’, as one which allows existing shareholders to ‘lock in the upside, but hedge the downside’.
He’s also having to cope with the problems of having too much money. He worries if his children, a 15-year-old girl and 13-year-old boy, will be spoilt by his wealth. He reckons he may give the bulk of his money to charity eventually.
But going by the four-hour lunches that he takes - with Imperial Treasure at Great World City being his Canteen No 1 and Kuriya his Canteen No 2 - and sometimes squeezing in a game of tennis or two before dinner, the money problem can’t be all that bad.
HIS VIEWS ON . . .
Cutting deals
Maybe it’s in the blood. It’s quite exciting to pitch a deal, to make sure that you don’t catch me. It’s like a chess game: you make this move, the next one I make. I don’t want to get checkmate.
Wealth
Money is a funny thing. When you don’t have it, you want it. But when you have it, you have a lot of problems. I believe that if I’d had no money, I wouldn’t have had my divorce. Things wouldn’t be good, but it wouldn’t end up in a divorce.
Growing old
Once you are old, every year makes a lot of difference. Your lease gets shorter, there’s no extension. You go, you go.
Death
Some of my school mates have passed away. So once you start to see all these things, your perspective on life becomes more measured, more considered.
Making money
It’s very difficult to make money from trading. People who get rich are those who buy a company, build it, run it. Most of the traders, they come, they make money, because they have this gambling instinct. They take the money and spend it. The minute they lose money, they got no money to pay up.
The next downturn
Today’s bull run can get cut short by a number of things. Just like our recent experience with Sars, or a bomb drops on the wrong person’s head. Like anything else, the least expected thing can happen at the wrong time. I got a feeling the next downturn will be very severe.
Source: The Business Times, 16 July 2007
Property boom to yield record stamp duty
Property boom to yield record stamp duty
Posted by propertyforesight in Tax Matters. add a comment
With the property market setting new records each month, government revenues from stamp duty look set to reach new highs this year.
Property deals in the first five months of this year have yielded more than $1.7 billion in stamp duty. At this rate, the government coffers could get a $4 billion boost for the entire year.
The takings for the first five months of this year have already surpassed the $1.3 billion for all of last year, the latest official statistics showed.
And this is just 7.7 per cent shy of the record $1.8 billion in 1996, the last property market peak.
But with the pace of transactions hotting up over the past few months, some analysts are predicting that the stamp duty collected could rise even more.
‘If the property market continues as it is now - and we are only starting to see it pick up - we are looking at somewhere in the order of
$4 billion to $5 billion in stamp duty,’ said Mr Song Seng Wun, economist and research head at stockbroking house CIMB-GK.
Stamp duty is a tax on commercial and legal documents used in certain transactions. The bulk of it comes from property purchases. Stamp duty ranges from 1 per cent to 3 per cent of the purchase price.
The latest surge in stamp duty is largely due to the jump in property prices and transactions. ‘Stamp duty reflects increased economic activities everywhere, but the main contributor has certainly been the property market,’ said Mr Song.
Mr Nicholas Mak, director of research and consultancy at property firm Knight Frank, also sees a surge in stamp duty, though he is slightly less bullish than Mr Song.
He expects a record 33,000 private homes to be sold this year. The average value of each home is also likely to be higher than in the past, he noted.
This would increase stamp duty, as it is calculated as a percentage of a property’s price. Based on this, he projects tax takings of about $3.2 billion.
A recent tweak in stamp duty rules may also contribute to the boost. In December, the Government stopped deferring stamp duty payments on property sales - a practice started in 1998 that allowed buyers to put off paying it for up to a few years.
Now, property buyers have to cough up stamp duty within 14 days of agreeing to buy. But those who bought properties before December still enjoy deferments.
This means that the stamp duty takings so far this year come not only from new property sales in the first five months, but also from deferred sales in past years, bumping up the figure.
Economists say stamp duty is set to become the third biggest contributor to government operating revenue this year, from being one of the smallest in the past.
It is projected to surpass customs and excise duties, motor vehicle taxes, property taxes and betting taxes. Since 2000, it has consistently fallen behind all four categories.
Analysts also noted that with the bumper take from stamp duty, as well as projected higher takings from the goods and services tax and income tax, government revenues are likely to surpass the $32 billion collected last year.
Source: The Straits Times, 16 July 2007
Posted by propertyforesight in Tax Matters. add a comment
With the property market setting new records each month, government revenues from stamp duty look set to reach new highs this year.
Property deals in the first five months of this year have yielded more than $1.7 billion in stamp duty. At this rate, the government coffers could get a $4 billion boost for the entire year.
The takings for the first five months of this year have already surpassed the $1.3 billion for all of last year, the latest official statistics showed.
And this is just 7.7 per cent shy of the record $1.8 billion in 1996, the last property market peak.
But with the pace of transactions hotting up over the past few months, some analysts are predicting that the stamp duty collected could rise even more.
‘If the property market continues as it is now - and we are only starting to see it pick up - we are looking at somewhere in the order of
$4 billion to $5 billion in stamp duty,’ said Mr Song Seng Wun, economist and research head at stockbroking house CIMB-GK.
Stamp duty is a tax on commercial and legal documents used in certain transactions. The bulk of it comes from property purchases. Stamp duty ranges from 1 per cent to 3 per cent of the purchase price.
The latest surge in stamp duty is largely due to the jump in property prices and transactions. ‘Stamp duty reflects increased economic activities everywhere, but the main contributor has certainly been the property market,’ said Mr Song.
Mr Nicholas Mak, director of research and consultancy at property firm Knight Frank, also sees a surge in stamp duty, though he is slightly less bullish than Mr Song.
He expects a record 33,000 private homes to be sold this year. The average value of each home is also likely to be higher than in the past, he noted.
This would increase stamp duty, as it is calculated as a percentage of a property’s price. Based on this, he projects tax takings of about $3.2 billion.
A recent tweak in stamp duty rules may also contribute to the boost. In December, the Government stopped deferring stamp duty payments on property sales - a practice started in 1998 that allowed buyers to put off paying it for up to a few years.
Now, property buyers have to cough up stamp duty within 14 days of agreeing to buy. But those who bought properties before December still enjoy deferments.
This means that the stamp duty takings so far this year come not only from new property sales in the first five months, but also from deferred sales in past years, bumping up the figure.
Economists say stamp duty is set to become the third biggest contributor to government operating revenue this year, from being one of the smallest in the past.
It is projected to surpass customs and excise duties, motor vehicle taxes, property taxes and betting taxes. Since 2000, it has consistently fallen behind all four categories.
Analysts also noted that with the bumper take from stamp duty, as well as projected higher takings from the goods and services tax and income tax, government revenues are likely to surpass the $32 billion collected last year.
Source: The Straits Times, 16 July 2007
Upmarket property agent Sotheby’s sets up shop here
Upmarket property agent Sotheby’s sets up shop here
Posted by propertyforesight in Property Investment. add a comment
United States-based luxury property agent Sotheby’s International Realty has set up a franchise in Singapore, attracted by the growing stream of foreign buyers seeking a home in the red-hot property market.
The high-end property broker offers services to help its rich global clientele find a dream home here. Clients are invited to preview sought-after properties, even before they are soft- launched.
Sotheby’s has just started in Singapore but is already handling more than 20 deals and expects to be busy.
Developers have lapped up a record amount of prime collective sale sites, so there should be no lack of new and exciting posh projects.
Property consultancy Savills Singapore announced last week that it had formed a business unit to work with private banks in advising the banks’ growing number of high net worth individuals.
Even PropNex, a property agent that started out in the HDB market - and is still strong in that segment - has jumped onto the bandwagon. PropNex Grandeur Homes was set up in March, headed by Mr Douglas Wong, who was previously associate director of Knight Frank’s Regal Homes, which deals with good class bungalows (GCBs).
Mr David Wong, chief executive of the Sotheby’s franchise in Singapore, said a typical day could involve picking a client up from the airport and driving him to the latest developments to help him select a unit or two.
The tour is complete with expert advice and could end with lunch at a top-end restaurant.
Sotheby’s clients get chauffeured around in a car they like. ‘We have a fleet of cars, including a Bentley, at our disposal,’ said Mr Wong.
Its clients have previewed Scotts Square, Wheelock Properties’ luxury condominium in Scotts Road, and the posh 8 Napier on the former Eng Lok Mansion site. Neither project has been launched. Sales at Scotts Square have not even started, though indicative prices hover around an average of $4,500 per sq ft (psf).
As for 8 Napier, developer Napier Properties, controlled in part by former Parkway Holdings boss Tony Tan, has released just 10 out of 46 units for sale at between $4,000 psf and $4,500 psf.
Sotheby’s clients were the first group to view the homes over a week ago. They have also seen other posh projects - mostly in districts 9, 10 and 11, including GCBs.
Mr Wong said the high-end properties they help clients - either wealthy individuals or institutional investors - find are typically priced from $3,500 psf. To him, luxury properties are those priced from $5,000 psf.
Sotheby’s International Realty is owned by the world’s leading franchisor of real estate brokerages, US-based Realogy. The brand is offered via an exclusive 25-year master franchise. It was recently secured by JVC Capital, a firm controlled by investors including seasoned property investor, Dr Goh Seng Heng.
Prior to joining Sotheby’s, Mr Wong, 42, spent nearly four years as director of sales and marketing for SC Global Developments, which specialises in building luxury homes. Before that, he headed the Prestige Homes division of Savills Singapore.
He said his firm can also help developer clients package their products to appeal to ’sophisticated international buyers’.
‘You basically create a product that can command a certain price,’ he said.
Sotheby’s will even conduct auctions in cases where a need arises, such as when there is strong demand for a project, Mr Wong said. Those auctions will be conducted by a Sotheby’s auctioneer from New York, he added.
So far, the real estate arm of British-based Christie’s has helped raise the upmarket appeal of some properties, the first of which were the Sentosa Cove land parcels.
The exclusive affiliate of Christie’s Great Estates, Mr Ken Jacobs, has conducted auctions jointly with Colliers International in Singapore and could continue to do so, depending on the available luxury projects in Singapore.
For now, Mr Wong said his firm is focusing on helping its global network of clients buy homes here, although in future, it will look into assisting Singaporeans in buying homes worldwide.
Source: The Straits Times, 16 July 2007
Posted by propertyforesight in Property Investment. add a comment
United States-based luxury property agent Sotheby’s International Realty has set up a franchise in Singapore, attracted by the growing stream of foreign buyers seeking a home in the red-hot property market.
The high-end property broker offers services to help its rich global clientele find a dream home here. Clients are invited to preview sought-after properties, even before they are soft- launched.
Sotheby’s has just started in Singapore but is already handling more than 20 deals and expects to be busy.
Developers have lapped up a record amount of prime collective sale sites, so there should be no lack of new and exciting posh projects.
Property consultancy Savills Singapore announced last week that it had formed a business unit to work with private banks in advising the banks’ growing number of high net worth individuals.
Even PropNex, a property agent that started out in the HDB market - and is still strong in that segment - has jumped onto the bandwagon. PropNex Grandeur Homes was set up in March, headed by Mr Douglas Wong, who was previously associate director of Knight Frank’s Regal Homes, which deals with good class bungalows (GCBs).
Mr David Wong, chief executive of the Sotheby’s franchise in Singapore, said a typical day could involve picking a client up from the airport and driving him to the latest developments to help him select a unit or two.
The tour is complete with expert advice and could end with lunch at a top-end restaurant.
Sotheby’s clients get chauffeured around in a car they like. ‘We have a fleet of cars, including a Bentley, at our disposal,’ said Mr Wong.
Its clients have previewed Scotts Square, Wheelock Properties’ luxury condominium in Scotts Road, and the posh 8 Napier on the former Eng Lok Mansion site. Neither project has been launched. Sales at Scotts Square have not even started, though indicative prices hover around an average of $4,500 per sq ft (psf).
As for 8 Napier, developer Napier Properties, controlled in part by former Parkway Holdings boss Tony Tan, has released just 10 out of 46 units for sale at between $4,000 psf and $4,500 psf.
Sotheby’s clients were the first group to view the homes over a week ago. They have also seen other posh projects - mostly in districts 9, 10 and 11, including GCBs.
Mr Wong said the high-end properties they help clients - either wealthy individuals or institutional investors - find are typically priced from $3,500 psf. To him, luxury properties are those priced from $5,000 psf.
Sotheby’s International Realty is owned by the world’s leading franchisor of real estate brokerages, US-based Realogy. The brand is offered via an exclusive 25-year master franchise. It was recently secured by JVC Capital, a firm controlled by investors including seasoned property investor, Dr Goh Seng Heng.
Prior to joining Sotheby’s, Mr Wong, 42, spent nearly four years as director of sales and marketing for SC Global Developments, which specialises in building luxury homes. Before that, he headed the Prestige Homes division of Savills Singapore.
He said his firm can also help developer clients package their products to appeal to ’sophisticated international buyers’.
‘You basically create a product that can command a certain price,’ he said.
Sotheby’s will even conduct auctions in cases where a need arises, such as when there is strong demand for a project, Mr Wong said. Those auctions will be conducted by a Sotheby’s auctioneer from New York, he added.
So far, the real estate arm of British-based Christie’s has helped raise the upmarket appeal of some properties, the first of which were the Sentosa Cove land parcels.
