S'pore's bubbly property market, part 3

Singapore property giant Kwek Leng Beng recently made the most bullish forecast for the Singapore property market so far, according to a Bloomberg interview. He's second from right in the larger pix that was published in local newspapers last year. Leng Beng stood next to famous architect Moshe Safdie (with moustache) in the winning bid for Marina Bay integrated resort and casino project, which will be developed by Sheldon Adelson of Las Vegas Sands. Leng Beng is on the left in the inset with younger brother Leng Joo. Notice how Leng Beng has an expressive way with his hand! :-)

But Leng Beng's prediction is plausible. He is one of the most astute readers of the local property market. He and his late father Hong Png of the Singapore Hong Leong empire have had an uncanny ability in reading the Singapore property market. They got so many cycles correct, including the latest bull run by Kwek junior.

And while everyone wrote off Las Vegas Sands in its bid for the Marina Bay integrated resort site, Leng Beng was the sole public backer of the American developer. Er, the other backer was dad, who correctly predicted the winners of the Marina Bay and Sentosa integrated resort and casino tender exercises.

S'pore's bubbly property market, part 2

Singapore's Minister of National Development Mah Bow Tan has said that the government will not interfere in the sizzling property market.

According to The Straits Times, Mr Mah said 'there's no reason to be alarmed.' Referring to sub-sale figures which indicate the level of speculation, he said: 'If you look at the numbers, it's quite a distance away from what we have in the mid 90s, particularly in 1996.'

'I think we try to avoid interfering in the market if we can and that's the reason why we continue to depend on broad dissemination of information even sometimes persuading various parties to come up with more accurate information and then collating them and getting URA and HDB to push out this info in a very timely and very comprehensive manner,' he said.

But he declined to say if the government will introduce more measures to cool the property sector.

This is pretty much in line with what Sophie argued yesterday. Sophie had said that the Singapore government will continue to allow the private property market function through market forces. But it may step in should prices hit the roof again.

Updated: S'pore's bubbly property market

The Singapore private property market is experiencing its biggest boom, after the 1996 crash that pulled the market down for a decade. Prices of private apartments and condominiums have since recovered strongly in the last two years. Public housing is not spared either.

Prices of many private homes in high-end areas such as Districts 9, 10 and 11 have surpassed the previous records with headline prices generally ranging from S$2,500 per square foot to as much as S$4,000 per square foot. The previous record of about S$2,400 per square foot for a posh apartment in the Orchard Road area looks like a steal.

Prices of apartments in less prime areas have also shot up but many are still priced below their peak in 1996. Check out the graph, based on statistics from the Urban Redevelopment Authority, showing recovering prices that are still below the 1996 high.

Such runaway prices have prompted endless speculation that the government is set to step in to cool the sizzling property market.

The speculation was partly triggered by Minister Mentor Lee Kuan Yew's earlier comments that Singapore must check property prices to help maintain the country's overall competitiveness.

"We must check this spike in rents for office and residential space or we will lose our competitiveness," he was quoted as saying on July 9 by The Sunday Times.

The recent hike in the development charge (a charge levied by the government when a developer proposes to enhance the usage of the land) and the government move to step up land sales to help increase supply have lent credence to the view that the government is determined to rein in the property market. Such measures are not likely to cause the market to collapse as property deals will still be market driven.

A bigger concern is whether the government will introduce drastic fiscal measures such as a capital gains tax, which was slapped on property transactions in 1996. The tax and other financing restrictions sent the property market into a tailspin and caused many to suffer negative equity in their property purchases. Instead of cooling it, the government measures sent the property market into a prolonged slumber.

But there is also the view that the government will not unveil drastic measures this time around. The government won't want to be accused of causing the property market to collapse again. After all, it has done so much to help nurture the recovery of the Singapore economy through many new projects and measures to attract foreign capital in the last few years.

While the government is stepping up the supply side to help moderate prices, there is a possibility that it may still press the eject button should things get out of control.

Kuan Yew has again provided the hint that the government may have something up its sleeves. While in Indonesia, he was asked whether the government was planning any regulatory moves to curb prices in the Singapore property market.

His response, reported in BT today: "This is market-sensitive information...surely we are not going to discuss with the newspapers. But I think we also know that there are certain market forces at work, and we just let it run its course."

