Friday, 31 December 2010

External Drivers - Watching China in 2011

In my postings on the topic of "The Property Bubble and Investment Trap" series, I often mentioned to watch the external drivers, particularly relating to the economy of China.

I like this article which was published by TODAY in mid December 2010. It highlighted 7 issues which are also key topics I have been scanning and following for sometime on the external business environment in China - prior to, during and after my recent retreat in Nanjing.

In the new year, I will be posting articles on these topics vis-a-vis the contrasting context in Singapore, just as some of these issues get more heated up in an Election Year. I hope you will find them interesting.

The following are some comments in personal emails to me. If you like this Blog like these other visitors, please forward the link of This BLOG to those who may like it. [Link : ]

"I have been religously following your blog for months and I find the your articles on property very enriching, well analysed & logical...

It is very enlightening & it is especially beneficial to working class Singaporeans. It will definitely help ordinary people like me to understand the property market and hopefully to benefit from it."

"I'd stumbled upon your blog last night and just wanted to say thanks for providing a logical, well-argued counterpoint to the rah-rah sentiment of the current property market."

"I've been trying to follow your blog including your past entries for less than a week now and they have been really enlightening and useful for a first time property buyer like myself. Thank you for your posts. I'll be looking forward to your next post comparing BTOs, DBSS and ECs."

"I came across your comment in Lucky Tan's blog recently. I find your comments insightful."

"Just happen to browse your blog and found it very enlightening."

Reference # 1
TODAY Dec 16, 2010
China in 2011
by Laura Luo
Seven issues no investor should ignore

As we move towards the end of the year in which China became the world's second-largest economy, we answer the seven key questions that investors are asking about China, its markets and the outlook next year.


The Chinese government is widely expected to raise interest rates further in an effort to curb inflation. Following the recent higher-than-expected increase in consumer prices, there is now a greater risk of rate rises in the near future. In the short term, this will hurt sentiment and flows into the market.

However, from a longer-term point of view, this scenario provides investors with an opportunity to enter the market, given that inflation is likely to ease into 2011. While policy tightening will temper growth and challenge some of the marginal players in the market in the short term, it will allow for more manageable growth going forward, opening up some interesting opportunities for long-term investors.


The Chinese property market is in a bubble in the tier-one cities, particularly at the luxury end. The bubble is spreading to second-tier cities and, like all bubbles, a collapse in the market would be a serious risk to the confidence and the economy. The challenge for the government is to orchestrate a soft landing given how important housing-sector growth is to the economy.


Recent government policy points to an increasing emphasis on the domestic economy, with a view to bolstering its contribution to China's overall economic growth. The drive is not new and has been in the works for some time. This is a trend that will develop over the next 10 to 20 years as the economy shifts away from fixed-asset investment and export-driven growth. While the policy is positive for growth in the consumer-related areas of the market, we would warn against blindly investing in consumer names. Many may not deliver particularly impressive returns, given the high valuations at which these companies are currently trading.


According to some forecasts, growth in China's domestic economy and increased consumption will eventually trigger a rise of global inflation and a commodities supercycle. The commodity supercycle is something that all investors should be prepared for. There will be increasing pressure on commodities in the coming years from both China and India because of their continued urbanisation and rising consumerism.


At present, we like the domestic "A" share market (shares of companies that have been incorporated in the mainland of China traded on the Shanghai and Shenzhen stock exchanges in yuan) more than the "H" share market (mainland-incorporated companies traded on the Hong Kong Stock Exchange). We see China "A" shares trading at a relative discount to their long-term levels as well as being market laggards. Markets will continue to adjust to policy (as they react to inflation and the threat of further monetary tightening), but we expect this phase to pass and inflation pressures to ease in the first quarter of 2011. We do not expect to see a consolidation of the two markets for some time.


We do not expect the government to allow a large, one-off rise in the renminbi but it will, however, need to allow the currency to appreciate at a measured pace of between 3 and 4 per cent per annum. Obviously, this will be a positive for domestic names with overseas expenses and domestic revenues (i.e. airlines), while exporters (who have higher renminbi costs and revenues priced in US dollars) will be negatively impacted. From an investment point of view, we continue to be wary of exporters.


The main reason behind China's underperformance among global markets in 2010 has largely been the uncertainty surrounding monetary and fiscal policy and continued anti-inflation measures. The government's policy has been primarily directed at the housing sector. Going forward, we see continued risk on the housing front, although we expect the outcome to be a soft landing.

The writer is a fund manager in Chinese equities at Schroder Investment Management.


@}------HAPPY NEW YEAR---------

Tuesday, 28 December 2010

The Property Bubble & Investment Trap Part XIII - Quick Review By Property Class, 2010 Closing

I had taken a short "detour" in my original posting plan to write the piece  on "Concepts About Aging - Nanjing YY Li vs Singapore MM Lee" for the Singapore General Election Portal (SGEP) first before this quick review to close for 2010.

The reasons are two :- (a) the issue of Aging is an important one in the next General Election, (b) I received some emails asking for specific directions in the current property market. While I have obliged with some general advice, I also wanted to illustrate clearly how "life" for many Singaporeans can be as "cool" as this old "octogenarian" Li Jun in this real life story, if you could adopt the right "cool" approach to property investment in a "hot" Singapore property market; say if you do not mind to continue working to a ripe old age like MM Lee.

SM Goh announced that the Government is carrying out a 5-year study in Marine Parade to assess the implications and needs of an ageing community. Why is the Govt so anxious about issue of Aging and retirement age? It has got to do with Healthcare and CPF (i.e. Money left in CPF after mortgages are fully redeemed and the peak CPF withdrawal period, following the demographic pattern of the "baby boomers"). As I had explained in my earlier posting the "baby-boomers" of the early 1960s are often made the "scapegoats" of policies. And these baby-boomers will soon reached age 55 by the end of the next term of Parliament and the following General Election in 2015/2016. So SM Goh announced to "mock them up" in Marine Parade.