The exclusive affiliate of Christie’s Great Estates, Mr Ken Jacobs, has conducted auctions jointly with Colliers International in Singapore and could continue to do so, depending on the available luxury projects in Singapore.
For now, Mr Wong said his firm is focusing on helping its global network of clients buy homes here, although in future, it will look into assisting Singaporeans in buying homes worldwide.
Source: The Straits Times, 16 July 2007
Builders agree on plan to share higher costs
Builders agree on plan to share higher costs
Posted by propertyforesight in Construction News. add a comment
Six months after Indonesia abruptly banned the export of land sand to Singapore, the construction industry appears to have come to grips with the disruption caused.
Prices for sand, which shot up initially, have stabilised, and an agreement has been reached by key industry players on how to share the cost increases.
The Construction Industry Joint Committee (CIJC) - which represents eight industry associations - has worked out a 75-25 per cent formula for private projects.
Under the agreement, developers will bear 75 per cent of the cost, with the other 25 per cent to be shared between contractors and concrete suppliers, according to a note sent out by the committee.
This is similar to the government’s position of paying 75 per cent of the increase in construction costs of public sector projects affected by the ban.
CIJC chairman Chang Meng Teng said the formula is not a legal requirement but a recommended guideline that industry players should follow.
Most developers and contractors have already worked out arrangements on a case-by-case basis, said Mr Chia Hock Jin, executive director of the Real Estate Developers Association of Singapore.
In February, Indonesia’s sand ban also caused a disruption in granite supply when its navy detained several Singapore-bound barges carrying granite on suspicion of sand smuggling.
The prices of sand and granite rocketed as a result of shortages in supply, pushing up concrete prices from $70 to $200 per cu m. Sand and granite is used to make concrete, which is used heavily for construction here.
Contractors - especially those with private contracts - faced losses of millions of dollars as they had to absorb the price increases to continue with their projects.
Since then, prices of sand, granite and concrete have dropped as suppliers diversify their sources to neighbouring countries such as Malaysia, Vietnam and Cambodia.
The recent note from the CIJC follows lengthy negotiations between the developers, contractors and suppliers, and comes after a period of uncertainty over who should bear the costs.
Mr Desmond Hill, president of the Singapore Contractors Association, said he was delighted with the agreement, noting that it ’sets some ground rules’ for future negotiations.
Meanwhile, the surest sign the construction industry is back on its feet came last week when it recorded growth of 17.9 per cent in the second quarter - the fastest pace in 10 years - according to preliminary figures from the Ministry of Trade and Industry.
But industry players noted that the surge in demand for construction materials and equipment is pushing overall costs up.
Source: The Straits Times, 16 July 2007
Posted by propertyforesight in Construction News. add a comment
Six months after Indonesia abruptly banned the export of land sand to Singapore, the construction industry appears to have come to grips with the disruption caused.
Prices for sand, which shot up initially, have stabilised, and an agreement has been reached by key industry players on how to share the cost increases.
The Construction Industry Joint Committee (CIJC) - which represents eight industry associations - has worked out a 75-25 per cent formula for private projects.
Under the agreement, developers will bear 75 per cent of the cost, with the other 25 per cent to be shared between contractors and concrete suppliers, according to a note sent out by the committee.
This is similar to the government’s position of paying 75 per cent of the increase in construction costs of public sector projects affected by the ban.
CIJC chairman Chang Meng Teng said the formula is not a legal requirement but a recommended guideline that industry players should follow.
Most developers and contractors have already worked out arrangements on a case-by-case basis, said Mr Chia Hock Jin, executive director of the Real Estate Developers Association of Singapore.
In February, Indonesia’s sand ban also caused a disruption in granite supply when its navy detained several Singapore-bound barges carrying granite on suspicion of sand smuggling.
The prices of sand and granite rocketed as a result of shortages in supply, pushing up concrete prices from $70 to $200 per cu m. Sand and granite is used to make concrete, which is used heavily for construction here.
Contractors - especially those with private contracts - faced losses of millions of dollars as they had to absorb the price increases to continue with their projects.
Since then, prices of sand, granite and concrete have dropped as suppliers diversify their sources to neighbouring countries such as Malaysia, Vietnam and Cambodia.
The recent note from the CIJC follows lengthy negotiations between the developers, contractors and suppliers, and comes after a period of uncertainty over who should bear the costs.
Mr Desmond Hill, president of the Singapore Contractors Association, said he was delighted with the agreement, noting that it ’sets some ground rules’ for future negotiations.
Meanwhile, the surest sign the construction industry is back on its feet came last week when it recorded growth of 17.9 per cent in the second quarter - the fastest pace in 10 years - according to preliminary figures from the Ministry of Trade and Industry.
But industry players noted that the surge in demand for construction materials and equipment is pushing overall costs up.
Source: The Straits Times, 16 July 2007
Wednesday, July 18, 2007
Woodsville condo site draws 8 bids; top offer at $50.7m
Woodsville condo site draws 8 bids; top offer at $50.7m
Grace Ng
Wed, Jul 18, 2007
The Straits Times
GOOD news for home buyers: More suburban condo units should be coming on stream in Woodsville Close, now that a residential site up for tender there has attracted eight bids.
The Urban Redevelopment Authority (URA) yesterday announced that it had closed the public tender for the 3,870.5 sq m site near Potong Pasir MRT station.
If sold, Woodsville Close, which has a 99-year lease and a maximum permissible gross floor area of 116,648 sq ft, will be the first suburban residential site sold by the URA this year.
The URA launched the tender for Woodsville on June 19, following the Government's move to release more office and residential sites in order to give developers more options and ease a tightening supply situation.
The eight bids from developers for the site ranged from $32.6 million to the top offer of $50.68 million submitted by developer Frasers Centrepoint.
Frasers' bid, at $434 per sq foot (psf) per plot ratio, is about 69 per cent above the reserve price of $30 million, which works out to $257 psf per plot ratio.
'This price will translate into a break-even price of about $750 psf to $800 psf for the future apartment project to be built on this site,' said Mr Leonard Tay, director of CBRE Research.
The second highest bid of $46.8 million was submitted by Eastpoint Development. Other developers that put in bids include EL Development and Meadows Property.
Property consultants pointed to the Woodsville site's convenient location near Potong Pasir MRT station, expressways and schools such as St Andrew's Junior College as a draw for developers looking to target the suburban market.
Knight Frank director of research Nicholas Mak estimated that about 90 three-bedroom units may be built on the Woodsville site. He expects the units to be 'sought after by HDB upgraders' from areas such as Sengkang, Upper Serangoon, Potong Pasir and Bishan.
Mr Tay noted that recent HDB data showing the average cash over-valuation for resale flats in central areas such as Bishan and Toa Payoh range among the highest islandwide, from $13,900 to $33,600 for the various flat types.
'This would provide greater incentive for HDB households in these nearby estates to make the transition to private property,' he said.
URA said in a statement that it will announce the award of the tender 'at a later date'.
Grace Ng
Wed, Jul 18, 2007
The Straits Times
GOOD news for home buyers: More suburban condo units should be coming on stream in Woodsville Close, now that a residential site up for tender there has attracted eight bids.
The Urban Redevelopment Authority (URA) yesterday announced that it had closed the public tender for the 3,870.5 sq m site near Potong Pasir MRT station.
If sold, Woodsville Close, which has a 99-year lease and a maximum permissible gross floor area of 116,648 sq ft, will be the first suburban residential site sold by the URA this year.
The URA launched the tender for Woodsville on June 19, following the Government's move to release more office and residential sites in order to give developers more options and ease a tightening supply situation.
The eight bids from developers for the site ranged from $32.6 million to the top offer of $50.68 million submitted by developer Frasers Centrepoint.
Frasers' bid, at $434 per sq foot (psf) per plot ratio, is about 69 per cent above the reserve price of $30 million, which works out to $257 psf per plot ratio.
'This price will translate into a break-even price of about $750 psf to $800 psf for the future apartment project to be built on this site,' said Mr Leonard Tay, director of CBRE Research.
The second highest bid of $46.8 million was submitted by Eastpoint Development. Other developers that put in bids include EL Development and Meadows Property.
Property consultants pointed to the Woodsville site's convenient location near Potong Pasir MRT station, expressways and schools such as St Andrew's Junior College as a draw for developers looking to target the suburban market.
Knight Frank director of research Nicholas Mak estimated that about 90 three-bedroom units may be built on the Woodsville site. He expects the units to be 'sought after by HDB upgraders' from areas such as Sengkang, Upper Serangoon, Potong Pasir and Bishan.
Mr Tay noted that recent HDB data showing the average cash over-valuation for resale flats in central areas such as Bishan and Toa Payoh range among the highest islandwide, from $13,900 to $33,600 for the various flat types.
'This would provide greater incentive for HDB households in these nearby estates to make the transition to private property,' he said.
URA said in a statement that it will announce the award of the tender 'at a later date'.
Prices at 8 HDB towns up by 5% or more
Prices at 8 HDB towns up by 5% or more
Jessica Cheam
Thu, Jul 19, 2007
The Straits Times
THE long dormant public housing market has bounced back with a vengeance, although some areas remain sluggish.
New figures from property agencies show that prices of flats sold in Queenstown, for example, shot up by 11.8 per cent on average in the second quarter over the first quarter.
Another hot spot was the Kallang/Whampoa area, which was in second place with a 10.2 per cent rise.
As many as eight Housing and Development Board (HDB) estates registered quarterly price rises of 5 per cent or more on average.
Prices in Ang Mo Kio, Serangoon and Marine Parade grew by about 7 to 9 per cent. One 116 sq m sea-view flat in Marine Parade sold at a record of $695,000 for the area.
Property agency PropNex's chief executive Mohamed Ismail said the strong upswing in prices was not surprising as many buyers, cash-rich from recent collective sales, were paying premium prices for HDB flats in prime locations, or with good views.
Other estates such as Clementi, Bukit Merah, Jurong East and Bishan also posted a healthy growth of about 4 to 6 per cent.
One executive flat in Queenstown sold for $628,000, well above the average of $559,000 for the area.
These figures were released to The Straits Times yesterday by two of the largest property agencies ERA Singapore and PropNex. Both claimed to have a 30 to 40 per cent share of the HDB market.
The agencies say they give a clearer picture of recent HDB price movements.
This follows HDB's unexpected move on Monday to disclose average resale prices and the average cash-over-valuation (COV) - the sum paid over market valuation - of flats by region on its website www.hdb.gov.sg
Property experts expressed misgivings over the HDB figures, which were grouped according to five clusters of towns, instead of individual towns. 'The figures may not be the true reflection of what the current market is willing to pay for specific estates,' said Mr Ismail.
For example, the overall average COV for the West region is $7,400, but in Clementi, the current average market price is $20,000 over valuation, he said.
The property agencies' figures show that some areas are still sluggish. One group of estates, which includes Bedok, the Central area and Geylang, had slower growth at about 1 to 3 per cent. Prices at other towns such as Bukit Batok, Pasir Ris and Yishun hardly moved.
Mr Ismail said this was probably because the 'excitement and price awakening' of the second quarter had not reached the outskirts yet. He expects prices in most HDB towns to move upwards in the third quarter.
One effect of the new statistics released from the agencies and HDB is that they serve as a reality check for sellers currently demanding unreasonably high prices due to 'headline' sales reported in some areas recently, analysts say.
A five-room flat in Bukit Merah, for example, sold for a mind-boggling $720,000 recently. But the average price for such flats is far lower at $467,000.
ERA assistant vice-president Eugene Lim said sales volumes could have been higher if not for flat-owners looking to 'catch on the initial euphoria'.
Buyers and sellers are now beginning to digest the deluge of information. But 'it will take a few weeks for the dust to settle', and for the market to see the real effects, said Mr Lim.
An HDB spokesman said yesterday that it is monitoring the market very closely, and will assess the need to provide such data on a regular basis.
Jessica Cheam
Thu, Jul 19, 2007
The Straits Times
THE long dormant public housing market has bounced back with a vengeance, although some areas remain sluggish.
New figures from property agencies show that prices of flats sold in Queenstown, for example, shot up by 11.8 per cent on average in the second quarter over the first quarter.
Another hot spot was the Kallang/Whampoa area, which was in second place with a 10.2 per cent rise.
As many as eight Housing and Development Board (HDB) estates registered quarterly price rises of 5 per cent or more on average.
Prices in Ang Mo Kio, Serangoon and Marine Parade grew by about 7 to 9 per cent. One 116 sq m sea-view flat in Marine Parade sold at a record of $695,000 for the area.
Property agency PropNex's chief executive Mohamed Ismail said the strong upswing in prices was not surprising as many buyers, cash-rich from recent collective sales, were paying premium prices for HDB flats in prime locations, or with good views.
Other estates such as Clementi, Bukit Merah, Jurong East and Bishan also posted a healthy growth of about 4 to 6 per cent.
One executive flat in Queenstown sold for $628,000, well above the average of $559,000 for the area.
These figures were released to The Straits Times yesterday by two of the largest property agencies ERA Singapore and PropNex. Both claimed to have a 30 to 40 per cent share of the HDB market.
The agencies say they give a clearer picture of recent HDB price movements.
