A Hong Kong based Asia property analyst for a small successful private investment bank was asked if he should buy property in Singapore:
We told clients and investors to sell all Singapore holdings (property, stocks and everything else) in June 2007. We determined that prices would never, ever be higher and were predicting a 15% drop in pricing by March 2008 and 25% drop by June 2008.
Rationale was simple and not rocket science.
#1. There was no demand for housing when the boom started. The vacancy rates on existing housing were above New York, London, Hong Kong, Tokyo and other major urban market levels. A Singapore property boom made no sense at all.
#2. Singapore GDP...nice impressive numbers. But the growth was 99% construction related. There is no economic growth when the construction boom ends and those numbers are subtracted from the total.
#3. The existing luxury housing vacancy levels in Singapore were adequate to fill the needs of Singaporeans and any possible influx of new senior executives for the next 5 years. Thus, there was no demand for executive luxury housing in the market.
#4. Value for money on Singapore property for foreign investors is not good when compared to other projected growth economies. (Several factors are weighed including psf, quality of workmanship, size of economy, projected growth of economy, lifestyle and culture of the market.)
#4. The targeted future population numbers of Singapore are pie in the sky and completely without substance. Singaporeans are not having kids and the demand for jobs in Singapore will be service led lower paying jobs to supply the planned tourism developments. None of these new inhabitants will be buying or renting condo’s, especially in the high-end. And tourists visit, they don’t buy or rent.
#5. Singapore is not a supply/demand driven economy. It is a small, managed economy. Thus, the property development plans were lofty, risky, and not based on future real supply/demand realities.
#6. There is a lack of real, transparent, objective information available in the Singapore market about the Singapore market. This leads to investors’ belief in hype and speculation rather than economic principles.
#7. Global money supplies and markets are taking a beating and will continue to take a beating. The second call on the subprime products happens this June so more big losses are expected. This will stall or even damage the Singapore economy.
We expect distress sales in the property market to start soon. The high-end rental market is non-existent and the higher % of all unit sales were high-end investment property, speculator driven. These buyers need “wealthy” renters to subsidize the million dollar mortgages. Most locals cannot afford the rents the market is demanding. Surveys of multinational companies and banks have indicated that there is no boat-load of expats with a big housing allowance arriving at the Singapore port anytime soon. The new owner is now stuck with 100% of a very expensive monthly mortgage.
Here is an example of one major high-end development I’m following to prove the point.
These are some very telling numbers. 600+ units launched 20+ remaining at $2,000 per square foot via the developer. 100+ units previously sold are now for sale privately less than 7 months after launch for $1,300 to $1,600 per square foot. The reason... no rental income. That tells me that property owners are willing to admit that market prices are down 25%+ already. Unfortunately, even at a 25% discount, there are no buyers.
Existing Singapore residents are keeping the rental market buoyant due to the fact they sold their old places and are waiting for the prices to drop...OR...waiting for their new unit to be completed. These people are relatively small in overall numbers and definitely not going to rent high end luxury units. They are driving HDB, middle priced housing rents up right now. They are also demanding 12 month leases or even less if they can get it proving that they are waiting to move or sitting on the sidelines waiting for prices to drop.
The Singapore property market is massively oversupplied today and more units are on the way. This is not good. This is should be extremely troublesome to anyone who owns property anywhere in that market. The potential valuation losses in the property market could be enormous, especially at the high-end. Overall prices could sink well below SARS levels and this could happen within 6 months to a year.
The short lived property boom was very much like a pyramid scheme. It was all hype and no substance. The first guys in are now smoking big cigars. The last guys in are now left holding the ashtray.
Foreign Talents Vs local Singaporeans; in Chinese, it means 同床异梦...
Same bed different dreams
When the foreigners landed in paradise, it is like waking up to a dream comes true. Everything is exactly what they want and are looking for. The beautiful infrastructure, the gleaming buildings that they can desire to be home, the first world lifestyle, and jobs aplenty. Then the great hosts welcoming them with red carpets and open arms. What a beautiful dream.
The elite too wake up to a reality that many could only dream off. Everyday is wine, women and song. No need to work too. Just manage their assets well. Make sure that property prices and all prices go up. Property prices up means asset value increase. Rental up means income increase. Higher ERP means having the road to themselves.