Under the old retirement age model of 55 years old, if the baby boomers still cannot pay off their mortgages by 2015, then they will be in "hot trouble" if threaten by unemployment. Personally, I do not feel safe leveraging and stretching a mortgage of 20~30 years beyond age 55. It should be a last resort, and not a DS solution. Better discharge yourself before age 50. Many Singaporeans still dare, or are forced to do so under the old "enslaving" model but will need to re-focus. Obviously, the PAP Govt found it necessary to delay the retirement age till 65 in 2012 and eventually 67. It buys the PAP Govt 10 more years to react by the coming Election and at least another 2 more years in the following one, in one Chinese zodiac cycle. You may also recall that the baby boomers (Post 60s) were also badly hit by the PAP's policy of lowering CPF contribution rate and income ceiling cap following the SARs crisis and previous recession, notwithstanding current income stagnation, ever rising cost of living, current high inflation  and imminent cut of CPF when baby boomers hit age 50.

The shrinking CPF fund is aggravated further by shrinking population growth for the Post 70s and 80s who will reach 45 y o and 35 y o respectively by 2015/2016. And the Post 70s at 45 age will enter what the once "NTUC Labour Chief" then considered as the "pre-emptive" layoff period because they will become "old and redundant".

You may recall my prediction of a possible "bust" in 2012~2013 (following a likely China Bubble Burst) and a "boom" in 2015 for our property market, augmented by MBT's announcement that the next Marina Bay Land Sale will be in 2013. If there is a bust, he will just call it off, as simple as that. The next Waterfront City is timed to be ready from 2015, build-to-order style; at buyers' risks. With the Circle and DTL MRT Lines all opened by then, it would be a "Golden Age" for another Election Year 2015/2016. My take is if the property market does not correct drastically by 2012 / 2013,  then by 2015; property prices will be ridiculously high and the Bubble will be dangerously full blown by then, if it is so "thick-skinned" to last for a "loud bang" only in 2015. Either the widened gap between EC and HDB flats prices will be so aggravating or the price of both HDB BTO and resale flats will be so high then that MBT may have to live by his middle name and BOW out if he should keep his MND Minister portfolio.

The PAP may say the property market "will not collapse" because theoretically I believe the FTs they brought in and new citizens approved will beef up the "Post 70s and 80s" age groups to check a shrinking CPF and a peaked withdrawal period by the aging Post 60s baby boomers, who will soon fade off economically. It was also a way to prop up the HDB 3 and 4 Rm Re-sale market once and contributed to the rising index which defied a correction in 2008/2009. So they will continue to sell aggressively the concept of a later retirement age in the next Election while beefing up the CPF base. The direct result of the propping up of the market then is the current high HDB resale prices and COV, and also ridiculous EC prices.

So with the "hot capital inflows" still coming in just as the GOVT adopts a "wait-and-see" incremental approach if more control measures are needed, when do you think the exodus of foreign funds will be ? - just before the Bust takes place 2013 ~ 2015? Unlike the difficulty and fultility to predict major "corrections" in the stock market, the "short to mid term of 2~5 years" of the local property market is  quite predictable in terms of likely scenarios, as I mentioned to some who emailed me. The exrernal drivers are less predictable which you have to watch closely.

Many might mistaken that the "hot capital inflows" will flow in the form of direct investment in properties, this may need not necessarily be so. It may flow through via other investment tools, such as purchase of stocks; and thus causing a Bubble in the stock market before moving into the property market. So you can imagine the impact if there is a "collapse", the disruption it will cause to the whole economy. This is also why I highlighted in earlier postings to watch external drivers, such as the China stock market. Watch the prices of new launches, not necessarily buy them new; but check the reasonableness of the re-sale market for a better purchase which is now rather "flat". The rsik is that the unwary will be left with the "parcel" as in a "muscial chair" game. The average Singaporean buyers tend to over-leverage (even on one property), unlike the China buyers who tend to pay off substantially or completely, espcially for the first property.

When a drastic correction does occur, how will this transform into physical terms. Let me put it in simple analogy. It could be at least a 30% correction in market value or price such as last seen in the 2008/2009 slump and equivalent to getting "one room less for a 3-Rm Condo" or "1 MPV or SUV less including COE".

The forecast in Reference #2 by Credit Suisse is another rough guide. The resultant impact could be equivalent to at least the sum total of "5 per cent in each of the next two years, on top of an estimated 15 per cent gain this year" or  :-
(a) 2010 - 15% +
(b) 2011 - 5% +
(c) 2012 - 5% +
Total : 25% 
For those who is not already in the market, do see this risk.

Next, buyers should look at risk assessment versus room for asset appreciation. I think the average Singapore buyer still looks for appreciation rather than yield. With "hot capital flows", the money is parked here only for "capital gain". When that is achieved, the next logical move is to "take profit" and "exit".

Quick Review By Property Class

Overall, as I observed from signs of the market, the distortion seems to have started despite the recent price increases of 5~11% for private properties in Nov 2010. What I observed :-

(a) MBT is claiming that the control measures implemented in End Aug are effective, but sales volume in the private sector has not dropped, and only HDB resale COV has dropped to a median of $22K. With recent Nov rebounce, there is rumour more measures will be used to hit the private sector by End Q2 2011, which is quite likely as the Election should be over by then.

(b) Smaller developers seem to be capitalising on the mix of "market uncertainty and EC euphoria" to take advantage of  ignorant buyers. There was a report in Lianhe Wan Bao that buyers who were ready to deposit their cheques for a booking after viewing the launch, but the developer turned around to say the units were "not for sales". Such choice units could be "booked" by relatives and then re-offer to those who visited the launch but were adamant to get a unit at a "premium" price. This is bad practice but the market had demonstrated it again. Many small private LH condos are asking price above $1200 psf, which is ridiculous pricing anyway. Such marketing trick seems to be timed at a disorientated market.

(c) Market analysts "speculating" that EC price will climb further in Q1 and Q2 2011 by another benchmark, even for EC @ $900/$1,200 psf, even on national TV.