This follows HDB's unexpected move on Monday to disclose average resale prices and the average cash-over-valuation (COV) - the sum paid over market valuation - of flats by region on its website www.hdb.gov.sg
Property experts expressed misgivings over the HDB figures, which were grouped according to five clusters of towns, instead of individual towns. 'The figures may not be the true reflection of what the current market is willing to pay for specific estates,' said Mr Ismail.
For example, the overall average COV for the West region is $7,400, but in Clementi, the current average market price is $20,000 over valuation, he said.
The property agencies' figures show that some areas are still sluggish. One group of estates, which includes Bedok, the Central area and Geylang, had slower growth at about 1 to 3 per cent. Prices at other towns such as Bukit Batok, Pasir Ris and Yishun hardly moved.
Mr Ismail said this was probably because the 'excitement and price awakening' of the second quarter had not reached the outskirts yet. He expects prices in most HDB towns to move upwards in the third quarter.
One effect of the new statistics released from the agencies and HDB is that they serve as a reality check for sellers currently demanding unreasonably high prices due to 'headline' sales reported in some areas recently, analysts say.
A five-room flat in Bukit Merah, for example, sold for a mind-boggling $720,000 recently. But the average price for such flats is far lower at $467,000.
ERA assistant vice-president Eugene Lim said sales volumes could have been higher if not for flat-owners looking to 'catch on the initial euphoria'.
Buyers and sellers are now beginning to digest the deluge of information. But 'it will take a few weeks for the dust to settle', and for the market to see the real effects, said Mr Lim.
An HDB spokesman said yesterday that it is monitoring the market very closely, and will assess the need to provide such data on a regular basis.
Property charge hike may cool en bloc fever
Property charge hike may cool en bloc fever
Joyce Teo, Property Correspondent
Thu, Jul 19, 2007
The Straits Times
THE Government sprung a surprise on property developers yesterday by dramatically ramping up a tax payable to enhance the use of a site.
The move triggered a selldown of property shares on the Singapore Exchange.
Developers pay the tax - called a development charge - if they want to enhance the value of a site by building a bigger project, for example.
The rise in the land's value was taxed at 50 per cent, but will now be levied at 70 per cent, similar to what it was in 1985. The same rate will also apply to fees paid to rewind a site's lease back to 99 years.
For example, a site that rises in value by $2 million will now be taxed $1.4 million, compared to $1 million previously.
Its broader effect will be to make certain sites more costly, and perhaps take some heat out of a roaring property market that has seen record prices across many housing types.
Analyst David Lum from Daiwa Institute of Research said the move is 'another piece of evidence that the Government might be a little uncomfortable with the rapid appreciation in certain segments of the market'.
An immediate casualty could be the buoyant en bloc market, which has seen developers pay huge sums for estates over the past 12 months.
And by stemming en bloc sales, which reduce housing stock in the short-term, the hike may even take pressure off rents.
Developers will have to recrunch their numbers now - and hopeful owners might have to lower expectations of a bumper en bloc bonanza.
Sing Holdings said yesterday that with the change, it expects the land cost for acquiring Hillcourt Apartments to rise by about 1.2 per cent - from $1,444 per sq ft of potential gross floor area to $1,461.
'The rate revision will add a few percentage points to the total costs of some developments,' said a Savills Singapore director, Mr Ku Swee Yong, who felt the impact on developers will not be great.
Knight Frank's head of research and consultancy, Mr Nicholas Mak, agreed: 'There was a knee-jerk reaction, but it's not going to derail the property boom.'
Still, property shares took a hit yesterday. Giants such as CapitaLand and City Developments fell by around 2 per cent or more, while the sector index plunged 2.7 per cent.
The rate rise is a double whammy for some firms. Deve- lopment charges are reviewed every six months, with new rates due on Sept 1.
These charges are designed to mirror property values and are almost certain to rise, given the surging market, thus adding more costs to developers over and above yesterday's rise.
Yesterday's change took immediate effect.
It will hit developments that have yet to receive provisional permission to enhance land value, or those granted an extension to their provisional permission from yesterday.
This means developers which have done deals over the past two to three months could be hit, said Credo Real Estate managing director Karamjit Singh
Joyce Teo, Property Correspondent
Thu, Jul 19, 2007
The Straits Times
THE Government sprung a surprise on property developers yesterday by dramatically ramping up a tax payable to enhance the use of a site.
The move triggered a selldown of property shares on the Singapore Exchange.
Developers pay the tax - called a development charge - if they want to enhance the value of a site by building a bigger project, for example.
The rise in the land's value was taxed at 50 per cent, but will now be levied at 70 per cent, similar to what it was in 1985. The same rate will also apply to fees paid to rewind a site's lease back to 99 years.
For example, a site that rises in value by $2 million will now be taxed $1.4 million, compared to $1 million previously.
Its broader effect will be to make certain sites more costly, and perhaps take some heat out of a roaring property market that has seen record prices across many housing types.
Analyst David Lum from Daiwa Institute of Research said the move is 'another piece of evidence that the Government might be a little uncomfortable with the rapid appreciation in certain segments of the market'.
An immediate casualty could be the buoyant en bloc market, which has seen developers pay huge sums for estates over the past 12 months.
And by stemming en bloc sales, which reduce housing stock in the short-term, the hike may even take pressure off rents.
Developers will have to recrunch their numbers now - and hopeful owners might have to lower expectations of a bumper en bloc bonanza.
Sing Holdings said yesterday that with the change, it expects the land cost for acquiring Hillcourt Apartments to rise by about 1.2 per cent - from $1,444 per sq ft of potential gross floor area to $1,461.
'The rate revision will add a few percentage points to the total costs of some developments,' said a Savills Singapore director, Mr Ku Swee Yong, who felt the impact on developers will not be great.
Knight Frank's head of research and consultancy, Mr Nicholas Mak, agreed: 'There was a knee-jerk reaction, but it's not going to derail the property boom.'
Still, property shares took a hit yesterday. Giants such as CapitaLand and City Developments fell by around 2 per cent or more, while the sector index plunged 2.7 per cent.
The rate rise is a double whammy for some firms. Deve- lopment charges are reviewed every six months, with new rates due on Sept 1.
These charges are designed to mirror property values and are almost certain to rise, given the surging market, thus adding more costs to developers over and above yesterday's rise.
Yesterday's change took immediate effect.
It will hit developments that have yet to receive provisional permission to enhance land value, or those granted an extension to their provisional permission from yesterday.
This means developers which have done deals over the past two to three months could be hit, said Credo Real Estate managing director Karamjit Singh
The Marq - a Landmark ?
The Marq - a Landmark ?
SC Global Development Ltd, which sold homes at its The Marq apartment project at a record price last month, said foreigners made up about 60 per cent of the buyers.
SG Global will price its penthouses, twice the size of its regular apartments at the development, at about $5,000 per square foot (psf), matching the record $5,100 achieved in other units, chief executive officer Simon Cheong said in an interview yesterday.
Singapore home prices are surging, driven by the longest economic expansion in a decade and the world's fastest-growing population of millionaires. Investors paid between $11million and $31 million for the first 21 homes sold at The Marq, a five-minute walk to the main shopping district of Orchard Road. The units fetched an average price of $4,137 per square feet, the company said on June 28.
Singapore's becoming more and more of a global city, and our buyers are well travelled and well heeled, and they compare our product against those in other gateway cities around the world, and they find the prices to be reasonable,' Mr Cheong said.
SC Global's stock almost tripled this year, compared with the 37per cent average gain for Singapore property index. - Bloomberg
SC Global Development Ltd, which sold homes at its The Marq apartment project at a record price last month, said foreigners made up about 60 per cent of the buyers.
SG Global will price its penthouses, twice the size of its regular apartments at the development, at about $5,000 per square foot (psf), matching the record $5,100 achieved in other units, chief executive officer Simon Cheong said in an interview yesterday.
Singapore home prices are surging, driven by the longest economic expansion in a decade and the world's fastest-growing population of millionaires. Investors paid between $11million and $31 million for the first 21 homes sold at The Marq, a five-minute walk to the main shopping district of Orchard Road. The units fetched an average price of $4,137 per square feet, the company said on June 28.
Singapore's becoming more and more of a global city, and our buyers are well travelled and well heeled, and they compare our product against those in other gateway cities around the world, and they find the prices to be reasonable,' Mr Cheong said.
SC Global's stock almost tripled this year, compared with the 37per cent average gain for Singapore property index. - Bloomberg
The government has released more comprehensive data on both the public and private housing market on websites in a bid to calm fears of escalating
The government has released more comprehensive data on both the public and private housing market on websites in a bid to calm fears of escalating property prices.
The Housing and Development Board (HDB) has assured that just 70 percent of resale flats sold in the second quarter of this year were above valuation, despite recent record prices being set for some resale flats.
In the private residential space, the Urban Redevelopment Authority (URA) also released more detailed private home sales figures and a new Home Buyers Guide.
This is the first time the HDB and the URA have released such data.
According to the HDB, the average amount of cash that buyers forked out above valuation was S$10,100 in the second quarter of this year.
This is a far cry from the more than S$100,000 that some flat-buyers reportedly paid above valuation in recent months.
In May, a buyer, flushed with cash from an en bloc sale, was reported to have paid a record S$720,000 for a five-room flat in Tiong Bahru, nearly S$200,000 above value.
National Development Minister Mah Bow Tan told Channel NewsAsia last month that providing more information would help property buyers make rational and prudent decisions.
Analysts that Channel NewsAsia spoke to have hailed the latest release of data as a very significant development.
Lui Seng Fatt, Regional Director, Jones Lang LaSalle, said: "The basic thing is that it provides the transparency for people who are making decisions. With more reflective and accurate information, it is certainly going to help people make the right decision."
The HDB also cautioned buyers to take account of overall market trends instead of just high-selling prices for isolated transactions when buying a resale flat.
It added there is a wide variety of resale flats to choose from, with some 760,000 units in the market.
As for private property, the URA announced three additional sets of data, which include details such as the number of units sold in a project in June, to help home-buyers make better decisions.
It said the figures would be updated on the 15th of every month.
The URA also unveiled a new Home Buyers Guide, detailing basic considerations and procedures that are involved at each stage of the buying process.
For more information, please visit www.hdb.gov.sg and www.ura.gov.sg.
The Housing and Development Board (HDB) has assured that just 70 percent of resale flats sold in the second quarter of this year were above valuation, despite recent record prices being set for some resale flats.
In the private residential space, the Urban Redevelopment Authority (URA) also released more detailed private home sales figures and a new Home Buyers Guide.
This is the first time the HDB and the URA have released such data.
According to the HDB, the average amount of cash that buyers forked out above valuation was S$10,100 in the second quarter of this year.
This is a far cry from the more than S$100,000 that some flat-buyers reportedly paid above valuation in recent months.
In May, a buyer, flushed with cash from an en bloc sale, was reported to have paid a record S$720,000 for a five-room flat in Tiong Bahru, nearly S$200,000 above value.
National Development Minister Mah Bow Tan told Channel NewsAsia last month that providing more information would help property buyers make rational and prudent decisions.
Analysts that Channel NewsAsia spoke to have hailed the latest release of data as a very significant development.
Lui Seng Fatt, Regional Director, Jones Lang LaSalle, said: "The basic thing is that it provides the transparency for people who are making decisions. With more reflective and accurate information, it is certainly going to help people make the right decision."
The HDB also cautioned buyers to take account of overall market trends instead of just high-selling prices for isolated transactions when buying a resale flat.
It added there is a wide variety of resale flats to choose from, with some 760,000 units in the market.
As for private property, the URA announced three additional sets of data, which include details such as the number of units sold in a project in June, to help home-buyers make better decisions.
It said the figures would be updated on the 15th of every month.
The URA also unveiled a new Home Buyers Guide, detailing basic considerations and procedures that are involved at each stage of the buying process.
For more information, please visit www.hdb.gov.sg and www.ura.gov.sg.
Proeprty Speculation by Individuals
Proeprty Speculation by Individuals
COLLIERS International has suggested that the authorities track multiple-unit purchases of private residential properties, which could be used to show the level of speculative activity.
Individuals who own several properties may dump them if the market softens and this exercise could potentially accelerate any property downfall, the property consultancy argued.
Colliers' director for research and consultancy Tay Huey Ying, said: 'So far, the government has been giving details on the number of subsale deals - which refer to secondary market transactions for projects that have yet to receive Certificate of Statutory Completion and are often seen as a proxy for speculative activity. That's useful information.
'But in addition to that, perhaps the government may also want to monitor and see the extent to which people are buying several units or even floors, particularly at new residential property launches, as that may also reflect an intent to speculate, that is, buying units with the aim of flipping them within a short period of time.'
When contacted, a spokeswoman for the Ministry of National Development said: 'The Urban Redevelopment Authority does not monitor multiple purchases by individuals. However, the government is monitoring the property market closely, to ensure that it remains healthy and sustainable.'
Ms Tay said she was more concerned with individuals who buy multiple units rather than than institutional investors like funds which make such purchases, since corporate buyers typically have greater financial muscle and are looking at holding their assets for rental income over a longer timeframe. 'Individuals are more likely to lack the financial muscle to hold on to their purchases if the market softens,' she said.
In addition to tracking those who buy multiple units or floors in the same development, Ms Tay also observed there were many individual investors who have been buying units across Singapore.
However, there was no mention of Major Funds who are investing in Singapore real estate as well as corporations buying into residential property also deserves monitoring, we at Exclusive Home feels.