Jobs, no need jobs. No need to work. Some are even luckier. Being paid in millions to go on holidays or sipping teas attending board meetings.
The citizens, the Singaporeans, wake up to a different dream. Tighten your belt, don't expect charity or welfare. Look after yourself and live within your means. Work till you die. Downgrade lifestyle and expectations. Eat less, use less, take bus or walk.
Actually the writing is on the wall. Move out if you can't fit in. Even the foreigners are singing the same song. Move out if you are so unhappy. We are here to replace you. All you ingrates, not knowing how lucky you are.
And the system is designed for the locals to move out. Money lock up in CPF cannot touch. So got money as good as no money. When one is going to work till he drops dead, there is no need for savings for retirement anymore. Outdated concept.
The message is very clear, that you can have your money only if you move out. Migrate, denounce your citizenship and the money will be returned to you. And good bye, good riddance.
Singapore could face another round of inflation if firms raise wages
By May Wong 09 July 2008
SINGAPORE : Finance Minister Tharman Shanmugaratnam has warned that Singapore could face another round of inflation if companies increase wages to help workers cope with the higher cost of living today.
He said this will also affect Singapore's competitiveness and the ability to create jobs.
Mr Tharman was speaking to some 500 workers at the Singapore Industrial and Services Employees' Union dinner on Wednesday evening.
Higher rice and oil prices have led some Singaporeans to call on the government to set the tone by raising wages.
But Mr Tharman said such short-term measures are not prudent. Instead, he said the government has provided assistance to help Singaporeans deal with the higher cost of living.
These include S$500 million in GST Credits - to help citizens cope with the increased Goods and Services Tax - and special bonuses for senior citizens.
Mr Tharman said Singapore also addresses the problem of inflation mainly through its exchange rate policy. Since the beginning of last year, the Singapore dollar has appreciated by 11 per cent against the US dollar.
However, the minister said there is a limit to how much Singapore can allow its dollar to rise to fight inflation. Mr Tharman said if Singapore dramatically strengthens its dollar to offset the higher prices, it will instead hurt economic growth badly.
He said oil prices have increased by 50 per cent since the start of this year. And it has gone up by about 100 per cent compared to a year go. Food prices globally are now up to 60 per cent higher than one year ago.
Mr Tharman cautioned Singaporeans to brace themselves as oil prices may increase further.
He said, "We expect inflation to be between 5-6 per cent on average this year, with inflation being lower towards the end of the year. We also expect inflation in the second half of the year to be lower because the effects of last July's GST increase on inflation will wear out.
"However, the recent sharp increase in global oil prices will add pressure on inflation. So we are monitoring this and the impact on inflation closely, and will decide if inflation forecasts for this year need to be revised."
Looking at the global situation, Mr Tharman said the weakness in the US economy could extend into next year. But he maintains that Singapore can expect Gross Domestic Product growth to average between four and six per cent this year.
Mr Tharman said the lasting solution to inflation is to continue with efforts to help workers upgrade their skills and earn better wages.
He said it is also important to help experienced, mature workers stay employed and help home-makers get back to work. This will not only increase the household income, but help improve Singapore's tight labour market. - CNA/ms
Raising wages to address rising costs not the right solution
By S Ramesh 25 April 2008
SINGAPORE: Raising wages to address the issue of rising costs may be an enticing option but that is not the right solution, said Acting Manpower Minister Gan Kim Yong.
He said adjusting wages upwards to meet rising prices would only result in a "price-wage spiral" and Singaporeans should look at the bigger picture.
"What is more important is for us to have a realistic expectation of wages that reflect the underlying economic strength of our industries and also of our productivity. That will allow us to ensure that our economy will be able to sustain its growth momentum," said Mr Gan.
Since the last two recessions, tripartite partners – the government, unions and employers – have been working hard to encourage companies to restructure their wage systems to make them more flexible. This would allow companies to respond quickly when there is an economic downturn.
One component that has been built into the wage system is the monthly variable component (MVC). Mr Gan said this has worked well, but more needs to be done.
He said: "It is not an easy instrument to introduce because companies have to put in place certain mechanisms, particularly in the small and medium enterprises. Many of them take the position that in any case, their wages are quite flexible because they are small and nimble, and are able to adjust the wages as they go along.