(d) The market has remained robust despite the cooling measures in August, many buyers are currently buying with the self prophecy that not buying a property now will mean one will miss the opportunity ahead. If it is for a FH property, I might think so too, but why should it be so just for an EC; whether or not the Govt will continue pumping out new land supplies for EC.

(e) Developers are minding the gap of their land bids. The gap between the top bidder and next highest bid for residential sites and sites with residential components has started to narrow. The gap (measured by the difference between the top two bids divided by the second highest bid) peaked at 31 per cent for the condo plot at Miltonia Close next to Orchid Country Club in the Yishun area offered at a tender which closed in August. The margin has slipped to single-digit per cent levels, mostly between one and 4 per cent
Review by Property Class

(a) BTO
The latest Punggol Topaz comprising 1,010 units standard flats was launched on Dec 22. The selling prices range from: $166,000 to $207,000 for a 3-room flat; $267,000 to $329,000 for a 4-room flat; and $335,000 to $406,000 for a 5-room flat. This translates to a sale price of $226~$282 psf for 3Rm, $266~$328 psf for 4Rm and $275~$333 psf for 5Rm.

The selling price for the last BTO at Yishun Greenwalk on Nov 19 was $150,000~$365,000 for 3-room ~ 5-room units. The issue with BTO pricing is still a political one and its pegging to HDB re-sale flats prices. It is a matter of how much the Govt wants to price lands, many of which were acquired compulsorily at ridiculously low historical prices; even at several cents psf.

Meanwhile, HDB is prepared to launch up to 22,000 new BTO flats next year, if demand is sustained. In Q1 2011, HDB will launch about 5,000 BTO flats. The next BTO launch in January 2011 will offer 1,700 flats in Bukit Batok and Yishun.
Photo : The "Political" Price of BTO Flats

(b) DBSS
With the current push towards EC, I expect DBSS to be marginalised as an asset class. I consider it as a poorer asset class. Based on my knowledge of costs, for a 4 Rm equivalent or  a 1000 sf DBSS flat, if you can forgo your subsidy of about $30 psf, i.e. the $30 K grant, the Govt should be able to give you EC at the same price. At most, I estimate the price differential to be another $50 psf. It will be a test case if there is another launch.

A good example of a lack lustre land bid was at Upper Serangoon Road, opposite Serangoon Secondary School. The Housing Board said this was the weakest reception for a DBSS tender since 2008. The Upper Serangoon plot measures 215,278 sq ft and has a maximum gross floor area of 753,474 sq ft. This works out to be about $206 psf ppr. The site is estimated to yield 630 dwelling units. This will translates to a break-even cost of about $420 to 450 psf. This could mean a five-room flat could be launched at a price of $500,000 to $535,000 ($410 ~ 440 psf).

If you look at this price and consider what I said in the preceding paragraph, you will appreciate how ridiculous the prices of newly launched ECs are; even if you would say allow an additional $50 psf for land costs. To lower the price of ECs, do you think our Govt will push out more DBSS lands for tender?

(c) EC
The Straits Times published a good summary of "WHAT THE NEW ECs OFFER" on 11 Dec 2010. EC makes up 20% of OCT and Nov sales. Attention must have been on the latest launch of PRIVE by NTUC Choice Homes. This developer, a subsidiary of the NTUC Cooperative, had been "dormant" for a number of years.

On the 1st day of sale, 270 units were sold at average price of between $660~$689 psf. One buyer was reported to have paid $734 psf. I do not know on what grounds, but this price is certainly too high.The fact that NTUC Choice Homes is the developer may confuse the market that this is the general indicative price of the EC market. The average sale price is much lower than the Esparina next to Buangkok (avg $740 psf) and The Canopy next to Yishun Park (avg $650 psf).

The next launch Austville Residences also at Buangkok, next to Kangkar LRT; is reported to sell from $620 psf. Compared to Esparina, we have seen a price drop of about 16%, although not strictly on equal bases.

In my last posting on PTY Part XII, I abstracted part of the a ST Advert for The Canopy which advertised a sale price from $530 psf. I note recent advertisements are starting to leave out any indication of sale price psf. So buyers should be weary as developers also dangle other carrots. Both Prive and  Austville are dangling the Deferred Payment Scheme (DPS) carrot which I think is redundant since SIBOR is at record low. With China just announced the Christmas present of lowering their interest rate, I like to see what our Govt will do - maybe a New Year present to lower SIBOR again ? - LOL.

But I would not consider the selling price by the NTUC Choice Homes as "cheap". I consider this price as more appropriate for a 99 Yr LH condo, and not an EC. To re-visit, you may read my posting in Part IX.  You can see a GLC trying to push up the EC prices, obviously the GOVT will benefits from high "land sales" prices. You may also note from the ST report that the Design and Build developers are offering lower prices at The Canopy and possibly Austville.

Meanwhile, big developers are joining the EC fray with pretty high bids. CITY Developments (CDL) unit Grand Isle Holdings, in early December; has emerged as the top bidder for an executive condominium (EC) site in Segar Road, Bukit Panjang. CDL’s top bid of almost $182 million, or $271 per square foot per plot ratio (psf ppr), coming in 15.5 per cent ahead of the second-highest offer of $157.5 million, or $234 psf ppr, submitted by EL Development.

(d) Mass market 99 Yr LH Condo
While this segment seems to be marginalised by the control measures and recent EC launches, with price staying flat; developers are putting in high land bids at "good" locations.

Far East Organization had emerged in early Nov as the top bidder for a 99 Yr LH private housing plot at Woodgrove Avenue in the Woodlands area. Its top bid of $105.12 million works out to about $333 psf GFA – about 4.2 per cent higher than the next highest bid of about $100.90 million by EL Development.

Far East is planning to develop a five-storey condo incorporating some townhouses on the site. Tenders for average suburban housing sites seem to have settled into a predictable pattern in terms of bid and price response. The top bids for such plots at the past four state tenders have been consistently in the $330-350 psf ppr range. An analyst estimates that Far East’s bid price would translate to a likely breakeven cost of about $650-700 psf. The project will likely be launched above $800 psf.