Source - The Business Times
COLLIERS International has suggested that the authorities track multiple-unit purchases of private residential properties, which could be used to show the level of speculative activity.
Individuals who own several properties may dump them if the market softens and this exercise could potentially accelerate any property downfall, the property consultancy argued.
Colliers' director for research and consultancy Tay Huey Ying, said: 'So far, the government has been giving details on the number of subsale deals - which refer to secondary market transactions for projects that have yet to receive Certificate of Statutory Completion and are often seen as a proxy for speculative activity. That's useful information.
'But in addition to that, perhaps the government may also want to monitor and see the extent to which people are buying several units or even floors, particularly at new residential property launches, as that may also reflect an intent to speculate, that is, buying units with the aim of flipping them within a short period of time.'
When contacted, a spokeswoman for the Ministry of National Development said: 'The Urban Redevelopment Authority does not monitor multiple purchases by individuals. However, the government is monitoring the property market closely, to ensure that it remains healthy and sustainable.'
Ms Tay said she was more concerned with individuals who buy multiple units rather than than institutional investors like funds which make such purchases, since corporate buyers typically have greater financial muscle and are looking at holding their assets for rental income over a longer timeframe. 'Individuals are more likely to lack the financial muscle to hold on to their purchases if the market softens,' she said.
In addition to tracking those who buy multiple units or floors in the same development, Ms Tay also observed there were many individual investors who have been buying units across Singapore.
However, there was no mention of Major Funds who are investing in Singapore real estate as well as corporations buying into residential property also deserves monitoring, we at Exclusive Home feels.
Source - The Business Times
Sentosa Cove site For Sale
Sentosa Cove site For Sale
THE few remaining land parcels in the upmarket waterfront housing district coming up on Sentosa island are still being sold by Sentosa Cove Pte Ltd (SCPL).
The developer's latest offering is a 71,589 sq ft site slated for development into 15 to 20 strata landed homes (terrace houses, semi-detached homes or bungalows) with shared facilities like a swimming pool or gymnasium. The reserve price has been set at $49.25 million or $688 psf per plot ratio (ppr), SCPL said.
Credo Real Estate managing director Karamjit Singh reckons the 99-year leasehold site could fetch around $70-80 million, reflecting a land price of about $980 to $1,120 psf ppr.
The plot, being offered by an expression of interest exercise, has a 1.0 plot ratio, hence the maximum gross floor area allowed is the same as the land area.
'To optimise the usage of the site, the successful developer will most likely develop strata bungalows,' Mr Singh reckons.
SCPL said the expression of interest exercise closes on Aug15 and the award will be based solely on price.
'Foreigners will be eligible to purchase these strata landed homes as Sentosa Cove has been granted waivers for foreign ownership on residential land,' SCPL said.
SCPL has sold land for about 80 per cent of the total 2,500 homes planned for Sentosa Cove, and more than 120 families have moved into their new homes in the location.
Source - The Business Times
THE few remaining land parcels in the upmarket waterfront housing district coming up on Sentosa island are still being sold by Sentosa Cove Pte Ltd (SCPL).
The developer's latest offering is a 71,589 sq ft site slated for development into 15 to 20 strata landed homes (terrace houses, semi-detached homes or bungalows) with shared facilities like a swimming pool or gymnasium. The reserve price has been set at $49.25 million or $688 psf per plot ratio (ppr), SCPL said.
Credo Real Estate managing director Karamjit Singh reckons the 99-year leasehold site could fetch around $70-80 million, reflecting a land price of about $980 to $1,120 psf ppr.
The plot, being offered by an expression of interest exercise, has a 1.0 plot ratio, hence the maximum gross floor area allowed is the same as the land area.
'To optimise the usage of the site, the successful developer will most likely develop strata bungalows,' Mr Singh reckons.
SCPL said the expression of interest exercise closes on Aug15 and the award will be based solely on price.
'Foreigners will be eligible to purchase these strata landed homes as Sentosa Cove has been granted waivers for foreign ownership on residential land,' SCPL said.
SCPL has sold land for about 80 per cent of the total 2,500 homes planned for Sentosa Cove, and more than 120 families have moved into their new homes in the location.
Source - The Business Times
Monday, July 16, 2007
SHE pays only $1,200 to rent a 3-bedroom private apartment in Guillemard.
SHE pays only $1,200 to rent a 3-bedroom private apartment in Guillemard.
A room with a view: Mr Jason Wong at his three-bedroom apartment at Lagoon View that overlooks East Coast beach. -- Pictures: Kua Chee Siong
That's cheaper than renting a four-room HDB flat in Bukit Merah.
The rents may have gone up 7.6 per cent in the first quarter of this year, but if you do your homework, there are still homes available for rent at a reasonable fee.
The New Paper on Sunday managed to track down tenants who are living in semi-detached houses and private apartments, paying rents between $1,200 and $1,500.
Restaurant manager Ms Viv Koh, 29, who rents the 1,100 sq ft apartment in Guillemard Apartments, said one agent offered her a five-room flat in the suburbs for $2,000.
She said she found the price 'ridiculous'.
She scoured the classified ads every day early this year, and contacted various agents.
Two months later, she settled on one and signed a one-year contract.
The seven-storey block with no condo facilities is located on Geylang Lorong 26 - a 10-minute walk from Aljunied MRT Station.
Ms Koh, who is single, was earlier renting a four-room HDB flat in Hougang for $900 a month.
According to agents, the rent at Guillemard Apartments ranges between $1,100 and $1,700, depending on its size.
Ms Koh said: 'The rent is a steal because the apartment is probably more than 15 years old. Most of the fittings, like the switches and lighting in the house, are retro.'
You can also find cheap rental apartments in older estates, say agents.
Places like Lagoon View on Marine Parade Road is a case in point.
Marketing manager Jason Wong, 28, who lives with two relatives, is paying $1,500 for a three-bedroom apartment overlooking East Coast beach.
He said: 'My relatives secured this place two years ago. The lease is ending but I understand from my landlord recently that we can continue the lease at the same rate.'
These not-so-expensive rents may go some way in retaining Singapore's competitiveness when compared to places such as Hong Kong.
Last week, Minister Mentor Lee Kuan Yew sounded a note of caution that Singapore could lose its competitiveness if its office and home rentals continue to rise.
The rent for an apartment of between 2,500 sq ft and 4,375 sq ft in Central, Hong Kong, is from HK$180,000 ($35,000) to HK$300,000, said Colliers International.
A check on a Hong Kong property listing website showed the monthly rent for a 440sq ft studio apartment in Central, Hong Kong, as HK$20,000.
Ms Yan Chiu, 32, a beautician, rented a newly-renovated but unfurnished four-room flat in Choa Chu Kang which she stumbled upon on the Internet. The rent: $1,100 a month.
The average rent for a four-room flat in Choa Chu Kang is $1,137, the HDB's second quarter average rental figuresshowed.
A Bukit Panjang four-room flat fetches the lowest average monthly rent at $1,006, while one at Bukit Merah is the highest at $1,397.
LANDED PROPERTY BOOM
Knight Frank's director for research and consultancy, MrNicholas Mak said: 'You can find two or three-bedroom properties further away from town in Woodlands, Jurong or Choa Chu Kang at these prices.
'But it is difficult to rent a landed property for $3,000.'
But Ms Tan, a marketing professional in her 30s, managed to buck that trend.
Last year, she rented a landed property in Sengkang for $1,300 for two years.
She had viewed a few houses in the Seletar Hills Estate with a rent of between $1,500 and $1,800 last year.
She said: 'I was looking for an unfurnished house because it would be cheaper than a furnished or semi-furnished one. Though the rooms had air-con, the house was bare. Overall, it was in a decent condition.'
The estate, however, does not have amenities like shops. It is surrounded by a condo, school and flats.
The attractive rents are probably why state properties have become increasingly popular of late.
Some of them, with huge compounds, are going for below $2,000.
In all, the Singapore Land Authority (SLA) has more than 2,300 residential properties islandwide which are currently occupied.
The properties include black-and-white bungalows, terrace houses, flats and apartments.
There is currently a long waiting list for its properties, including the $1,700-a-month terrace houses at Seletar Camp, even though the area will make way for the 140ha aerospace park.
A SLA spokesman said: 'In the last two years, there has been a gradual increase in the number of rentals, along with a significant demand this year. The rental is pegged to the market and determined by qualified licensed valuers, based on the condition of a unit.
'The rates also depend on the location, size and type of the property.'
The popular areas include Alexandra Park, Changi areas and central locations like Orchard Road.
Also, demand has gone up for houses and apartments at Chip Bee Gardens located off Holland Road, which is managed by Jurong Town Council (JTC).
There are 1,356 sq ft terrace houses and three- and four-bedroom apartments - with monthly rentals starting from $3,300 and $2,500, respectively.
Tenants can go to SLA's portal at www.spio.sla.gov.sg, to search for homes.
A recent check showed there are only two-bedroom apartments in Jurong for rent at $900 a month. SLA said that there will only be a handful of apartments in various locations available in the next few months.
But tenants may contact SLA's managing agents, like United Premas, EM Services and DTZ Debenham Tie Leung Property Management Services, to check on availability from time to time.
A room with a view: Mr Jason Wong at his three-bedroom apartment at Lagoon View that overlooks East Coast beach. -- Pictures: Kua Chee Siong
That's cheaper than renting a four-room HDB flat in Bukit Merah.
The rents may have gone up 7.6 per cent in the first quarter of this year, but if you do your homework, there are still homes available for rent at a reasonable fee.
The New Paper on Sunday managed to track down tenants who are living in semi-detached houses and private apartments, paying rents between $1,200 and $1,500.
Restaurant manager Ms Viv Koh, 29, who rents the 1,100 sq ft apartment in Guillemard Apartments, said one agent offered her a five-room flat in the suburbs for $2,000.
She said she found the price 'ridiculous'.
She scoured the classified ads every day early this year, and contacted various agents.
Two months later, she settled on one and signed a one-year contract.
The seven-storey block with no condo facilities is located on Geylang Lorong 26 - a 10-minute walk from Aljunied MRT Station.
Ms Koh, who is single, was earlier renting a four-room HDB flat in Hougang for $900 a month.
According to agents, the rent at Guillemard Apartments ranges between $1,100 and $1,700, depending on its size.
Ms Koh said: 'The rent is a steal because the apartment is probably more than 15 years old. Most of the fittings, like the switches and lighting in the house, are retro.'
You can also find cheap rental apartments in older estates, say agents.
Places like Lagoon View on Marine Parade Road is a case in point.
Marketing manager Jason Wong, 28, who lives with two relatives, is paying $1,500 for a three-bedroom apartment overlooking East Coast beach.
He said: 'My relatives secured this place two years ago. The lease is ending but I understand from my landlord recently that we can continue the lease at the same rate.'
These not-so-expensive rents may go some way in retaining Singapore's competitiveness when compared to places such as Hong Kong.
Last week, Minister Mentor Lee Kuan Yew sounded a note of caution that Singapore could lose its competitiveness if its office and home rentals continue to rise.
The rent for an apartment of between 2,500 sq ft and 4,375 sq ft in Central, Hong Kong, is from HK$180,000 ($35,000) to HK$300,000, said Colliers International.
A check on a Hong Kong property listing website showed the monthly rent for a 440sq ft studio apartment in Central, Hong Kong, as HK$20,000.
Ms Yan Chiu, 32, a beautician, rented a newly-renovated but unfurnished four-room flat in Choa Chu Kang which she stumbled upon on the Internet. The rent: $1,100 a month.
The average rent for a four-room flat in Choa Chu Kang is $1,137, the HDB's second quarter average rental figuresshowed.
A Bukit Panjang four-room flat fetches the lowest average monthly rent at $1,006, while one at Bukit Merah is the highest at $1,397.
LANDED PROPERTY BOOM
Knight Frank's director for research and consultancy, MrNicholas Mak said: 'You can find two or three-bedroom properties further away from town in Woodlands, Jurong or Choa Chu Kang at these prices.
'But it is difficult to rent a landed property for $3,000.'
But Ms Tan, a marketing professional in her 30s, managed to buck that trend.
Last year, she rented a landed property in Sengkang for $1,300 for two years.
She had viewed a few houses in the Seletar Hills Estate with a rent of between $1,500 and $1,800 last year.
She said: 'I was looking for an unfurnished house because it would be cheaper than a furnished or semi-furnished one. Though the rooms had air-con, the house was bare. Overall, it was in a decent condition.'
The estate, however, does not have amenities like shops. It is surrounded by a condo, school and flats.
The attractive rents are probably why state properties have become increasingly popular of late.
Some of them, with huge compounds, are going for below $2,000.
In all, the Singapore Land Authority (SLA) has more than 2,300 residential properties islandwide which are currently occupied.
The properties include black-and-white bungalows, terrace houses, flats and apartments.
There is currently a long waiting list for its properties, including the $1,700-a-month terrace houses at Seletar Camp, even though the area will make way for the 140ha aerospace park.
A SLA spokesman said: 'In the last two years, there has been a gradual increase in the number of rentals, along with a significant demand this year. The rental is pegged to the market and determined by qualified licensed valuers, based on the condition of a unit.
'The rates also depend on the location, size and type of the property.'
The popular areas include Alexandra Park, Changi areas and central locations like Orchard Road.
Also, demand has gone up for houses and apartments at Chip Bee Gardens located off Holland Road, which is managed by Jurong Town Council (JTC).