"We do acknowledge that some of these companies already have a flexible wage system in their own structure... but it is also important for us to look at other flexible components of the wage system, including reducing the ratio between minimum and maximum wages."
A major preoccupation of the Manpower Ministry is to finalise Singapore's reemployment legislation which is expected to come into effect by 2012.
Mr Gan said that it would not be a top-down approach – there will be widespread public consultation with both employers and unions before the final legislation is crafted.
The acting manpower minister also said the feedback received so far has indicated that employers welcome the initiative and see the benefit of employing older workers.
In fact, the employment rate of those aged between 55 and 64 years went up by 3 percentage points from 2006 to reach almost 56 percent last year. The tripartite partners hope to achieve a 65 percent target by 2012.
Mr Gan said: "Employers are ready and willing to give it a try, and we are now helping them to introduce this system even ahead of the introduction of the legislation.
"Drafting the legislation is not so difficult. What is difficult is to decide what are the criteria, terms within the legislation, and this is something we have to work with the industry and unions so that we can arrive at some common understanding how reemployment is to be implemented."
A tripartite work group has also been set up and it will visit companies to enhance the consultation process before the final law is introduced. - CNA/so
S'pore govt ministers to cost taxpayers 15 pct more
SINGAPORE, Feb 15 (Reuters) - Singapore government ministers and other political appointees, the world's best paid, will cost taxpayers another 15 percent in the coming financial year starting April, according to the city-state's budget on Friday.
The state will spend S$66.5 million ($46.96 million) on political appointments, up from S$58.1 million in the current fiscal year to March -- which was also 27 percent up on 2006/2007.
The government announced two rounds of pay hikes for ministers last year, raising Prime Minister Lee Hsien Loong's annual pay to S$3.76 million -- at least five times that of U.S. President George W. Bush. (Reporting by Kevin Lim, editing by Neil Chatterjee)
- The magistrates are free to burn down houses, while the common people are forbidden even to light lamps; the powerful can do whatever they want, the weak are not allowed to do anything.
8 comments:
A Hong Kong based Asia property analyst for a small successful private investment bank was asked if he should buy property in Singapore:
We told clients and investors to sell all Singapore holdings (property, stocks and everything else) in June 2007. We determined that prices would never, ever be higher and were predicting a 15% drop in pricing by March 2008 and 25% drop by June 2008.
Rationale was simple and not rocket science.
#1. There was no demand for housing when the boom started. The vacancy rates on existing housing were above New York, London, Hong Kong, Tokyo and other major urban market levels. A Singapore property boom made no sense at all.
#2. Singapore GDP...nice impressive numbers. But the growth was 99% construction related. There is no economic growth when the construction boom ends and those numbers are subtracted from the total.
#3. The existing luxury housing vacancy levels in Singapore were adequate to fill the needs of Singaporeans and any possible influx of new senior executives for the next 5 years. Thus, there was no demand for executive luxury housing in the market.
#4. Value for money on Singapore property for foreign investors is not good when compared to other projected growth economies. (Several factors are weighed including psf, quality of workmanship, size of economy, projected growth of economy, lifestyle and culture of the market.)
#4. The targeted future population numbers of Singapore are pie in the sky and completely without substance. Singaporeans are not having kids and the demand for jobs in Singapore will be service led lower paying jobs to supply the planned tourism developments. None of these new inhabitants will be buying or renting condo’s, especially in the high-end. And tourists visit, they don’t buy or rent.
#5. Singapore is not a supply/demand driven economy. It is a small, managed economy. Thus, the property development plans were lofty, risky, and not based on future real supply/demand realities.
#6. There is a lack of real, transparent, objective information available in the Singapore market about the Singapore market. This leads to investors’ belief in hype and speculation rather than economic principles.
#7. Global money supplies and markets are taking a beating and will continue to take a beating. The second call on the subprime products happens this June so more big losses are expected. This will stall or even damage the Singapore economy.
We expect distress sales in the property market to start soon. The high-end rental market is non-existent and the higher % of all unit sales were high-end investment property, speculator driven. These buyers need “wealthy” renters to subsidize the million dollar mortgages. Most locals cannot afford the rents the market is demanding.