In the subsale market, units in the low-rise Rosewood Suites (under construction) were sold at $650-700 psf in the July-September period.

(e) Market shifts towards higher end Mid-Range, Luxury Class and Landed LH Properties
As I mentioned in a previous posting, if there was "no" hot capital inflows, the focus might be on the EC market. With  hot capital flows, the focus will shift towards more expensive "luxury" class assets - 99 LH, FH or even special class luxury landed bungalows such as Sentosa Cove. This had more or less happened and the good example is the back-off of a $36m deal at Sentosa Cove by China PR buyer who  found it worthwhile to forgo a $500,000 penalty in deposit, agent fees, legal fees and procedural fees.

Hence, recently launched 99 Yr LH Leedon at Farrer Road which is next to the Circle Line enjoyed brisk sales @ $1,680 psf, more expensive than the historical price of the Ex-Marco Polo Hotel site when it was launched as a condo. The brisk sales at Leedon also brought back the en-bloc of Tulip Gardens. The next to watch is the Pine Grove at Ulu Pandan.

Will prices at the Bukit Timah Condo Belt then sky-rocket when the DTL 2 MRT is opned in 2015 since most of them are either 999 Yr LH and FH properties. This commentary, "Before the gains, the pains"  in TODAY 24 Dec 2010 best summarise it. "Downtown Line Stage 2 is expected to be completed in five years' time. What does that mean for property prices today? What about from now till 2015? Till 2016 and beyond? The short answer is: There will be pains before any gains. Weakness before strength." My own comment is the pain may not be only in the disruptions in the construction phase, but also where the current Bubble is taking us.

Over at the East Coast, Far East Organization has clinched Paramount Hotel and Shopping Centre along East Coast Road for $214 million. This purchase price for land works out to about $1,178 psf ppr including development charge (DC) of $40.07 million for residential use at a plot ratio of 2.1 or $736 psf ppr including an estimated $12.8 million DC for a mix of hotel and commercial use at 3.0 plot ratio. This land cost of $1,178 psf ppr is comparable with the sale price for the The Shore nearby, also developed by the same developer. Hence if developed as a condominium project, the selling price will be ridiculously high.

Developers are showing keen interest in the landmark Lion City Hotel and Hollywood Theatre site up for sale near Paya Lebar MRT station. Including paying a premium, an extra $8 million; for the state land, and the estimated development charge of $80.8 million to convert the site into a residential development, and based on the $300 million indicative price, the price of the land works out to $843 per sq ft of potential gross floor area.

(e) The next Waterfront City
The Government’s strategy is driven first by a multi-billion-dollar revamp of the Tanjong Pagar area to promote new office, residential and other developments. There are also aims to make Tanjong Pagar a potential rival to the iconic Marina Bay as the next Waterfront City.

The mammoth GuocoLand development on the 1.5ha plot at the corner of Peck Seah Street and Choon Guan Street promises to be a landmark project and, at 280m high, among the three tallest buildings in Singapore. The developer, which paid $1.7 billion for the site, plans to build the mixed-use project on top of Tanjong Pagar MRT station and spend up to $3 billion, according to earlier reports.

More residential units are on the way as well. Keppel Tower and GE Tower will be turned into a high-rise condominium with shops and restaurants on the first floor. The project is a result of a rare land-swop deal between real estate investment trust K-Reit Asia and Keppel Land. Keppel plans to build two towers consisting of 620 apartments in total. Heritage sites like the Tanjong Pagar Railway Station will be in the action too.

Analysts say those keen to enjoy the area’s full potential will have to wait another 10 to 20 years.

Profile of Buyers

Based on queries and feedbacks I had received in emails, I feel average buyers should be wary of the current dis-orientated market, EC Euphoria and seek own direction based on their own circumstances.

The "Leviathan plus Kia-su" mindset is best for the developers and marketeers to hit and net the easy prey.

Reference #1 :-
TODAY  Dec 16, 2010
Analysts say surge in private home sales reinforce the case for harsher measures

Reference #2 :-
TODAY Dec 16, 2010

Credit Suisse expects residential property prices in Singapore to increase 5 per cent in each of the next two years, on top of an estimated 15 per cent gain this year because of low interest rates, a growing population and strong economic expansion.

Any weakness in the global economy, further measures by the government to cool the property market and a hardening of interest rates will be key risks to the residential real-estate market here, it said.

Among Singapore-listed property stocks, City Developments is the investment bank's top pick because of its exposure to office properties and luxury residences, both of which have stronger prospects next year than mass-market housing.

Credit Suisse says investors should exit the residential real-estate market in China and move their money to the residential and commercial property markets in Singapore, Hong Kong and Japan.

Reference #3 :-
TODAY Dec 22, 2010

SINGAPORE - Prices of freehold landed housing in Singapore's prime districts have surged 5.1 per cent in the fourth quarter from the previous three months, compared to growth of 2 per cent in the third quarter.

The average price of landed homes in the prime districts in the fourth quarter stands at $1,693 psf, property consultant DTZ said yesterday. Outside the prime districts, landed prices are up by 4.3 per cent to $993 psf, compared to the 1.7 per cent increase a quarter ago, it said.

Overall, DTZ says this represents an increase of about 16 per cent for landed properties for the whole of this year.

Ms Chua Chor Hoon, head of DTZ South East Asia Research, noted that the limited supply of landed properties, accounting for about 26 per cent of total private housing stock, made them a prized asset.

In contrast, the supply of non-landed units, such as condominiums, is injected at a faster pace via the government land sales programme and collective sales, she said.

The resale price of leasehold condominiums in the suburban areas has held firm at $660 psf this quarter, while that of condominiums in the prime districts grew marginally by 0.4 per cent to $1,520 psf. The prices of these two non-landed segments have surpassed their previous peaks in 2007, indicating price increases are hitting a resistance wall, DTZ said.

Buyers have also exercised greater prudence following the government's cooling measures implemented this year, it added.