There are 1,356 sq ft terrace houses and three- and four-bedroom apartments - with monthly rentals starting from $3,300 and $2,500, respectively.
Tenants can go to SLA's portal at www.spio.sla.gov.sg, to search for homes.
A recent check showed there are only two-bedroom apartments in Jurong for rent at $900 a month. SLA said that there will only be a handful of apartments in various locations available in the next few months.
But tenants may contact SLA's managing agents, like United Premas, EM Services and DTZ Debenham Tie Leung Property Management Services, to check on availability from time to time.
Dubai World eyes real estate acquisitions in US and Asia
Dubai World eyes real estate acquisitions in US and Asia
Web posted at: 7/13/2007 8:52:48
Source ::: REUTERS
SINGAPORE • Dubai World, the investment holding firm of the Dubai government, said its real estate arm is looking to expand in the United States and Asia and is set to make an acquisition soon.
“We like the market in Singapore and we’re evaluating opportunities here. We are looking at China, Vietnam, Thailand,” Dubai World Chairman Sultan Ahmed Bin Sulayem told Reuters on the sidelines of a press briefing yesterday.
Dubai World’s real estate firm, Nakheel Group – the developer of three palm-frond shaped islands off Dubai’s coast – recently said it would launch an international arm to pursue projects outside of Dubai.
In December last year, it sold the world’s largest Islamic bond, raising $3.52bn.
Asked what the timeframe was for Nakheel’s next acquisition, Sulayem said he hopes “that it can come within the next few months,” adding these would be in Asia and the US.
Dubai World holds a multi-billion dollar portfolio that includes British ports operator P&O and has been taking on considerable debt to fund its acquisitions for its various businesses.
The investment firm’s private equity arm, Istithmar, has also been buying up US property aggressively. Last year, it bought a 73 per cent stake in the Mandarin Oriental New York, acquired retailer Loehmann’s, the Knickerbocker Hotel in New York, and office block 280 Park Avenue in April.
Istithmar and Nakheel have also said that they plan to develop tourist resorts and real estate projects in African nations including Kenya and Mozambique to tap rising leisure demand.
Istithmar recently made an $825 million offer for New York luxury retailer Barneys in June, but its bid could be scuppered by Japan’s Fast Retailing, which later offered $900 m.
Sulayem said Dubai World has no plans to list its ports operator, dismissing earlier news reports that it was seeking a public float.
“I don’t believe listing is an option now. Not at the current time, no,” he said.
In November 2005, Dubai Ports World, the investment firm’s port operator and the world’s third-largest container port operator, said it was planning an initial public offering (IPO) within two years.
Its holding company issued a $3.5bn Islamic bond, or sukuk, convertible into shares in any IPO.
“We evaluate what is the most efficient way of financing and if we prove that listing part of it will be cheaper, then we’ll do it. So far, we’ve proven that issuing bonds is better for us,” Sulayem said.
Sulayem was in Singapore to finalise the acquisition of Singapore shipyard firm Pan-United Marine by Dubai Drydocks World, the global maritime arm of Dubai World.
Dubai Drydocks said in a statement that it has received acceptances of approximately 84.8 per cent of shares in Pan-United Marine.
Web posted at: 7/13/2007 8:52:48
Source ::: REUTERS
SINGAPORE • Dubai World, the investment holding firm of the Dubai government, said its real estate arm is looking to expand in the United States and Asia and is set to make an acquisition soon.
“We like the market in Singapore and we’re evaluating opportunities here. We are looking at China, Vietnam, Thailand,” Dubai World Chairman Sultan Ahmed Bin Sulayem told Reuters on the sidelines of a press briefing yesterday.
Dubai World’s real estate firm, Nakheel Group – the developer of three palm-frond shaped islands off Dubai’s coast – recently said it would launch an international arm to pursue projects outside of Dubai.
In December last year, it sold the world’s largest Islamic bond, raising $3.52bn.
Asked what the timeframe was for Nakheel’s next acquisition, Sulayem said he hopes “that it can come within the next few months,” adding these would be in Asia and the US.
Dubai World holds a multi-billion dollar portfolio that includes British ports operator P&O and has been taking on considerable debt to fund its acquisitions for its various businesses.
The investment firm’s private equity arm, Istithmar, has also been buying up US property aggressively. Last year, it bought a 73 per cent stake in the Mandarin Oriental New York, acquired retailer Loehmann’s, the Knickerbocker Hotel in New York, and office block 280 Park Avenue in April.
Istithmar and Nakheel have also said that they plan to develop tourist resorts and real estate projects in African nations including Kenya and Mozambique to tap rising leisure demand.
Istithmar recently made an $825 million offer for New York luxury retailer Barneys in June, but its bid could be scuppered by Japan’s Fast Retailing, which later offered $900 m.
Sulayem said Dubai World has no plans to list its ports operator, dismissing earlier news reports that it was seeking a public float.
“I don’t believe listing is an option now. Not at the current time, no,” he said.
In November 2005, Dubai Ports World, the investment firm’s port operator and the world’s third-largest container port operator, said it was planning an initial public offering (IPO) within two years.
Its holding company issued a $3.5bn Islamic bond, or sukuk, convertible into shares in any IPO.
“We evaluate what is the most efficient way of financing and if we prove that listing part of it will be cheaper, then we’ll do it. So far, we’ve proven that issuing bonds is better for us,” Sulayem said.
Sulayem was in Singapore to finalise the acquisition of Singapore shipyard firm Pan-United Marine by Dubai Drydocks World, the global maritime arm of Dubai World.
Dubai Drydocks said in a statement that it has received acceptances of approximately 84.8 per cent of shares in Pan-United Marine.
Plan opens new West Side story
Plan opens new West Side story
By David M. Levitt 2007-7-16
Change font size:
-- Advertisement --
MANHATTAN'S West Side rail yards are being offered to developers under a city and state plan to turn the 26-acre (10.5-hectare) parcel into an office and residential district.
The state and the Metropolitan Transportation Authority, owner of the property, will begin soliciting proposals for the site's development rights, Governor Eliot Spitzer said.
The yards stretch from the Hudson River to 10th Avenue between 30th Street and 33rd Streets and may accommodate 12 million square feet (1.11 million square meters) of skyscrapers and apartments as well as parks and a cultural center.
"Today is the beginning of a new West Side story," said Spitzer. "This will be one of the largest and most important development projects in the history of New York City."
Developers including the Durst Organization, Brookfield Properties and Vornado Realty Trust may bid for the site, lured by the potential to build skyscrapers and the availability of a large piece of land in Manhattan.
Any developer would probably have to spend US$1 billion to build a platform over the rail yards before constructing anything at the site, Durst President Douglas Durst said, according to Bloomberg News.
The development will be "a huge driver of economic growth," Spitzer said. "The 12 million square feet is going to be larger than Rockefeller Center by two million square feet."
The governor announced the release of two "requests for proposals" from developers, one each for the eastern and western sections of the yards.
The plan calls for office towers and commercial development to dominate the eastern yard, between 9th and 10th Avenues. On the western side, between 11th Avenue and the river, at least 20 percent of the development must be commercial, another 20 percent residential, with the builder free to propose the remaining mix.
The western end of the site is where Mayor Michael Bloomberg was thwarted in 2005 in an effort to build a stadium for the 2012 Olympics and the New York Jets football team.
The new plan for the western end includes a 250,000-square-foot cultural center, a public school, and five acres of parkland.
About 20 percent of the rental units proposed for the western rail yard must be affordable housing under a city program which provides tax-exempt bonds for such development, according to the bid documents.
Two sites near the yards, an MTA parking lot at West 54th Street and the space above an Amtrak rail cut near West 48th Street, will also be set aside for low and moderate-income housing.
The development "will have a significant component of permanent affordable housing," said City Council President Christine Quinn. "And that will send a message, I think, to other developers, that you can do big-scale development, and get real, permanent affordable housing which our city is desperate for."
Developers considering bids include Durst, Brookfield Properties Corp, Tishman Speyer Properties LP and The Related Cos LP, the New York Times reported.
Durst said he intends to bid jointly with Vornado to "create a new destination in New York. It will be a place that people must go to."
By David M. Levitt 2007-7-16
Change font size:
-- Advertisement --
MANHATTAN'S West Side rail yards are being offered to developers under a city and state plan to turn the 26-acre (10.5-hectare) parcel into an office and residential district.
The state and the Metropolitan Transportation Authority, owner of the property, will begin soliciting proposals for the site's development rights, Governor Eliot Spitzer said.
The yards stretch from the Hudson River to 10th Avenue between 30th Street and 33rd Streets and may accommodate 12 million square feet (1.11 million square meters) of skyscrapers and apartments as well as parks and a cultural center.
"Today is the beginning of a new West Side story," said Spitzer. "This will be one of the largest and most important development projects in the history of New York City."
Developers including the Durst Organization, Brookfield Properties and Vornado Realty Trust may bid for the site, lured by the potential to build skyscrapers and the availability of a large piece of land in Manhattan.
Any developer would probably have to spend US$1 billion to build a platform over the rail yards before constructing anything at the site, Durst President Douglas Durst said, according to Bloomberg News.
The development will be "a huge driver of economic growth," Spitzer said. "The 12 million square feet is going to be larger than Rockefeller Center by two million square feet."
The governor announced the release of two "requests for proposals" from developers, one each for the eastern and western sections of the yards.
The plan calls for office towers and commercial development to dominate the eastern yard, between 9th and 10th Avenues. On the western side, between 11th Avenue and the river, at least 20 percent of the development must be commercial, another 20 percent residential, with the builder free to propose the remaining mix.
The western end of the site is where Mayor Michael Bloomberg was thwarted in 2005 in an effort to build a stadium for the 2012 Olympics and the New York Jets football team.
The new plan for the western end includes a 250,000-square-foot cultural center, a public school, and five acres of parkland.
About 20 percent of the rental units proposed for the western rail yard must be affordable housing under a city program which provides tax-exempt bonds for such development, according to the bid documents.
Two sites near the yards, an MTA parking lot at West 54th Street and the space above an Amtrak rail cut near West 48th Street, will also be set aside for low and moderate-income housing.
The development "will have a significant component of permanent affordable housing," said City Council President Christine Quinn. "And that will send a message, I think, to other developers, that you can do big-scale development, and get real, permanent affordable housing which our city is desperate for."
Developers considering bids include Durst, Brookfield Properties Corp, Tishman Speyer Properties LP and The Related Cos LP, the New York Times reported.
Durst said he intends to bid jointly with Vornado to "create a new destination in New York. It will be a place that people must go to."
More super-wealthy South-east Asian individuals, including Singaporeans, are looking to invest in UK properties, especially in London.
More super-wealthy South-east Asian individuals, including Singaporeans, are looking to invest in UK properties, especially in London. But the flows are not just going one way; more British investors too have become interested in Singapore real estate, say two senior private bankers with SG Private Banking, part of the Societe Generale Group.
‘Over the past one year we have seen - if you consider only the more serious expressions of interest from our clients in South-east Asia in this market (UK) - a jump of at least 20 per cent,’ said Don Percival, director of private banking with SG Hambros, which is SG Private Banking’s UK arm.
The property boom in this part of the world has heightened the interest that wealthy Asians have traditionally had in acquiring real estate as an asset class, and the UK is one of the most popular destinations for that purpose, Mr Percival told BT.
The UK property market holds several attractions for foreign investors. Not only does it offer investors non-domicile tax status, it also offers a stable economic and political environment. Furthermore, the market has been booming as growing demand exceeds limited supply, with property values in central London growing some 33 per cent last year.
There’s also a historical connection for investors from South-east Asia, as a result of British colonialism.
Said Nikita Rossinsky, managing director (Southeast Asia) of SG Private Banking: ‘There is an amazing amount of interest right now (in UK property). And part of it is historically motivated. There’s an affinity with the UK especially in this part of the world. Investors from Singapore, Malaysia, Brunei - when they look overseas, they look at the UK.’
Typically, these high-net-worth clients are looking to diversify their portfolio by investing in the UK. Many of them, in fact, may already have an exposure to the UK property market, but are looking to rebalance their portfolio.
Said Mr Percival: ‘We’ve seen more Singapore clients who already have portfolios in London.’
Added Mr Rossinsky: ‘And it’s not just money going from Singapore to London. We have also seen clients who have multiple properties there, who then leverage these properties to help them invest in their business here. So the money goes out and then comes back here.’
The Singapore real estate market itself has also become a draw for foreign investors, such as those from the UK, who are drawn by recent developments here and the stable regulatory and social environment. ‘People feel comfortable investing here; it’s a centre of global excellence,’ said Mr Rossinsky.
‘And we have seen the interest in London as well…Singapore is marketing itself as ‘the Switzerland of Asia’ and I have made introductions to our teams here for accounts and trusts to be set up,’ said Mr Percival.
The two senior bankers were speaking to BT after a private seminar held by SG Private Banking for about 50 of its South-east Asian clients last week. The seminar was held in response to more queries from clients on investing in UK property. It drew double the number of participants it had planned for. About 60-70 per cent of the guests were flown in from Malaysia, Brunei, Indonesia and the Philippines.
A lot of times, a client’s property investment decisions are also influenced by lifestyle factors, as the investor may also be looking to stay in the property he buys, said Mr Percival.
