INVESTMENT TUESDAY : FOR REAL ESTATE MATTERS, TALK TO LI KASHING

Information is not perfect and life is unfair to those with no foresight.

I concluded after reading this WSJ piece on how stock market timing has exacerbated the income disparity in the US ie. poor people get poorer because their information is slow or lousy. http://online.wsj.com/articles/bad-stock-market-timing-fueled-wealth-disparity-1414355341

It cannot be helped, I suppose. Because most people get the news 2-3 days late or even weeks depending on their media source. I can vouch for that safely, having just read the Today papers and noting that, other than local news, most of the stuff there I am already in the know about having read them a couple of days ago.

It is the same for real estate ?

Yesterday’s real estate news.

Private residential property prices to plunge 20% by 2015

With >89k units in pipeline (http://www.ura.gov.sg/uol/media-room/news/2014/oct/pr14-64.aspx …),  the plunge in Singapore private property price will extend beyond 2015, as vacancies are expected soar to a record high 10%. http://sbr.com.sg/residential-property/news/private-residential-property-prices-plunge-20-2015

Today’s main story.

Singapore Landlords Build World Empires With Bond Sales

“Singapore landlords are tapping the fourth-lowest local borrowing costs in Asia to fund record overseas purchases of hotels, office blocks and luxury apartments as property prices fall at home.

CapitaLand Ltd.’s (CAPL) Ascott Residence Trust and Malaysian tycoon Quek Leng Chan’s GuocoLand Ltd. were among real estate companies that sold the equivalent of $5.04 billion of Singapore dollar-denominated notes in 2014, the most for the same period in any year, data compiled by Bloomberg show. The island’s 10-year government bond yield has tumbled 30 basis points since Dec. 31 to 2.24 percent, the lowest rate in Asia after Japan, Taiwan and Hong Kong.

Singapore developers have spent more than $9.8 billion on foreign purchases this year, almost double the same period of 2013, snapping up real estate from malls in Beijing to luxury apartments in Sydney and London. “ http://www.bloomberg.com/news/2014-10-27/singapore-landlords-build-world-empires-with-bond-sales.html

Meanwhile Singaporean investors continue to be inspired by the Strait Times headlines that work with the property developers such as,  Want to move to the Jurong Lake district? Here are 5 new condominium options to consider http://www.straitstimes.com/news/business/property/story/want-move-the-jurong-lake-district-here-are-5-new-condominium-options-c

In my opinion, the richest man in Asia cannot be wrong. To be able to grow and preserve wealth, you definitely need some acumen. And Li Ka Shing’s acumen is kindred in spirit to Warren Buffet’s, to buy when all are selling and to sell when all are buying. And because of the sheer size of their funds, they need to move 2 steps ahead of markets, or they will fail to unload their holdings.

And Li Ka Shing would qualify to be property guru emeritus for Asia for he started out in real estate. http://en.wikipedia.org/wiki/Li_Ka-shing

So, Li Ka Shing has been selling alot of stuff and Reit-ing much of his holdings since 2013. https://tradehaven.net/market/random-thoughts-temasek-olam-and-watsons-when-it-is-so-dumb-it-must-be-smart/

And Singaporeans are the biggest investors in London property, to the ire of the British population. https://tradehaven.net/market/buy-and-be-cursed-property-investments/

Singaporeans are not the only ones. Russians, Chinese and Middle eastern billionaires are also buying up much of London and New York.

Therefore, the UK decided to introduce a new Mansion tax and New York has a similar one in store. http://www.bloomberg.com/news/2014-10-27/mansion-tax-cutting-london-luxury-prices-before-it-exists.html?hootPostID=384a38861ff0558e8fdeef6bfd09e3f9

And I am betting it is not the end of the story yet. Wait till Australia wakes up to the idea too as the Chinese and Singaporeans pour in. http://www.businessinsider.com/chinese-investments-in-australia-grow-2014-10?IR=T&

You see, retail investors and wholesale developers rushing into these prime overseas markets have one thing in common.

They Have Not Suffered Before – like the Japanese did in Australia back in the 80’s.  And my favourite anecdote would be this.

“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.” http://www.businessspectator.com.au/article/2014/3/28/china/chinese-homebuyer-alarm-case-deja-vu

And so Aspial launched their Australia 108 last week in Singapore like I mentioned in Australia Focus : The Real Estate Romance.

Do we see Li Ka Shing doing that ?

No. (He did that years ago)

Instead he is bought  Envestra Ltd, an Australian gas distributor. http://www.bloomberg.com/news/2014-08-07/li-ka-shing-wins-2-2-billion-envestra-deal-after-apa-cashes-in.html

And he is into aircraft leasing, parking and tech start ups these days.

Singaporean landlords need not worry as much as the man on the street though.

One avenue that is highly viable and profitable to them would be the wonderful S-Reit market as long as they can find someone to value the property at a profit to them.

And they better hurry before the new taxes come.

My words of self proclaimed wisdom back in March.

“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 ?” https://tradehaven.net/market/buy-and-be-cursed-property-investments/