Reference #4 :-
ST Online Dec 22, 2010

Reference #5 :-
China raises mortgage rates in line with interest rates

Wednesday, 22 December 2010

Merry X'mas & Happy New Year - "And all I want for X'mas is ..."

We have come to another year-end. This is particularly meaningful as this Blog has been sustained for slightly over a year.  I extend my warmest SEASONS' GREETINGS to all supporters and visitors, and it is with such anticipation of more interesting postings that we shall look forward to A BETTER 2011.

And "all I want for X'mas" is something more interesting for you, just like this little "sticky" toy below which I had discovered while in China, and your continual support. ( Note : Notwithstanding my knowledge of material specifications, I am still ignorant what it is made of.) And "my wish for 2011 for this Blog" is to hit a peak traffic of 1000 visitors. I hope you will help to send the link of this Blog to just 5 persons you know who may be keen. Once again a MERRY X'MAS and A HAPPY NEW YEAR to all of you.

1. Original
2. When Thrown On Chair

3. Final Shape

Wednesday, 15 December 2010

Election Watch Part II - Concepts About Aging - Nanjing YY Li vs Singapore MM Lee

This article is contributed my me to the Singapore General Election Portal (SGEP).

A Response to “Making Life Easier for The Elderly”

MM Lee at the old age of 87, said this during a recent constituency event; “If I'm fit, I'm prepared to stand. But whether I stand or not, that's up to the Prime Minister”. Asked if he was feeling up to it, Mr Lee chuckled and would only say: 'It's for you to judge.' [ Source : Straits Times, 14 Nov 2010 ]

SM Goh announced that the Government is carrying out a 5-year study in Marine Parade to assess the implications and needs of an ageing community. He said the elderly are a special group, and Singapore need more young people to engage older Singaporeans to help them grow old graciously ….. but “in a cost effective way”. [Source : Today, 13 Dec 2010]

During my recent trip to Nanjing, I met this interesting old man ( an octogenarian ), Mr Li Jun(李均), age 81; while strolling through the Bai Lu Zhou Park one morning. Let me refer to him as 李爷爷 (YY Li) and share his concepts about Aging and his hobby which is both eco-friendly and certainly cost effective.

YY Li is 81 years old but still so healthy and wise. He was practising his “water calligraphy” at the park when I encountered him one morning. What he impressed me most was his philosophy about old age and life, having live past 81.

Photo: YY Li sharing his “Water Calligraphy” techniques with another visitor to the park.

Photo : YY Li introducing himself as a Nanjing resident, Li Jun (李均)

Photo : YY Li explaining how the “broom stick” was improvised as a Water Brush.

Photo : YY Li explaining his concept about life after passing Age 81 (八十一) … 顺… (Smooth)

Photo : YY Li completed his “cool” concept about life after 81 - 顺其自然 ( Let it happens naturally )

Photo : YY Li explaining broader concept about his life and passion –大地为纸水为墨 …

Photo : YY Li completing this couplet about his passion - Using earth as paper and water as ink (大地为纸水为墨), he completes his calligraphy of all the world’s well written essays (书尽天下好文章)

The following is an abstract from the Transcript of MM Lee’s Interview with Seth Mydans of New York Times and IHT on 1 September 2010.

Mr Lee: “Thank you. When you are coming to 87, you are not very happy..”

Q: “Not. Well you should be glad that you’ve gotten way past where most of us will get.”

Mr Lee: “That is my trouble. So, when is the last leaf falling?”

Q: “Do you feel like that, do you feel like the leaves are coming off?”

Mr Lee: “Well, yes. I mean I can feel the gradual decline of energy and vitality and I mean generally every year when you know you are not on the same level as last year. But that is life.”

Photo : Falling Gingko leaves turning golden yellow in Nanjing to welcome the cold winter. “What A Golden Age ?”

I prefer YY Li’s concepts about Aging and living old age naturally. I believe he is completely at ease with life and enjoys the peace and harmony Nature is providing him at no costs. If you are above 80 years old but still want to worry on how best to control and manage the country the only way you like it, obviously life would be like waiting for “the last leaf falling” even if there is a “Golden Age”.

Photo : To have a “Smooth” life at his age (过八十一), let’s recap YY Li’s advice, “Let it be natural ” 顺其自然 …

Photo : And there will still be other Gingko trees bearing fruits to aid longevity, “lust and green”…

Photo : Another Gingko tree “lust and green” and waiting for the same Nanjing winter.

Photo : The Aged exercising at Bai Lu Zhou Park in Nanjing.

Photo : Another Aged senior singing Beijing Opera with his buddy on the Er Hu, while the birds “rhymed” from the cages.

Photo : Or if you prefer option rowing over “reflections” in a lake ?

Photo : Close up view of an Imperial Edict carved in stone.

Singapore likes to work out “great complex formulas about how to live and manage life” but forgets the simpler things in life which makes it meaningful and enjoyable. What SM Goh Chok Tong and PMO Minister Lim Boon Heng are talking about is just “hardware”. So they are concerned about “spending money”. [Today, 13 and 14 Dec 2010]

"The NTUC Secretary-General Lim Swee Say said in 2005: In the past, people lived till 60 or 65. Nowadays, we live a lot older. Today, 75 to 80 years is the average lifespan. In time to come, with advances in life sciences, we can expect to live even longer."

"This poses one question for all older people: What to do with the extra time?", he told union leaders and guests during the Union of Power and Gas Employees 10th anniversary celebrations at Neptune Theatre Restaurant on Jan 29, 2005.

And so the NTUC now encourages the old to continue working during the “extra time”. They start to chase after the “regulations” to delay the statutory “retirement” age. Then PAP MP and Mayor for Southeast District CDC, Mattias Yao, “screamed” out loudly in Petir November/December 2010 edition, “No need to retire at 62”. He wrote that “the Act specifies the age below which employers are not allowed to retire their employees on account of age. It sets a lower limit, not an upper limit.”….. The paranoia is still ultimately about bearing the burden of costs for the Aged, so NTUC says work longer till the day we drop.