What his bank then does for these clients - upon introduction by their local SG Private Banking relationship managers in Asia - is to adopt a holistic approach in helping them make the best property investment decisions.
Other than offering lending services, the bank also provides advice in efficient tax planning, and estate and success planning. It also introduces them to independent specialists in property acquisition, education and immigration, said Mr Percival.
Source: The Business Times, 16 July 2007
‘Over the past one year we have seen - if you consider only the more serious expressions of interest from our clients in South-east Asia in this market (UK) - a jump of at least 20 per cent,’ said Don Percival, director of private banking with SG Hambros, which is SG Private Banking’s UK arm.
The property boom in this part of the world has heightened the interest that wealthy Asians have traditionally had in acquiring real estate as an asset class, and the UK is one of the most popular destinations for that purpose, Mr Percival told BT.
The UK property market holds several attractions for foreign investors. Not only does it offer investors non-domicile tax status, it also offers a stable economic and political environment. Furthermore, the market has been booming as growing demand exceeds limited supply, with property values in central London growing some 33 per cent last year.
There’s also a historical connection for investors from South-east Asia, as a result of British colonialism.
Said Nikita Rossinsky, managing director (Southeast Asia) of SG Private Banking: ‘There is an amazing amount of interest right now (in UK property). And part of it is historically motivated. There’s an affinity with the UK especially in this part of the world. Investors from Singapore, Malaysia, Brunei - when they look overseas, they look at the UK.’
Typically, these high-net-worth clients are looking to diversify their portfolio by investing in the UK. Many of them, in fact, may already have an exposure to the UK property market, but are looking to rebalance their portfolio.
Said Mr Percival: ‘We’ve seen more Singapore clients who already have portfolios in London.’
Added Mr Rossinsky: ‘And it’s not just money going from Singapore to London. We have also seen clients who have multiple properties there, who then leverage these properties to help them invest in their business here. So the money goes out and then comes back here.’
The Singapore real estate market itself has also become a draw for foreign investors, such as those from the UK, who are drawn by recent developments here and the stable regulatory and social environment. ‘People feel comfortable investing here; it’s a centre of global excellence,’ said Mr Rossinsky.
‘And we have seen the interest in London as well…Singapore is marketing itself as ‘the Switzerland of Asia’ and I have made introductions to our teams here for accounts and trusts to be set up,’ said Mr Percival.
The two senior bankers were speaking to BT after a private seminar held by SG Private Banking for about 50 of its South-east Asian clients last week. The seminar was held in response to more queries from clients on investing in UK property. It drew double the number of participants it had planned for. About 60-70 per cent of the guests were flown in from Malaysia, Brunei, Indonesia and the Philippines.
A lot of times, a client’s property investment decisions are also influenced by lifestyle factors, as the investor may also be looking to stay in the property he buys, said Mr Percival.
What his bank then does for these clients - upon introduction by their local SG Private Banking relationship managers in Asia - is to adopt a holistic approach in helping them make the best property investment decisions.
Other than offering lending services, the bank also provides advice in efficient tax planning, and estate and success planning. It also introduces them to independent specialists in property acquisition, education and immigration, said Mr Percival.
Source: The Business Times, 16 July 2007
Will the financial and property markets continue to boom, or do investors need to be more cautious? When, if at all, should the authorities step in?
Will the financial and property markets continue to boom, or do investors need to be more cautious? When, if at all, should the authorities step in?
Sanjay Prabhakaran Director, South-east Asia Baxter Healthcare (Asia) Pte Ltd
I BELIEVE the current financial and property boom will be sustained for a few more years at least. However, the factors that will determine the growth potential of the financial and property sectors will differ.
Singapore has successfully expanded and diversified its financial markets over the past several years. Whether or not the ongoing bull run will continue depends partly on the government’s ability to adjust national policies in response to (or in anticipation of) developments elsewhere. Such tweaks could, for example, be designed to reduce the dependence on the US economy, or to increase our trade surpluses and foreign exchange reserves.
In addition, the current financial boom differs from earlier bull runs in that there is a greater spread of wealth within the investment community. In other words, there are more investors keen on gaining exposure in the markets of their choice. The financial services providers should continue to lower the barriers to investment and make new asset classes available to retail investors, to facilitate the goal of wealth creation.
On the property front, the government has been successful in attracting high-net-worth individuals to Singapore, as well as developing new growth engines - such as biotechnology and healthcare - for the local economy. These should ensure that the residential and rental markets for mid- to high-end properties stay robust. Then again, the government should never allow the market to overheat or the high-net-worth individuals could relocate elsewhere.
What’s fuelling the markets
Charles Reed CEO interTouch
THE boom in the property market is about the same as it was just before the Asian financial crisis almost a decade ago. But the recent Reuters Real Estate Summit in Singapore highlighted that with rentals peaking, investors are not yet done with the lucrative property market, which still holds huge potential. Investors, and now more speculators, are certainly not yet done, but is there still huge potential?
With booming Asian economies, property investment in the region is escalating and with more developers trying to get a piece of the pie, funding in this sector shows no sign of slowing down.
There is demand among the growing middle classes in China, India and in other Asian cities, to invest in their own property markets, thus fuelling the industry further. I find it hard to believe that the growing middle classes in China or India can afford the current runaway prices!
What is fuelling the Singapore property sector and the stock market at the moment is the excessive liquidity in the market from the newly-minted millionaires created by the collective sales fever. Overnight, thousands of people suddenly find themselves with millions of dollars of cash to play with.
Needless to say, the authorities need to observe developments quite closely as policy and regulations are invaluable. However, there is no need to step in as yet as competition is important for the industry to fully reach its potential. The way forward is greater liberalisation and openness from industry regulators to attract healthier competition.
Derek Goh Executive Chairman/Group CEO Serial System Ltd
ECONOMIC cycles are part and parcel of the system that the world economies operate in. These are economic forces (micro and macro) that influence the daily lives of every individual.
The financial and property markets are booming because of the bigger appetite of fast growing economies like China, India and Japan. Though each economic cycle lasts an average of 10 to 12 years, the asset bubble is not going to burst just yet.
Government intervention in the markets is unnecessary as the Asian economies are now more resilient and able to withstand bigger swings.
Businesses are not expecting any downturn in the next 12-18 months as major events on the horizon are stabilisers for the global economy, namely, the Beijing Olympics in August 2008 and the US presidential election in December 2008.
Beyond 2008, there is less certainty, as the US economy is losing momentum and China’s trade surplus would be too huge for the US balance of trade. Potential trade wars may be triggered by an aggressive new US president then.
For 2007 and 2008 overall, the Singapore economy will not be greatly shaken by any financial or property tsunami.
Tan Kok Leong Principal TKL Consulting
THE current property and financial market boom should probably be viewed as the upswing of a business cycle, in the wake of globalisation and technological changes. It is a feature of capitalism at work. The outlook for the introduction and spread of technologies remains favourable while relatively low interest rates favour investment, purchase of homes and consumer durables.
The financial crisis 10 years ago was probably caused by volatile short-term capital flows which attacked weaknesses in foreign reserves, the international exchange rate system and capital markets simultaneously. Future problems, perhaps, are likely to be caused more by disorderly unwinding of global imbalances.
A word of caution
Alfred Wong Managing Director/Architect WongPartnership
THERE is definitely a feeling of euphoria in Singapore.
The rate at which residential property prices are rising does not reflect the increase in the earning power of Singaporeans. This is, of course, with the exception of those in the finance and real estate sectors. However, judging by car sales at the car show on July 8 when $31 million worth of cars were sold, it would appear that the average Singaporean is riding on a wave of positive expectations from the integrated resorts and the projected population growth.
I think that many investors do not remember the lessons of the last Asian crisis. I also expect the authorities to step in if the situation approaches a critical point.
Sam Yap S G Executive Chairman Cherie Hearts Group
THE property market is currently overheating from speculative pressure, with prices soaring to levels not backed by economic fundamentals. This is sustained by easy credit from banks to speculators and property developers. Once the bubble bursts, a potentially destructive impact could be unleashed on our economy, with home buyers, property developers and banks being the likely victims.
The steps taken by the government to ease the pressure, while encouraging, are insufficient. More proactive measures, such as releasing more land for residential and commercial development and stricter guidelines on bank lending may be needed. Urgent action is required for a soft landing.
Annie Yap CEO The GMP Group
COMPARED with a decade ago, we can confidently say that in terms of business or leisure, Singapore can appeal to almost anyone today. Financially speaking, with greater collaboration with China, India and the Middle East, Singapore’s financial environment is more diversified than ever. Having our eggs in more baskets means we are more resilient and stable. With upcoming developments in the works, we will see Singapore attract interest from an increased breadth and depth of investors.
But we cannot let lofty enthusiasm become dangerous. Over-speculation can jeopardise Singapore’s plans for growth. Therefore, regulatory bodies should take up the role of observers, engaging in soft policing to calm over-excitement before sectors overheat. That way, markets operate smarter without compromising their autonomy. For example, the use of media in encouraging balanced discussions about the property market has helped in making the sector and the general public pause to take stock.
Lars Ronning President, North & South-east Asia, India, Australia & New Zealand Tandberg
AS financial and property markets continue to boom, caution should be exercised to establish that the current situation is a true reflection of economic growth and not just a result of speculative buying by over-zealous investors.
Amid the air of optimism and euphoria, the authorities need to prevent such inflationary pressures from increasing the cost of doing business here and eroding Singapore’s attractiveness as a business hub to foreign and local investors.
Tan Ser Giam Chairman Eastern Navigation Pte Ltd
SINGAPORE’S financial market is flush with funds and this will continue to push the stock market higher, barring unforeseen events. The property market will likewise be strong, although the risk of the government stepping in to cool the market remains high. There are rumblings from businesses about rising rentals adding to the cost of doing business. One of the things to watch is the US economy. If it goes into recession, all bets on the stock and property markets are off.
Joel G. Momberger Managing Director Informatica SEA Pte Ltd
AS a small open economy, Singapore is extremely vulnerable to external developments, especially in the surrounding region. While it has withstood the Asian financial crisis 10 years ago and even maintained a relatively favourable economic performance, its close links with the regional economies suggest it will not get away completely unscathed should anything untoward happen.
However, Singapore’s track record of prudent fiscal and monetary policies has been a great asset and this will help reassure investors of its commitment to consolidate its position as a financial centre for the region.
On government intervention
Lim Soon Hock Managing Director Plan-B ICAG Pte Ltd
WHAT goes up must come down, and this applies to both the financial and property markets, as has been proven in the past. Astute investors will watch the cycle very carefully to look for early signals of correction and downturn.
The wild card amid the optimism and euphoria is the US dollar. Should the US dollar depreciate sharply, there will be shock waves throughout the global economic system. While countries in Europe and Asia may benefit from the weakening of the US dollar, it will only be temporary; the US being the economic engine and technology innovator of the world will import less, because it will cost more. This will have adverse repercussions on the economies of these countries, and as a consequence, on the financial and property markets.
Our authorities should only step in where necessary to prevent a crisis. For example, to prevent an over-strengthening of the Singapore dollar, or property prices escalating beyond the means of the man in the street. I am confident the government will do everything possible to ensure that the gap between the rich and the poor will not be left to widen without timely intervention.
Wee Piew CEO HG Metal Manufacturing Ltd
THERE are a lot of positives going for the Singapore economy, which has been posting strong growth in the last couple of years. In the coming years, we are likely to see continued growth in the services sector - like financial services and tourism - with the opening of the integrated resorts.
Hence, the current boom in property and financial services is not without fundamentals. There is definitely more capital flowing into Singapore to take advantage of its growth in the coming years. As such, I do not see an asset bubble at this point in time. After all, the property market has only just been on an uptrend in the past year or so while a property boom typically lasts for a few years.
However, if the recent sharp rise continues next year - especially if it spreads to mass market residential property and the HDB market - then I think the authorities should consider taking some steps to ensure more supply of land for developers. On the other hand, I think stricter measures like those imposed in 1996 should be avoided as it is better left to the market to find a price equilibrium.
Eric Hoh Vice-President, Asia South Region Symantec
IT is heartening to see how Singapore has accelerated in terms of economic growth which comes amid a thriving stock market, a strong economy and a property boom. Singapore is likely to continue on its economic upswing with the much anticipated launch of the integrated resorts and hosting of the Formula 1 Grand Prix race.
As many continue to leverage on the increasing attractiveness of Singapore as a global city, I feel that the property and financial boom will continue in the short to medium term. For now, I agree with Senior Minister Goh Chok Tong that we should not be overly concerned and let the market find its own level.
Ng Kong Yeam Group Executive Chairman Sino-America Tours Corporation Pte Ltd
BOOMS and busts will always occur, if one reads economic and financial history. In 1985, property prices in Singapore were very low, nothwithstanding efforts by developers to promote sales. Ten years later, in 1995, prices shot up. Then in 1997, the property and stock markets fell due to the Asian financial crisis.
Supply and demand dictate the rise and fall of prices of stocks and properties. Expensive goods are sold based on wants rather than needs. In my view, the boom in Singapore will last two more years, and then a bust will begin to take place. In the US, the housing bust has already started. Investors should figure out for themselves when they should be cautious. Authorities cannot possibly regulate the rise and fall of prices.
Wong Teek Son Executive Chairman and CEO Riverstone Holdings Ltd
THERE is a tripartite relationship between businesses, authorities and investors for the market to continue to boom.
