Buy and Be Cursed …. Property Investments

I felt quite snubbed earlier when I went to Holland Village and nobody bothered to market the new Commonwealth condo to me because I was wearing grubby sneakers and shorts.

At least if they had asked, I could have had the pleasure of saying No, and that I was unemployed.

I think I would have been a darn good property investor, seeing that the house I wanted to buy for SGD 2.8 mio back in 2009 has just gone for slightly under 10 mio recently. This is not to mention all the other places I have looked at over the years – the farms in Australia going for 300k in early 2000 that is larger than Singapore (with its own little stream and hill) and the London apartments back then too.

Had the foresight but not the temerity unlike my late Mommy who bought a nice house for us to live in when we were studying in Australia because it was less than the price of her new C class then in the old days when C class’s were going for SGD 250k.

I have been reading quite a few articles on Australia, London and even Israeli real estate with great alacrity because it is exactly like it was for Singapore back 3-5 years ago, complaining about foreigners driving the property prices up, before they unveiled the arsenal of cooling measures.

Anyhow Singaporeans are not really complaining these days as I see a new SMS on my phone advertising for Cambodian real estate and land. Yeah, move over Myanmar, Cambodia, here we come !

So much for our complaints, Singaporeans are the biggest buyers of London city property, just 4% behind the locals. Out of every new property built, about 3 quarters went to a foreign buyer.

How do you think the local Brits feel ?

“Large parts of London are becoming ghost towns.”

http://www.bloomberg.com/news/2014-04-08/london-skyline-planner-sees-empty-luxury-homes-hurting-city.html

More mortgage debt in south-west London than whole of Wales

http://www.telegraph.co.uk/finance/newsbysector/constructionandproperty/10753899/More-mortgage-debt-in-south-west-London-than-whole-of-Wales.html?utm_source=dlvr.it&utm_medium=twitter

And we have the media crying foul that London is losing their talent, artists and middle class professionals on account of unaffordability. And even Prince Charles has come out to say something about it.

Prince Charles warns London house price rise may drive away young talent

http://www.theguardian.com/money/2014/mar/26/prince-charles-warns-rise-london-house-prices-young-talent?CMP=twt_gu

It is the same for Australia.

Australian Property hitting a ceiling relative to incomes

http://www.afr.com/p/personal_finance/smart_money/property_prices_headed_for_record_gSdGyBWsYfyuDcVBwatptN

And even the Malaysians are not exactly too happy about Singaporeans driving prices higher ! And I have not even run over to buy my iPad mini yet.

I suppose Japan cannot really complain because they do have a supply problem with their aging population. But the rest, even the Cambodians, really cannot be exactly elated by the influx of foreign money.

Real estate which had previously been shut out as an investment tool has now become part of the investment portfolio. Whether you are a middle middle class, upper middle class or upper class, globalisation has made it an investment trend which makes sense because we are seeing rural-urban migration all around the world (but mostly in the EM nations – so we should really consider further flung places like San Paolo if you ask me).

My heart stopped when I read 2 headlines in the Singapore Business Times (mainstream news) which inspired me to write about this.

London calling for mid-sized homegrown developers: OCBC

Funding access is an ace in hand for Asian developers forming JVs abroad
Mid-sized property developers in Singapore have joined the big boys in expanding overseas – particularly in London and Australia – and are expected to continue in pursuit of better margins amid stiff competition at home, said a senior executive from OCBC.

http://www.businesstimes.com.sg/premium/top-stories/london-calling-mid-sized-homegrown-developers-ocbc-20140421

Sembcorp revives property unit

It will develop homes in group’s industrial parks

Sembcorp Industries is reactivating Sembcorp Properties, a dormant subsidiary which developed condominiums in Singapore a decade ago, with a new strategy – to develop residential and commercial properties in its existing industrial parks, starting with China.

http://www.businesstimes.com.sg/premium/top-stories/sembcorp-revives-property-unit-20140422

What will the average Singaporean think ?

Oh great…  let’s go and buy that latest Commonwealth condo now !

And what does that mean ? You are just making someone else a little richer than yourself and supporting the prices for someone else to buy in London (even though I know that the average Singaporean would not bother with reading my stuff here).

You see, this is how it works and it is much more intrinsically linked than we think.

Governments around the world, including our own, are racing against the clock to calm their increasingly-disgruntled-about-foreign-buyers-VOTING populations.

I note one common thread of thought amidst all the calls for additional taxes and regulations which will UNDOUBTEDLY be passed right before their next elections, very much like the way the Singapore government took a jab at the jugular with all the additional stamp duties and stuff a couple of years back.

Taken from a Business Spectator article … http://www.businessspectator.com.au/article/2014/3/28/china/chinese-homebuyer-alarm-case-deja-vu

“Almost three decades later, Australia is having the same argument about Chinese investment, and the current debate is strikingly similar to the argument we had back in the 1980s. It seems we have not learnt much from history.

The Japanese didn’t colonise Queensland. Golf courses bought at the height of the speculative property bubble for $200 million were sold for a fraction of the original price tag at a leaner time. The issue of Japanese investment is hardly raised now despite the fact that Japan is still one of the largest investors in the country.

Displaying a marked similarity to the Australian attitude towards Japanese investment in the 1980s, a 2013 Lowy Institute poll indicated a majority of Australians (57 per cent) think the government is allowing too much Chinese investment in this country. At the same time, 76 per cent of those surveyed thought China was the most important economy to Australia.

The attitude of Australians to foreign investment has not changed much over the last 30 years. It seems people are happy to sell commodities and host tourists, but do not like foreign investment in mining and real estate.”

It is a paradox. They want the investment but they don’t really want you in their backyard.

And that is exactly the same mentality for Singaporeans, Londoners and whosoever too.

“In January Mark Carney, the bank’s governor, warned MPs of the dangers of “extrapolative expectations”—people rushing to buy on the assumption that prices will continue to surge.” http://www.economist.com/news/britain/21600728-property-prices-are-rising-swiftly-bank-england-may-intervene-cool-it?fsrc=scn/tw/te/pe/tr/coolit

Step one – protect the citizens. Step two – cooling measures. Step three – damage control.

The truth is that nobody wishes you well if you buy a house (whilst they will bless you plentyfold if you buy their bonds) except for the developer and real estate agent and fellow buyers. Just like the Singaporeans who curse at those foreign speculators, shall we be cursed for buying that little shoebox in Covent Gardens at 2,500 GBP psf that we will probably cannot live in (because errr, we are not citizens) ? Add that to the daily prayers of the people for prices to crash, I think that is just a little too much ill will to live with, don’t you ?