Policies need not be casted in stone whether or not to send the Aged workers back to the workforce after the statutory retirement age of 62. If corporations cannot respect the freedom and wishes of the Aged whether to continue working or not, what kind of society are we to those who had already contributed? There is no corporate social responsibility but just corporate survival.
Photo : A pair of Imperial edicts lying in display at Fu Lu Zhou Park, Nanjing.

Meanwhile, MM Lee said he is willing to contest the next general election, if his health allows for it. But the decision lies with PM Lee. That would be a “forced” decision.

I hope aged Singaporeans need not be “forced” likewise. Isn’t it more logical and “cool” to follow YY Li’s wise advice on the concepts of managing Old Age, “Just let it happens naturally”. He is enjoying life and all he needs is a “broom stick” and a bottle of “water” taken from the nearby lake.
Reference #1 :
Straits Times Online : Nov 14, 2010
'If I'm fit, I'll contest'

Reference #2 :
Today, 13 Dec 2010
Marine Parade to pilot 5-year study on ageing community's needs
Link :
Transcript of MM Lee’s Interview with Seth Mydans of New York Times and IHT on 1 September 2010
Link :
Reference #4:-
Today, 14 Dec 2010
Making life easier for the elderly ...
Link : 
NTUC News 18 Feb 2005
"Live Older, Work Longer"
Re-posted in New Asia Republic, 12 Dec 2010 (article was first published in the November/December 2010 edition of PETIR)
PAP: No need to retire at 62
Link :

Contributed to :- Singapore General Election Portal (SGEP)
Read more articles and GE updates at the SGEP.

Friday, 10 December 2010

Chinese Build 15-Story Hotel In Just Six Days, Rest On Seventh

"Six days. That's how long it took to build this level 9 Earthquake-resistant, sound-proofed, thermal-insulated 15-story hotel in Changsha, complete with everything, from the cabling to three-pane windows. The foundations were already built, but it's just impressive.

The wonders of prefabricated construction modules and modern construction techniques will never cease to amaze ..." [Source : GIZMODO]

Tuesday, 7 December 2010

The Property Bubble & Investment Trap Part XII - Quick Sizing Up of Current Property Market

Occasionally, we must return to "history" in order to appreciate the present better, to see what is trendy and sensible. Yes, I am first referring to architecture and buildings. However, the same applies to property prices and the value of your "home". From Day 1, I had given you this "helicopter vision" about the Singapore Property Market with historical prices. Buildings and development projects just get me all "fired" up in "thinking" despite its tough working environment, which is why I am still able to find energy to continue working in my profession.

Video : Ming Architecture, Nanjing Fuzi Miao.

Likewise, you may have notice a revamp of my blog - it has  more vivid and colourful photos, mostly taken by me with my "idiot-proof" camera. I will soon go more "micro" on issues for shorter read. However, the "Property" theme remains difficult to do so. I like to present insightful information and a true opinion. Those who trust my views may really rely on it to chart their course of investment. Hence, it would be "difficult" not to analyse in detail and explain more. But it takes longer read and is equally "straining" to write.

It makes sense to do a quick "sizing-up" of the property market especially when the General Election date is getting nearer. This means news are getting hotter, more "sensitive" and maybe even distorted. You can see a "star-burst" of news and must look deeper to piece everything together for a better decision. In pictures, I had illustrated what I mean, if you would look at the 2 analogous pictures in my first posting after my return from Nanjing. There must be at least 2 angles to look from.

The maxim is always "Watch what they do, not what they say." During the run-up to the Polling Date, you must follow the maxim twice, "cooling-off" period included. All these extra-ordinary "good" news would certainly put us in a "Golden Age" despite Episode 2 of MSK's Great Escape which Jack Neo should seriously consider as his comeback movie to join back the "Golden Age".

The previous Saturday (27 Nov), I was reading the ST in detail after a 4-week break, first on SITEX and then on Property. Instead of a focus on SITEX, I noted there were more advertisments on PROPERTY, a few developers took up full-page advertisments. As a professional working in this related industry, I hardly paid any attention to the beautiful perspectives and project details (I know where they are located and could imagine how they would look like upon TOP anyway). I was hunting for tell-tale signs which the ordinary readers and buyers might not be able to pick up. Most did not advertise "PRICE psf" despite a full page advertisement. Only 3 did and I will highlight them later on.

Not coincidentally, I had not been receiving those frequent SMS invitation to property launches for some time. Certainly not when I was in China and not the past week after I came back. The same with those postcard advertisments offering high-tea, BBQ party, etc.; when I emptied my mailbox after I came back. Great, are these developers getting more "green" just like their projects?

I had highlighted the following in my previous postings :-
(1) S$ Appreciation vs Fall in SINBOR to new low (Mid Oct 2010)
(2) Tharman mentioned "no capital controls"

A keen reader James Neo had commented and asked me for my further opinion on my prediction of a "bust" in 2012~2013 and a "boom" in 2015 for our property market. I had answered him under "Comments" in my posting "Back From Nanjing City, Jiangsu Province, China". I had addressed him sufficiently and do not wish to repeat in my posting again. You may visit the "Comments" for my views.

Coincidentally, there was this interesting advertisement by "Inflation US" - "The Day The Dollar Died". Though it is scenario building, an advestisement must still be convincing enough when directed at a mix of professionals as potential readers, and the date of the Bubble bust in this FICTIONAL account of QE4 was "December 19, 2012".

A few visitors had also emailed me to ask for personal advice or told me some personal investment stories. I thanked them for the interest in this Blog. While I would try my very best to share what I know and address some of their queries, I wish to clarify that NO 2 properties, investors or purchasers would have the same profile that they could be compared an "apple-to-apple" basis. Property investment is also a very personal matter. It is very difficult to give good advice without a clear understanding of the purchaser's investment profile and the category of property he is buying. Unless more information are volunteered, any advice from me would be general and for information only. I suggest that they follow my blog more closely and "fit" into the picture and pitch against their own observations, unless they wish to make specific query which must come with relevant information.