Surveys of multinational companies and banks have indicated that there is no boat-load of expats with a big housing allowance arriving at the Singapore port anytime soon. The new owner is now stuck with 100% of a very expensive monthly mortgage.
Here is an example of one major high-end development I’m following to prove the point.
These are some very telling numbers.
600+ units launched
20+ remaining at $2,000 per square foot via the developer.
100+ units previously sold are now for sale privately less than 7 months after launch for $1,300 to $1,600 per square foot.
The reason... no rental income.
That tells me that property owners are willing to admit that market prices are down 25%+ already. Unfortunately, even at a 25% discount, there are no buyers.
Existing Singapore residents are keeping the rental market buoyant due to the fact they sold their old places and are waiting for the prices to drop...OR...waiting for their new unit to be completed. These people are relatively small in overall numbers and definitely not going to rent high end luxury units. They are driving HDB, middle priced housing rents up right now. They are also demanding 12 month leases or even less if they can get it proving that they are waiting to move or sitting on the sidelines waiting for prices to drop.
The Singapore property market is massively oversupplied today and more units are on the way. This is not good. This is should be extremely troublesome to anyone who owns property anywhere in that market. The potential valuation losses in the property market could be enormous, especially at the high-end. Overall prices could sink well below SARS levels and this could happen within 6 months to a year.
The short lived property boom was very much like a pyramid scheme.
It was all hype and no substance.
The first guys in are now smoking big cigars.
The last guys in are now left holding the ashtray.
Foreign Talents Vs local Singaporeans; in Chinese, it means 同床异梦...
Same bed different dreams
When the foreigners landed in paradise, it is like waking up to a dream comes true. Everything is exactly what they want and are looking for. The beautiful infrastructure, the gleaming buildings that they can desire to be home, the first world lifestyle, and jobs aplenty. Then the great hosts welcoming them with red carpets and open arms. What a beautiful dream.
The elite too wake up to a reality that many could only dream off. Everyday is wine, women and song. No need to work too. Just manage their assets well. Make sure that property prices and all prices go up. Property prices up means asset value increase. Rental up means income increase. Higher ERP means having the road to themselves.
Jobs, no need jobs. No need to work. Some are even luckier. Being paid in millions to go on holidays or sipping teas attending board meetings.
The citizens, the Singaporeans, wake up to a different dream. Tighten your belt, don't expect charity or welfare. Look after yourself and live within your means. Work till you die. Downgrade lifestyle and expectations. Eat less, use less, take bus or walk.
Actually the writing is on the wall. Move out if you can't fit in. Even the foreigners are singing the same song. Move out if you are so unhappy. We are here to replace you. All you ingrates, not knowing how lucky you are.
And the system is designed for the locals to move out. Money lock up in CPF cannot touch. So got money as good as no money. When one is going to work till he drops dead, there is no need for savings for retirement anymore. Outdated concept.
The message is very clear, that you can have your money only if you move out. Migrate, denounce your citizenship and the money will be returned to you. And good bye, good riddance.
All in the same bed but different dreams.
Singapore could face another round of inflation if firms raise wages
By May Wong
09 July 2008
SINGAPORE : Finance Minister Tharman Shanmugaratnam has warned that Singapore could face another round of inflation if companies increase wages to help workers cope with the higher cost of living today.
He said this will also affect Singapore's competitiveness and the ability to create jobs.
Mr Tharman was speaking to some 500 workers at the Singapore Industrial and Services Employees' Union dinner on Wednesday evening.
Higher rice and oil prices have led some Singaporeans to call on the government to set the tone by raising wages.
But Mr Tharman said such short-term measures are not prudent. Instead, he said the government has provided assistance to help Singaporeans deal with the higher cost of living.
These include S$500 million in GST Credits - to help citizens cope with the increased Goods and Services Tax - and special bonuses for senior citizens.
Mr Tharman said Singapore also addresses the problem of inflation mainly through its exchange rate policy. Since the beginning of last year, the Singapore dollar has appreciated by 11 per cent against the US dollar.
However, the minister said there is a limit to how much Singapore can allow its dollar to rise to fight inflation. Mr Tharman said if Singapore dramatically strengthens its dollar to offset the higher prices, it will instead hurt economic growth badly.
He said oil prices have increased by 50 per cent since the start of this year. And it has gone up by about 100 per cent compared to a year go. Food prices globally are now up to 60 per cent higher than one year ago.