Businesses need to build credible operating models to withstand the economic fluctuations. Riverstone, for example, builds its foundations on value propositions by customising products to fit every customer’s needs, leading to long-term relationships.
Investors need to examine their options carefully when making their investment decision. Singapore has a good corporate governance structure and investors have data available for them to make educated decisions. The authorities need to continuously work with the market to ensure that information is transparent, adequate and responsibly reported, and leave the decision making to the open market.
Source: The Business Times, 16 July 2007
Sanjay Prabhakaran Director, South-east Asia Baxter Healthcare (Asia) Pte Ltd
I BELIEVE the current financial and property boom will be sustained for a few more years at least. However, the factors that will determine the growth potential of the financial and property sectors will differ.
Singapore has successfully expanded and diversified its financial markets over the past several years. Whether or not the ongoing bull run will continue depends partly on the government’s ability to adjust national policies in response to (or in anticipation of) developments elsewhere. Such tweaks could, for example, be designed to reduce the dependence on the US economy, or to increase our trade surpluses and foreign exchange reserves.
In addition, the current financial boom differs from earlier bull runs in that there is a greater spread of wealth within the investment community. In other words, there are more investors keen on gaining exposure in the markets of their choice. The financial services providers should continue to lower the barriers to investment and make new asset classes available to retail investors, to facilitate the goal of wealth creation.
On the property front, the government has been successful in attracting high-net-worth individuals to Singapore, as well as developing new growth engines - such as biotechnology and healthcare - for the local economy. These should ensure that the residential and rental markets for mid- to high-end properties stay robust. Then again, the government should never allow the market to overheat or the high-net-worth individuals could relocate elsewhere.
What’s fuelling the markets
Charles Reed CEO interTouch
THE boom in the property market is about the same as it was just before the Asian financial crisis almost a decade ago. But the recent Reuters Real Estate Summit in Singapore highlighted that with rentals peaking, investors are not yet done with the lucrative property market, which still holds huge potential. Investors, and now more speculators, are certainly not yet done, but is there still huge potential?
With booming Asian economies, property investment in the region is escalating and with more developers trying to get a piece of the pie, funding in this sector shows no sign of slowing down.
There is demand among the growing middle classes in China, India and in other Asian cities, to invest in their own property markets, thus fuelling the industry further. I find it hard to believe that the growing middle classes in China or India can afford the current runaway prices!
What is fuelling the Singapore property sector and the stock market at the moment is the excessive liquidity in the market from the newly-minted millionaires created by the collective sales fever. Overnight, thousands of people suddenly find themselves with millions of dollars of cash to play with.
Needless to say, the authorities need to observe developments quite closely as policy and regulations are invaluable. However, there is no need to step in as yet as competition is important for the industry to fully reach its potential. The way forward is greater liberalisation and openness from industry regulators to attract healthier competition.
Derek Goh Executive Chairman/Group CEO Serial System Ltd
ECONOMIC cycles are part and parcel of the system that the world economies operate in. These are economic forces (micro and macro) that influence the daily lives of every individual.
The financial and property markets are booming because of the bigger appetite of fast growing economies like China, India and Japan. Though each economic cycle lasts an average of 10 to 12 years, the asset bubble is not going to burst just yet.
Government intervention in the markets is unnecessary as the Asian economies are now more resilient and able to withstand bigger swings.
Businesses are not expecting any downturn in the next 12-18 months as major events on the horizon are stabilisers for the global economy, namely, the Beijing Olympics in August 2008 and the US presidential election in December 2008.
Beyond 2008, there is less certainty, as the US economy is losing momentum and China’s trade surplus would be too huge for the US balance of trade. Potential trade wars may be triggered by an aggressive new US president then.
For 2007 and 2008 overall, the Singapore economy will not be greatly shaken by any financial or property tsunami.
Tan Kok Leong Principal TKL Consulting
THE current property and financial market boom should probably be viewed as the upswing of a business cycle, in the wake of globalisation and technological changes. It is a feature of capitalism at work. The outlook for the introduction and spread of technologies remains favourable while relatively low interest rates favour investment, purchase of homes and consumer durables.
The financial crisis 10 years ago was probably caused by volatile short-term capital flows which attacked weaknesses in foreign reserves, the international exchange rate system and capital markets simultaneously. Future problems, perhaps, are likely to be caused more by disorderly unwinding of global imbalances.
A word of caution
Alfred Wong Managing Director/Architect WongPartnership
THERE is definitely a feeling of euphoria in Singapore.
The rate at which residential property prices are rising does not reflect the increase in the earning power of Singaporeans. This is, of course, with the exception of those in the finance and real estate sectors. However, judging by car sales at the car show on July 8 when $31 million worth of cars were sold, it would appear that the average Singaporean is riding on a wave of positive expectations from the integrated resorts and the projected population growth.
I think that many investors do not remember the lessons of the last Asian crisis. I also expect the authorities to step in if the situation approaches a critical point.
Sam Yap S G Executive Chairman Cherie Hearts Group
THE property market is currently overheating from speculative pressure, with prices soaring to levels not backed by economic fundamentals. This is sustained by easy credit from banks to speculators and property developers. Once the bubble bursts, a potentially destructive impact could be unleashed on our economy, with home buyers, property developers and banks being the likely victims.
The steps taken by the government to ease the pressure, while encouraging, are insufficient. More proactive measures, such as releasing more land for residential and commercial development and stricter guidelines on bank lending may be needed. Urgent action is required for a soft landing.
Annie Yap CEO The GMP Group
COMPARED with a decade ago, we can confidently say that in terms of business or leisure, Singapore can appeal to almost anyone today. Financially speaking, with greater collaboration with China, India and the Middle East, Singapore’s financial environment is more diversified than ever. Having our eggs in more baskets means we are more resilient and stable. With upcoming developments in the works, we will see Singapore attract interest from an increased breadth and depth of investors.
But we cannot let lofty enthusiasm become dangerous. Over-speculation can jeopardise Singapore’s plans for growth. Therefore, regulatory bodies should take up the role of observers, engaging in soft policing to calm over-excitement before sectors overheat. That way, markets operate smarter without compromising their autonomy. For example, the use of media in encouraging balanced discussions about the property market has helped in making the sector and the general public pause to take stock.
Lars Ronning President, North & South-east Asia, India, Australia & New Zealand Tandberg
AS financial and property markets continue to boom, caution should be exercised to establish that the current situation is a true reflection of economic growth and not just a result of speculative buying by over-zealous investors.
Amid the air of optimism and euphoria, the authorities need to prevent such inflationary pressures from increasing the cost of doing business here and eroding Singapore’s attractiveness as a business hub to foreign and local investors.
Tan Ser Giam Chairman Eastern Navigation Pte Ltd
SINGAPORE’S financial market is flush with funds and this will continue to push the stock market higher, barring unforeseen events. The property market will likewise be strong, although the risk of the government stepping in to cool the market remains high. There are rumblings from businesses about rising rentals adding to the cost of doing business. One of the things to watch is the US economy. If it goes into recession, all bets on the stock and property markets are off.
Joel G. Momberger Managing Director Informatica SEA Pte Ltd
AS a small open economy, Singapore is extremely vulnerable to external developments, especially in the surrounding region. While it has withstood the Asian financial crisis 10 years ago and even maintained a relatively favourable economic performance, its close links with the regional economies suggest it will not get away completely unscathed should anything untoward happen.
However, Singapore’s track record of prudent fiscal and monetary policies has been a great asset and this will help reassure investors of its commitment to consolidate its position as a financial centre for the region.
On government intervention
Lim Soon Hock Managing Director Plan-B ICAG Pte Ltd
WHAT goes up must come down, and this applies to both the financial and property markets, as has been proven in the past. Astute investors will watch the cycle very carefully to look for early signals of correction and downturn.
The wild card amid the optimism and euphoria is the US dollar. Should the US dollar depreciate sharply, there will be shock waves throughout the global economic system. While countries in Europe and Asia may benefit from the weakening of the US dollar, it will only be temporary; the US being the economic engine and technology innovator of the world will import less, because it will cost more. This will have adverse repercussions on the economies of these countries, and as a consequence, on the financial and property markets.
Our authorities should only step in where necessary to prevent a crisis. For example, to prevent an over-strengthening of the Singapore dollar, or property prices escalating beyond the means of the man in the street. I am confident the government will do everything possible to ensure that the gap between the rich and the poor will not be left to widen without timely intervention.
Wee Piew CEO HG Metal Manufacturing Ltd
THERE are a lot of positives going for the Singapore economy, which has been posting strong growth in the last couple of years. In the coming years, we are likely to see continued growth in the services sector - like financial services and tourism - with the opening of the integrated resorts.
Hence, the current boom in property and financial services is not without fundamentals. There is definitely more capital flowing into Singapore to take advantage of its growth in the coming years. As such, I do not see an asset bubble at this point in time. After all, the property market has only just been on an uptrend in the past year or so while a property boom typically lasts for a few years.
However, if the recent sharp rise continues next year - especially if it spreads to mass market residential property and the HDB market - then I think the authorities should consider taking some steps to ensure more supply of land for developers. On the other hand, I think stricter measures like those imposed in 1996 should be avoided as it is better left to the market to find a price equilibrium.
Eric Hoh Vice-President, Asia South Region Symantec
IT is heartening to see how Singapore has accelerated in terms of economic growth which comes amid a thriving stock market, a strong economy and a property boom. Singapore is likely to continue on its economic upswing with the much anticipated launch of the integrated resorts and hosting of the Formula 1 Grand Prix race.
As many continue to leverage on the increasing attractiveness of Singapore as a global city, I feel that the property and financial boom will continue in the short to medium term. For now, I agree with Senior Minister Goh Chok Tong that we should not be overly concerned and let the market find its own level.
Ng Kong Yeam Group Executive Chairman Sino-America Tours Corporation Pte Ltd
BOOMS and busts will always occur, if one reads economic and financial history. In 1985, property prices in Singapore were very low, nothwithstanding efforts by developers to promote sales. Ten years later, in 1995, prices shot up. Then in 1997, the property and stock markets fell due to the Asian financial crisis.
Supply and demand dictate the rise and fall of prices of stocks and properties. Expensive goods are sold based on wants rather than needs. In my view, the boom in Singapore will last two more years, and then a bust will begin to take place. In the US, the housing bust has already started. Investors should figure out for themselves when they should be cautious. Authorities cannot possibly regulate the rise and fall of prices.
Wong Teek Son Executive Chairman and CEO Riverstone Holdings Ltd
THERE is a tripartite relationship between businesses, authorities and investors for the market to continue to boom.
Businesses need to build credible operating models to withstand the economic fluctuations. Riverstone, for example, builds its foundations on value propositions by customising products to fit every customer’s needs, leading to long-term relationships.
Investors need to examine their options carefully when making their investment decision. Singapore has a good corporate governance structure and investors have data available for them to make educated decisions. The authorities need to continuously work with the market to ensure that information is transparent, adequate and responsibly reported, and leave the decision making to the open market.
Source: The Business Times, 16 July 2007
Peter Lim, the man formerly known as the ‘Remisier King’ and who is estimated to be worth more than $2 billion today, reckons the stock market
Peter Lim, the man formerly known as the ‘Remisier King’ and who is estimated to be worth more than $2 billion today, reckons the stock market still has two good years to go. But he is getting concerned about the property market.
‘The market won’t collapse for the next two, three years. It’s all sentiment-driven. People are making more money, and so long as people are spending, we are OK. But one has got to start to think how to exit at the end of 2-3 years - 2009, before the casino starts operating,’ he said.
Mr Lim is, of course, well known as an influential stockbroker and deal-maker in the Singapore and Malaysian markets in the early 1990s. That was also when he made his millions, but quit at his peak to take care of divorce proceedings.
Despite being out of the industry, it was in the last few years that his fortunes took a leap forward, thanks to the booming stock market. He was recently in the news for agreeing to put $150 million into Rowsley for its reverse takeover of a China solar company.
In a near four-hour interview with BT to talk about his market views and investment philosophy, Mr Lim said a lot of the big companies listed on the Singapore Exchange (SGX) today have a global presence.
Like Keppel Corp, for instance; it can’t fulfil all the orders for its oil rigs. So even if there is a shift in investor sentiment and the market corrects severely, investors can still ride out the whole cycle, said Mr Lim - barring a global recession, of course.
The danger, he said, is in the small-cap sector. ‘Some of these stocks have gone up a lot. Much of the potential has been priced in. If this potential is cut short by any unexpected unfortunate event, they will come down like a rock.’
Small-cap stocks run up fast because of their small float. But when the sentiment turns, everyone is a seller, he said.
As for the property market, Mr Lim thinks prices have gone up too fast. The sharp increase has taken everyone by surprise, even the government. ‘Actually, it’s quite simple. Singapore is small. You get a small bucket, and pour a lot of water, it’ll overflow. This is what’s happening. I think the demand just comes together at the same time. I don’t think it’s sustainable.’
Demand is so strong that people are knocking down buildings, and that’s curtailing supply even more.
But the thing is, the buildings knocked down will have three times more apartments when they get rebuilt a few years down the road. ‘When the supply comes out, property prices will drop,’ he said.
Comparisons have been drawn between Singapore and London. ‘But you tell me: how many en bloc (redevelopments) do they have in London? No en blocs means no additional supply.’ he said.