The purpose of this posting is a "quick-sizing" from where I left before my annual retreat. Let's look at some of these events for the past one month.

(4) MBT announced more land sales for H1 of 2011 in order to cool the market further (Nov 26, 2010). At the launch of Dawson, he reassured the property market has cooled with the same old data. If you had read my earlier postings, you would have known it from this blog even if you had not read the local newpapers. MBT has to do this, because the GE is getting nearer, and he should be more anxious now that he was not voted into the PAP CEC in the recent bi-annual party conference.

(5) Last Saturday (4 Dec), I watched the advertisments in ST again. There were a few large "PTY" advertisments and the only one that listed the "PRICE psf" was none other than the Canopy again.

(6) On Sunday night (5 Dec), I was watching Tung Soo Hua's Money Week. Earlier I had just heard PAP's Mrs Lim Hwee Hua tried to pin the blame for the high prices of HDB flats on "a few private owners who also owned HDB properties", on Channel 8 News, instead of admitting it as due to a myriad of factors, during a Kampong Chai Chee dialogue session. A "few" owners could not monopolise the whole market. She could have escaped the heat of argument by hinting that more measures would be taken.

Three prominent analysts were interviewed by Money Week regarding 4 EC sites to be released in H1 of 2011. It was shocking that these analysts predicted the sale prices for these future EC units to be between $900~$1,200 psf. I feel current prices for EC are already ridiculous and how could EC prices climb to set another record benchmark equivalent to current high prices of mid-range private condominiums. Who is setting and pushing this new benchmark? - The Analysts?  Developers? Or our Star Award winning Presenter of Money Week?

As I watched Money Week, the rolling sub-titles were warning about FED likely to push QE3 as unemployment rate for US has risen to a worse-than-expected 9.8 per cent last Friday. Does that means that the QE4 scenario is getting nearer?

Some newspapers reports are switching to advising Developers what to do (LOL). "Time to build up land banks", screamed TODAY on 26 Nov 2010. Even the experienced Conrad Raj joined the call, with his "Developers keep the faith, make big bets" (TODAY on Dec 3). I guessed MBT must be struggling with his weekly "Cheap and Affordable Public Housing"  column for TODAY. He had to pop out again yesterday (7 Dec) on TV News to impress all that COV has fallen again for a second month. But as a blogger wrote, 'why is there a need at all for "COV" in the first place?', when there is already an independent "valuation" report. In Singapore, "we" create "procedures" to make life difficult while making some people "richer" and the Govt is still so proud of it. I think it is wrong governance. Let me ask all a question, what do you think should be the "valuation" of the old Ming styled building shown in the video clip above? What do you think is the fair rental that the shopowner selling these simple souvenirs  must pay to keep his business as a going concern? Now do you see this wider perspective I am sharing, when it is your property; which is why I added this video of a "historical" building above? Why should there be "COV" as a "tip", just like compulsory "service charge" at a restaurant?

Review of Adverts
When I read the ST adverts the previous Saturday, some taking a full page, I noted the "selling price psf" was mostly not there. Obviously, this is attract people to ask for the "price" which Developers would probably have switched to "negotiable" mode by now.
(1) Advert 1 - NV Residences 99 Yr LH Private Condo
Photo : Part NV Residences Advert ST 27 Nov 2010
The above is part of the NV Residences. Now look at the price advertised @ "fr $763 psf". If this is not technically "invitation to treat" in "contracts", it must be a fall in price. Now you may recall this star performer selling at $830 psf since soft-launch. I wonder if this is the unit price for a "Penthouse" or "normal" unit or a 8% discount! From my own knowledge, it was standard procedure for this established Developer to offer discount at 8% when appropriate. Those who are keen perhaps may call to check and feedback to me.
(2) Advert 2 - The Canopy 99 Yr EC
Photo : Part of The Canopy Advert ST 27 Nov 2010

The above is part of The Canopy's Advert. Selling price from $530 psf.  You may recall, 240 out of 406 were sold on the first day of the launch at $650-$700 psf. So is it a 18%~24% discount or is it "invitation to treat" again? From my experience, it is unlikely to price a penthouse with such a big discount. From case 1 above, it would be about 8~10% discount for a penthouse at most. Hence, I believe there was a fall in asking price. Perhaps someone can feedback to me too.
(3) Advert 3 - City Scape FH Condo @ Farrer Park

Photo : Part of The City Scape Advert ST 27 Nov 2010

The above is part of City Scape's Advert. Asking price "From $1,235 psf". So for a FH condo located close to a MRT and shopping amenities, the asking price stays high for this small development. But if you had watched Money Week last Sunday, and do believe the analyst's prediction for the 4 EC in H1 2011, I am sure you would jump at this price. This is why I am advising you to look at the bigger picture.

As I said, these were only 3 advertisements which listed prices. The others are probably "negotiable" now. And instead of receiving SMS on launches and open houses, I had just been invited to join an "investment club" of a developer for free.

Finally, with QE3 looking more imminent and the QE4 scenario not impossible by 2012, or may be even sooner; as China is likely to raise interest rates in the coming days. This was further to the mid Oct hike. While I was in China, the Bank RR was raised. But the interest rate just have to go up again due to inflation. I had read this article "China's 'bubble about to burst'" in The Daily Telegraph, you may be keen to take a look. (See Reference #4).

Following the last round of rate hike by China, Singapore responded with "S$ appreciation" but "SINBOR" was lowered the next day. Will Singapore keep its "door wide open" again if China up its interest rate in the next few days, and with QE3 coming soon?

Nearer home, "a 2012 bust and 2015 boom" for the property market still look very likely to me. MBT announced further Marina Bay land sale will be in 2013. Developments typically take about 2.5~3 years to complete and will therefore complete by 2015 onwards. If there is no bust by 2012,  property prices will escalate to record high prices by 2015 with more supporting infrastructures like the DTL2 and Circle Line fully in place by then. Prices of residential properties will jump by another benchmark and even DBSS and EC would be out-of-reach to the average person despite the supply MBT is pushing out into the market right now. If there is a bust beyond 2015 like what James Neo suggested to me in his "comment" to my earlier posting, many would be severely trapped "without their pants" if they are overly leveraged and the price correction very drastic.