Instead of an outright denial, his comment about market-sensitive information suggests that there could be some measures in the pipeline. But he also qualified it by saying that the government should let the market run its course, suggesting no government interference.

So the overall message seems to be: The Singapore government will continue to allow the private property market function through market forces. But it may step in should prices hit the roof again.

Disclosure: Sophie lives in a private condominium in a not-so-prime part of the city that has also seen a sharp spike in property prices. Agents have been knocking on our door, offering some 40 per cent more than the purchase price earlier this year.

Latest: Housing rentals in Singapore are still lower than those in other major cities, according to The Sunday Times on July 29. According to a report cited by the newspaper, Singapore is ranked 15th in terms of rentals in the world -- below major cities like Hong Kong, Tokyo and New York. But a recent ST report also noted the trend of expatriates relocating to cheaper areas in Singapore due to fast rising rentals. I guess prices or rentals are all relative.

London Resurgent

By Uncle Cheng

Did you read the recent news item that one of a set of four penthouse flats in central London has been sold off-plan for a staggering £85 million (HK$1,300,000,000)? A few weeks earlier came the news that New Year bonuses paid out by financial institutions in the City of London topped a staggering £9 billion (HK$138,000,000,000). London, to put it mildly, is riding the crest of a wave of wealth.

Quite why London has suddenly boomed now is a bit of mystery. Experts say that New York shot itself in the foot with over-regulation after some corporate scandals and has made itself unattractive to foreigners because of excessively tough visa rules. Even the Mayor of New York is warning that New York’s very future is threatened by London. Mainland Chinese and Russian companies are choosing to issue their shares in London rather than New York.

This is all very strange because only a few years ago Britain was being warned that if it did not adopt the new European currency, the Euro, London would lose out as a financial centre and be replaced by Frankfurt. Well, Britain did not join the Euro and today by far the biggest trading centre for Euros is London, not Frankfurt. Then Germany’s biggest bank Deutsche Bank moved its investment banking headquarters from Frankfurt to London.

You might ask why what happens in London interests me so much? There are many reasons, and reasons that Hong Kong should pay attention to. First of all, I did law pupillage there and one of the reasons for London’s present pre-eminence is the city’s concentration of legal talent. Hong Kong is also home to a pool of legal talent and we must ensure it stays here. Secondly, London, and New York before it, benefited hugely by being cultural melting pots. A staggering forty percent of Londoners are foreign-born and they speak an incredible 300 languages. Of course, there is no way Hong Kong can compete with such figures but we must keep our economy open to talent from anywhere in the world, not just from the mainland.

London, like Hong Kong, does not tax rich foreigners on their overseas income and this has proved a huge magnet to the world’s new billionaires. There are said to be 23 Pound billionaire residents in London, and of those 11 are foreigners such as the Indian Lakshmi Mittal (worth £14.8 billion) and the Russian Roman Abramovich (worth £9.1 billion), owner of Chelsea football club.

Then there is London’s population, which after decades of decline, has been rising very steeply mainly due to immigration from eastern Europe. Even the UK’s Chinese population has risen fast recently and now totals about 600,000.

Perhaps I should add that I do have a selfish interest in London’s economic well-being because I own a house there which must rank as the best investment I ever made in my entire life. In not that many years it has appreciated by over 600 percent and by an extraordinary 35 percent in 2006 alone. A lot of the demand has come from foreign buyers and I have heard that native Londoners wanting to buy residential property are complaining that they can no longer compete with super-rich foreigners who think nothing of upping a bid by a million Pounds.

So for the moment at least London is again the capital of capitals. The city is abundantly confident, the restaurant bills have gone stratospheric, there is creativity and dynamism everywhere. The sceptics say even Athens and Rome fell in the end as confidence lapsed into decadence.

Yet I see no sign of London losing its grip just yet. Indeed London’s affluence and its dominance of international finance seems likely to strengthen further. Even the French, who as you will know have fought many wars with the British, have had to acknowledge London’s success. Nicolas Sarkozy, campaigning as a candidate to succeed Chirac as President of France, went to London recently to address London’s 350,000 French residents.

London, you see, has become the seventh largest French city in the world.