Mr Lim is worried about the impact of high rentals on businesses - office rentals have gone up by 200-300 per cent in the last few years. ‘Costs are going to bloat . . . most businesses’ margins are going to be eaten up by costs.’
At the moment, many individuals and companies are making money from asset inflation, he said. ‘You hope that this asset inflation becomes an income, becomes regular. But I don’t think so. These are all situational. But it will go one day.
‘I’m not a pessimist, but this is how I see it. That’s why at the end of a bull market, you see a new generation coming up. Because all the old ones die. Now and then, you see one of those who stays - then he becomes a legend. And if you observe those legends, most of the time, they spend their time scolding people: ‘don’t gear, don’t gamble’.’
And that exactly was the message that he kept harping on during the interview.
‘A lot of people get it wrong. When the bull market is here, they build debts. Bull market is the time to build cash. Because today’s market turns very quickly. When the market turns, you cannot sell, especially for the property market. You can only sell when things are going up.
‘So I always tell my friends: ‘Make sure you stay alive. The market won’t die, so there’s always a next time.’ ‘
By BT’s estimates, Mr Lim is worth in excess of $2 billion. He has just under 5 per cent in Wilmar International. Based on the company’s current market capitalisation of $22 billion on SGX, that stake alone is worth $1.11 billion. He has about 11 per cent in FJ Benjamin, and that’s worth $52.6 million. Meanwhile, his 25 per cent stake in Rowsley has a market value of $37 million. So his Singapore equities alone are worth $1.2 billion. On top of that, he has some Australian mining stocks bought in the 1970s and ’80s.
Mr Lim says 50 per cent of his portfolio is now in equities, another 10 per cent in properties and the remaining 40 per cent in cash. The cash is from the dividends he received, which he has not reapplied to the market. So all in, he’s worth more than $2.4 billion.
The 54-year-old believes that the fortune he has today is pre-destined. ‘This size - substantially, it’s your destiny. If today I have $10 million, I’d say over 90 per cent is due to my hard work. But getting it right is not $1 billion. Maybe it’s $100 million. How that $100 million becomes $1 billion, you know it’s because somebody likes you. You must believe it’s somehow a path that’s been drawn.’
The bulk of his net worth is in Wilmar, in which he was asked to pump in under $10 million in the early 1990s. By the second half of the decade, he had totally written off that investment. That was when the Indonesian currency fell from 2,500 rupiah against the US dollar (the exchange rate he invested in Wilmar), to 16,000 rupiah, and president Suharto was ousted. There were riots in Indonesia. There was no way of cashing out the assets. But in a few years, things stabilised in Indonesia and the pieces began to come together for Wilmar. Its China operations began to pick up, businessman Robert Kuok decided to inject his Malaysian palm oil operations into Wilmar and palm oil prices started to go through the roof because of the scramble to produce biofuels.
‘My Indonesian partner was asking me the other day: ‘How the hell did we make so much money?’ ‘
‘Up to a point after people tell you a story and a vision, don’t write it off. Sometimes it comes true. You just make sure that if it doesn’t come true, you don’t get hurt too much,’ he said.
The most important factor to consider when investing in a company is the person running it; you look at whether the person is honest, and whether he or she is master of their trade.
‘It works. It’s a tested method of assessing companies,’ Mr Lim said.
Wilmar is not his only lucky break. He escaped the Asian crisis as he had quit the broking profession in 1996 to prepare for his divorce proceedings. And he spent the next six months liquidating most of his stock positions. So when the crisis hit, he was mostly in cash.
He was also not in the market during the dotcom bubble as the hearing on the division of matrimonial assets dragged on until 2001. He thanks his lucky stars for having avoided the Asian financial crisis, but thinks he would not have been caught in the insanity of the dotcom bubble.
Nowadays, Mr Lim spends his time dispensing advice to deal-makers in the industry - and sends them a bill of $300,000 or more for it. He still gets a thrill out of structuring deals, which he says is similar to a chess game.
He described the recent Rowsley deal to acquire a solar energy company in China as ‘beautiful’, as one which allows existing shareholders to ‘lock in the upside, but hedge the downside’.
He’s also having to cope with the problems of having too much money. He worries if his children, a 15-year-old girl and 13-year-old boy, will be spoilt by his wealth. He reckons he may give the bulk of his money to charity eventually.
But going by the four-hour lunches that he takes - with Imperial Treasure at Great World City being his Canteen No 1 and Kuriya his Canteen No 2 - and sometimes squeezing in a game of tennis or two before dinner, the money problem can’t be all that bad.
HIS VIEWS ON . . .
Cutting deals
Maybe it’s in the blood. It’s quite exciting to pitch a deal, to make sure that you don’t catch me. It’s like a chess game: you make this move, the next one I make. I don’t want to get checkmate.
Wealth
Money is a funny thing. When you don’t have it, you want it. But when you have it, you have a lot of problems. I believe that if I’d had no money, I wouldn’t have had my divorce. Things wouldn’t be good, but it wouldn’t end up in a divorce.
Growing old
Once you are old, every year makes a lot of difference. Your lease gets shorter, there’s no extension. You go, you go.
Death
Some of my school mates have passed away. So once you start to see all these things, your perspective on life becomes more measured, more considered.
Making money
It’s very difficult to make money from trading. People who get rich are those who buy a company, build it, run it. Most of the traders, they come, they make money, because they have this gambling instinct. They take the money and spend it. The minute they lose money, they got no money to pay up.
The next downturn
Today’s bull run can get cut short by a number of things. Just like our recent experience with Sars, or a bomb drops on the wrong person’s head. Like anything else, the least expected thing can happen at the wrong time. I got a feeling the next downturn will be very severe.
Source: The Business Times, 16 July 2007
‘The market won’t collapse for the next two, three years. It’s all sentiment-driven. People are making more money, and so long as people are spending, we are OK. But one has got to start to think how to exit at the end of 2-3 years - 2009, before the casino starts operating,’ he said.
Mr Lim is, of course, well known as an influential stockbroker and deal-maker in the Singapore and Malaysian markets in the early 1990s. That was also when he made his millions, but quit at his peak to take care of divorce proceedings.
Despite being out of the industry, it was in the last few years that his fortunes took a leap forward, thanks to the booming stock market. He was recently in the news for agreeing to put $150 million into Rowsley for its reverse takeover of a China solar company.
In a near four-hour interview with BT to talk about his market views and investment philosophy, Mr Lim said a lot of the big companies listed on the Singapore Exchange (SGX) today have a global presence.
Like Keppel Corp, for instance; it can’t fulfil all the orders for its oil rigs. So even if there is a shift in investor sentiment and the market corrects severely, investors can still ride out the whole cycle, said Mr Lim - barring a global recession, of course.
The danger, he said, is in the small-cap sector. ‘Some of these stocks have gone up a lot. Much of the potential has been priced in. If this potential is cut short by any unexpected unfortunate event, they will come down like a rock.’
Small-cap stocks run up fast because of their small float. But when the sentiment turns, everyone is a seller, he said.
As for the property market, Mr Lim thinks prices have gone up too fast. The sharp increase has taken everyone by surprise, even the government. ‘Actually, it’s quite simple. Singapore is small. You get a small bucket, and pour a lot of water, it’ll overflow. This is what’s happening. I think the demand just comes together at the same time. I don’t think it’s sustainable.’
Demand is so strong that people are knocking down buildings, and that’s curtailing supply even more.
But the thing is, the buildings knocked down will have three times more apartments when they get rebuilt a few years down the road. ‘When the supply comes out, property prices will drop,’ he said.
Comparisons have been drawn between Singapore and London. ‘But you tell me: how many en bloc (redevelopments) do they have in London? No en blocs means no additional supply.’ he said.
Mr Lim is worried about the impact of high rentals on businesses - office rentals have gone up by 200-300 per cent in the last few years. ‘Costs are going to bloat . . . most businesses’ margins are going to be eaten up by costs.’
At the moment, many individuals and companies are making money from asset inflation, he said. ‘You hope that this asset inflation becomes an income, becomes regular. But I don’t think so. These are all situational. But it will go one day.
‘I’m not a pessimist, but this is how I see it. That’s why at the end of a bull market, you see a new generation coming up. Because all the old ones die. Now and then, you see one of those who stays - then he becomes a legend. And if you observe those legends, most of the time, they spend their time scolding people: ‘don’t gear, don’t gamble’.’
And that exactly was the message that he kept harping on during the interview.
‘A lot of people get it wrong. When the bull market is here, they build debts. Bull market is the time to build cash. Because today’s market turns very quickly. When the market turns, you cannot sell, especially for the property market. You can only sell when things are going up.
‘So I always tell my friends: ‘Make sure you stay alive. The market won’t die, so there’s always a next time.’ ‘
By BT’s estimates, Mr Lim is worth in excess of $2 billion. He has just under 5 per cent in Wilmar International. Based on the company’s current market capitalisation of $22 billion on SGX, that stake alone is worth $1.11 billion. He has about 11 per cent in FJ Benjamin, and that’s worth $52.6 million. Meanwhile, his 25 per cent stake in Rowsley has a market value of $37 million. So his Singapore equities alone are worth $1.2 billion. On top of that, he has some Australian mining stocks bought in the 1970s and ’80s.
Mr Lim says 50 per cent of his portfolio is now in equities, another 10 per cent in properties and the remaining 40 per cent in cash. The cash is from the dividends he received, which he has not reapplied to the market. So all in, he’s worth more than $2.4 billion.
The 54-year-old believes that the fortune he has today is pre-destined. ‘This size - substantially, it’s your destiny. If today I have $10 million, I’d say over 90 per cent is due to my hard work. But getting it right is not $1 billion. Maybe it’s $100 million. How that $100 million becomes $1 billion, you know it’s because somebody likes you. You must believe it’s somehow a path that’s been drawn.’
The bulk of his net worth is in Wilmar, in which he was asked to pump in under $10 million in the early 1990s. By the second half of the decade, he had totally written off that investment. That was when the Indonesian currency fell from 2,500 rupiah against the US dollar (the exchange rate he invested in Wilmar), to 16,000 rupiah, and president Suharto was ousted. There were riots in Indonesia. There was no way of cashing out the assets. But in a few years, things stabilised in Indonesia and the pieces began to come together for Wilmar. Its China operations began to pick up, businessman Robert Kuok decided to inject his Malaysian palm oil operations into Wilmar and palm oil prices started to go through the roof because of the scramble to produce biofuels.
‘My Indonesian partner was asking me the other day: ‘How the hell did we make so much money?’ ‘
‘Up to a point after people tell you a story and a vision, don’t write it off. Sometimes it comes true. You just make sure that if it doesn’t come true, you don’t get hurt too much,’ he said.
The most important factor to consider when investing in a company is the person running it; you look at whether the person is honest, and whether he or she is master of their trade.
‘It works. It’s a tested method of assessing companies,’ Mr Lim said.
Wilmar is not his only lucky break. He escaped the Asian crisis as he had quit the broking profession in 1996 to prepare for his divorce proceedings. And he spent the next six months liquidating most of his stock positions. So when the crisis hit, he was mostly in cash.
He was also not in the market during the dotcom bubble as the hearing on the division of matrimonial assets dragged on until 2001. He thanks his lucky stars for having avoided the Asian financial crisis, but thinks he would not have been caught in the insanity of the dotcom bubble.
Nowadays, Mr Lim spends his time dispensing advice to deal-makers in the industry - and sends them a bill of $300,000 or more for it. He still gets a thrill out of structuring deals, which he says is similar to a chess game.
He described the recent Rowsley deal to acquire a solar energy company in China as ‘beautiful’, as one which allows existing shareholders to ‘lock in the upside, but hedge the downside’.
He’s also having to cope with the problems of having too much money. He worries if his children, a 15-year-old girl and 13-year-old boy, will be spoilt by his wealth. He reckons he may give the bulk of his money to charity eventually.
But going by the four-hour lunches that he takes - with Imperial Treasure at Great World City being his Canteen No 1 and Kuriya his Canteen No 2 - and sometimes squeezing in a game of tennis or two before dinner, the money problem can’t be all that bad.
HIS VIEWS ON . . .
Cutting deals
Maybe it’s in the blood. It’s quite exciting to pitch a deal, to make sure that you don’t catch me. It’s like a chess game: you make this move, the next one I make. I don’t want to get checkmate.
Wealth
Money is a funny thing. When you don’t have it, you want it. But when you have it, you have a lot of problems. I believe that if I’d had no money, I wouldn’t have had my divorce. Things wouldn’t be good, but it wouldn’t end up in a divorce.
Growing old
Once you are old, every year makes a lot of difference. Your lease gets shorter, there’s no extension. You go, you go.
Death
Some of my school mates have passed away. So once you start to see all these things, your perspective on life becomes more measured, more considered.
Making money
It’s very difficult to make money from trading. People who get rich are those who buy a company, build it, run it. Most of the traders, they come, they make money, because they have this gambling instinct. They take the money and spend it. The minute they lose money, they got no money to pay up.
The next downturn
Today’s bull run can get cut short by a number of things. Just like our recent experience with Sars, or a bomb drops on the wrong person’s head. Like anything else, the least expected thing can happen at the wrong time. I got a feeling the next downturn will be very severe.
Source: The Business Times, 16 July 2007
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