Mr Tharman cautioned Singaporeans to brace themselves as oil prices may increase further.
He said, "We expect inflation to be between 5-6 per cent on average this year, with inflation being lower towards the end of the year. We also expect inflation in the second half of the year to be lower because the effects of last July's GST increase on inflation will wear out.
"However, the recent sharp increase in global oil prices will add pressure on inflation. So we are monitoring this and the impact on inflation closely, and will decide if inflation forecasts for this year need to be revised."
Looking at the global situation, Mr Tharman said the weakness in the US economy could extend into next year. But he maintains that Singapore can expect Gross Domestic Product growth to average between four and six per cent this year.
Mr Tharman said the lasting solution to inflation is to continue with efforts to help workers upgrade their skills and earn better wages.
He said it is also important to help experienced, mature workers stay employed and help home-makers get back to work. This will not only increase the household income, but help improve Singapore's tight labour market. - CNA/ms
Raising wages to address rising costs not the right solution
By S Ramesh
25 April 2008
SINGAPORE: Raising wages to address the issue of rising costs may be an enticing option but that is not the right solution, said Acting Manpower Minister Gan Kim Yong.
He said adjusting wages upwards to meet rising prices would only result in a "price-wage spiral" and Singaporeans should look at the bigger picture.
"What is more important is for us to have a realistic expectation of wages that reflect the underlying economic strength of our industries and also of our productivity. That will allow us to ensure that our economy will be able to sustain its growth momentum," said Mr Gan.
Since the last two recessions, tripartite partners – the government, unions and employers – have been working hard to encourage companies to restructure their wage systems to make them more flexible. This would allow companies to respond quickly when there is an economic downturn.
One component that has been built into the wage system is the monthly variable component (MVC). Mr Gan said this has worked well, but more needs to be done.
He said: "It is not an easy instrument to introduce because companies have to put in place certain mechanisms, particularly in the small and medium enterprises. Many of them take the position that in any case, their wages are quite flexible because they are small and nimble, and are able to adjust the wages as they go along.
"We do acknowledge that some of these companies already have a flexible wage system in their own structure... but it is also important for us to look at other flexible components of the wage system, including reducing the ratio between minimum and maximum wages."
A major preoccupation of the Manpower Ministry is to finalise Singapore's reemployment legislation which is expected to come into effect by 2012.
Mr Gan said that it would not be a top-down approach – there will be widespread public consultation with both employers and unions before the final legislation is crafted.
The acting manpower minister also said the feedback received so far has indicated that employers welcome the initiative and see the benefit of employing older workers.
In fact, the employment rate of those aged between 55 and 64 years went up by 3 percentage points from 2006 to reach almost 56 percent last year. The tripartite partners hope to achieve a 65 percent target by 2012.
Mr Gan said: "Employers are ready and willing to give it a try, and we are now helping them to introduce this system even ahead of the introduction of the legislation.
"Drafting the legislation is not so difficult. What is difficult is to decide what are the criteria, terms within the legislation, and this is something we have to work with the industry and unions so that we can arrive at some common understanding how reemployment is to be implemented."
A tripartite work group has also been set up and it will visit companies to enhance the consultation process before the final law is introduced. - CNA/so
S'pore govt ministers to cost taxpayers 15 pct more
SINGAPORE, Feb 15 (Reuters) - Singapore government ministers and other political appointees, the world's best paid, will cost taxpayers another 15 percent in the coming financial year starting April, according to the city-state's budget on Friday.
The state will spend S$66.5 million ($46.96 million) on political appointments, up from S$58.1 million in the current fiscal year to March -- which was also 27 percent up on 2006/2007.
The government announced two rounds of pay hikes for ministers last year, raising Prime Minister Lee Hsien Loong's annual pay to S$3.76 million -- at least five times that of U.S. President George W. Bush. (Reporting by Kevin Lim, editing by Neil Chatterjee)
只许州官放火，不许百姓点灯！
(zhǐ xǔ zhōu guān fàng huǒ，bù xǔ bǎi xìng diǎn dēng)
- The magistrates are free to burn down houses, while the common people are forbidden even to light lamps; the powerful can do whatever they want, the weak are not allowed to do anything.
Immigration: The Human Cost
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