To keep my posting manageable, I am stopping here. In the next posting, I will do a quick sizing up by property class to look at certain recent land bids and property prices while I was away in China, before moving on to write about the China Property Bubble.

Next Posting - Quick Review By Property Class
(a) BTO
(b) DBSS
(c) EC - NTUC Choice Home with DPS carrot or catch?
(d) Market shift to Higher end Mid-Range and Luxury Class - D'Leedon pricing / Pine Grove En Bloc.
(e) The next Waterfront City.

Reference # 1 :-
ST Online Nov 26, 2010

Reference # 2 :-
ST Online Nov 26, 2010

Referenec # 4 :-
TODAY , Nov 30, 2010
China's 'bubble about to burst'

Hedge fund manager Mark Hart warns of imminent implosion of world's second-largest economy


FORT WORTH (TEXAS) - China is in the "late stages of an enormous credit bubble", according to American hedge fund manager Mark Hart, who has made millions predicting the crises in the United States sub-prime market and European debt.

Mr Hart, who runs Corriente Advisors from Fort Worth, Texas, has launched a fund to bet on the imminent implosion of China.

He warns of an "economic fall-out" that will be as "extraordinary as China's economic out-performance over the last decade".

Asking investors for a minimum of US$1 million ($1.32 million) each for its China Opportunity Master Fund, Corriente will use sovereign and corporate credit default swaps, interest rate and foreign exchange options to trade on its expectations of a collapse.

Mr Hart, who launched a record-performing US sub-prime fund as early as 2006 and in 2007, a fund that bets on a European debt crisis, warns investors: "Complacency among market participants regarding China is eerily similar to the complacency exhibited prior to the US sub-prime crisis and European sovereign debt crisis."

Mr Hart says "inappropriately low interest rates and an artificially suppressed exchange rate" have created dangerous bubbles in sectors including:

(a)Raw materials: Correinte says China has consumed only 65 per cent of the cement it has produced in the past five years, after exports. The country is currently producing more steel than the next seven largest producers combined - it now has 200 million tonnes of excess capacity, more that the European Union and Japan's total production so far this year.

(b)Property prices: The average price-to-rent ratio of China's eight key cities is 39.4 times - this figure was 22.8 times in America just before its housing crisis.

Corriente argues: "Lacking alternative investment options, Chinese corporations, households and government entities have invested excess liquidity in the property markets, driving home prices to unsustainable levels."

(c)Banking: As with the credit crisis in the West, the banks' exposure to the infrastructure credit bubbles is not obvious because the debt is held in Local Investment Companies (LIC) - shell entities which borrow from Chinese banks and invest in fixed assets.

Mr Hart reckons that "bad loans will equal 98 per cent of total bank equity if LIC owned, non-cashflow producing assets are recognised as non-performing".

As a final blow, Mr Hart says that the market belief that the Chinese government has "ample resources" to bail out its banks is flawed.

Corriente's analysis of the ratio of China government debt to GDP comes out at 107 per cent - five times higher than official numbers.

The hedge fund says this number uses "conservative assumptions" and the real figure could be as high as 200 per cent.

The result is that, rather than being the key engine for global growth, China is an "enormous tail-risk", Mr Hart says.

Saturday, 4 December 2010


This blog celebrates its 1st "Birthday" today (4 December 2010) as it was first conceived on 4 December 2009.

However, this blog did not spring to "hive" until August 2010, when the popular topic ""The Property Bubble and Investment Trap" was first posted. Traffic to the site was probably boosted with my frank insight opinions and unbiased comments.

The achievements of this Blog and its sustained traffic would not be possible without giving credits to Mr Tan Kin Lian's Blog, The Singapore Daily and your continual support. These blogs divert about 20% and 80% of the traffic here respectively. 80% of the visitors are Singaporeans with the balance 20% pulled from over 40 countries worldwide despite a small readership, but it is sustainable.

Little milestones of This Blog :-

(a) 4 Dec 2009 - Blog Conceived
(b) 6 Dec 2009 - First Posting
(c) 12 Feb 2010 - "How To Ensure Affordable Low Cost Housing?" article highlighted by the SG Daily site and 1st Comment posted on 14 Feb 2010.
(d) 18 Feb 2010 - Blog caught attention of a NUS Doctoral Candidate for research on blogging.*
(e) 8 July 2010 - "A Tale of Two Cities" Series started.
(f) 14 Aug 2010 - Invitation extended by Jelutung Community Club @ Canberra YEC for "Freedom of Speech" event.*
(g) 16 Aug 2010 -The Popular "The Property Bubble and Investment Trap" Series Started.
(h) 19 Aug 2010 - Site Meter Histats installed.
(i) 24 Aug 2010 - Single Day Highest Visitors Achieved - 291 (239 new visitors).
* Note : This Blog remains totally "non-aligned" despite such invitations and may not respond as such.

While the interest of readers remains in property investment, I like to re-visit the theme of this site which is to promote a civil society and eradicate the "Leviathan" mindset. I like to mark this day with a tribute to Thomas Hobbes and his Literature on Leviathan.

Thomas Hobbes (5 April 1588 – 4 December 1679) was a champion of absolutism for the sovereign but he also developed some of the fundamentals of European liberal thought: the right of the individual; the natural equality of all men; the artificial character of the political order (which led to the later distinction between civil society and the state); the view that all legitimate political power must be "representative" and based on the consent of the people; and a liberal interpretation of law which leaves people free to do whatever the law does not explicitly forbid.

The popular series on  "The Property Bubble and Investment Trap" was a strict topic with mere words and few photographs. The bash from this 1st anninersary would be a revamp to add more vivid colours and photos in this Blog. I hope visitors will like it. I also welcome your comments and contributions for postings, if they are appropriate. You may write to email address :-