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Monday, 30 August 2010

The Property Bubble & Investment Trap Part IV - Making Sense of Mortgage Default Statistics and Key to Invest

TODAY (Aug 24, 2010) carried a report with a beautiful caption "Fewer defaulting on mortgages". It looks encouraging on the surface but what can we make up from the accompanying statistics?. TODAY (Aug 27, 2010) soon carried another report which shifted emphasis to the 50-something. It  reads "50-somethings overtake the young ones as highest ones as highest loan defaulters" and carried comments from 2 prominent MPs and some other social researchers.

I pay keen attention to problems faced by the 50-something  due to our population demographics. As a "baby-boomer" borned in the early 1960s, I will soon "upgrade" to this group and share their blessings and plight. I also pay close attention the "baby-boomers"  not because I am one, but because we are often made the "scapegoats" of policies. In Singapore, this refer to those borned in the 1960s. In the US, it would be those who are borned a decade or more years back from our 1960, post WW II; because Singapore had developed at a much slower pace.

So you note the 3 structural problems facing the USA has got to involve the "baby-boomers", particualrly on healthcare. So President Barack Obama gave them expanded health care before expanding the economic pie to sustain it.

A personal joke about my age group (Singapore baby-boomers) is this : If you want to test policies use them as "guinea pigs", and if you can't solve the problems just treat them as the "scapegoats". The logic is simple, the birth rate is highest during this phase. This is a good reference point. So if MBT or any other MND Minister can squeeze all of them into their parent's flats or their own if they can service the mortgage debt, he could at least take a breather.

Coincidentally, the baby-boomers went through the ups and downs of the Singapore boom-and-bust cycles soon after they graduated from university. (1987 Black Monday, 1997 Asian Financial Crisis, 9/11 2001, SARs 2003, 2008 Black Monday, Sub-Prime/Mini-Bond 2009). Not coincidentally, this is also the period I had followed construction costs and property prices.

For baby-boomers who failed to get a place in university, they were blessed with higher CPF rates for joining the work force early. They got married early and would have enjoyed appreciation of their HDB flats and upgraded during the phase of rising income and high CPF, perhaps a blessing in disguise.
 
Now back to the statistics. In keeping with the maxim, "Watch what they do, not what they say", statistics are dead and misleading unless analyse to see their full implications on the market (on us!). The first report from TODAY said that "the number of mortgagors failing to meet repayments on their loans has dwindled" with the strong recovery in the property market. This is wrong or only partly true. Not all mortgaged properties are for investment (renting), there are more homeowner-occupiers. The lower mortgage default is therefore also due to lower unemployment with economic recovery, and not directly or solely due to strong recovery of the property market. I factored out rising income totally.

Singapore's mortgage market is one of the most developed in Asia. Outstanding housing loans were around SG$79.6 billion (US$57.3 billion) in 2008, or approximately 30.9% of GDP. In the first half of 2009, it must have gone up further and then fell lower after September. So when we need to apply the percentage mentioned in the reports to see the quantum, this is it as the multiplicant.

The DP Credit Bureau (DPCB). said the average default rate across all age groups fell to a low of 0.43 per cent in March this year. Generally, this is good. There is no information on the quantum of loan to co-relate with, and I could not comment more.

It also said that the percentage of those in the 21-to-29 age group defaulting on their mortgages has steadily fallen to 0.42 per cent, a decrease from 2.2 per cent two years ago. This is OK which means the young are able to get a job. The quantum of loan also tend to be smaller for this age group unless they commit on a heavy mortgage. What is worrying is the borrowing age starts from 21. I hope this is only a small percentage of those who committed to a mortgage, since a female could have just graduated and a male would have just entered university at 21. The tendency to marry late in S'pore also suggest otherwise.

It is also not surprising that the CPF Board disclosed that based on data till 2006 - that out of 153,000 graduates who tapped their parents' CPF monies to pay for tertiary education here, 5 per cent have defaulted on their loans.

The report mentioned that the 50-to-59 group has overtaken the 21- to 29-year-olds as the age bracket with the highest percentage of loans in arrears, with 0.62 per cent behind in their payments. This is worrying but not surprising to me. I feel it was due to setbacks of the revised CPF policies and also wage restructuring efforts by the GOVT during the past few crisis since 1997 (Asian Financial Crisis -13 years past). Taking the average age of 55, that would mean these people were then in their early 40s. I recalled the NTUC Labour Chief landed in hot soup for his remarks soon after the 911 Event and SARs crisis about trend of "pre-emptive lay-offs" for those reaching 40 because they were considered old and slow. There were rounds of wage and CPF cuts due to wage re-structuring, a topic I followed very closely then. This group should be about 45~50 then.

The report warned that with rising property prices and bigger mortgages, younger borrowers would be shouldering a larger debt burden that may not be sustainable in the long run. Not forgetting employment and income UNCERTAINTY now as I pointed out in my last potsing.

The report also showed that 49.7 per cent of all mortgage defaults took place between the third and the fifth year of the loan, while 31 per cent occurred after the fifth year. This is interesting.

In March 2008, the total outstanding housing loans amount to S$79.6 billion. Based on the DPCB Report, the average default rate across all age groups fell to a low of 0.43 per cent in March this year, down from the 0.89 per cent in March 2008. Hence, in 2008 the default quantum was 0.89/100 x 1 000 000 000 (US billion) = S$8.9 million. The low of 0.34 % this March would mean the default is S$3.4 million. There is no alarm here but we do not know how long the mortgage loans are stretched. It would be good to look further into such statistics.

Mr Tan Kin Lian advised that a mortgagor should not borrow more than 5 years the combined annual income of a married couple after deducting maid expenses. This is even putting aside car loans. Hence, almost half of those who defaulted are high risk (3~5 years). 31 % happened after the fifth year.

We have no information in this report on how long mortgagors had stretched their loans. Minimum loan tenure to be 5 years. The usual maximum loan repayment period is up to 25 years or 65 years of age, whichever earlier. Only in exceptional circumstances would the mortgagor be allowed to stretch to 30 years. Affordability is blinded by ability to service longer mortgage loans from 10~25 years or even beyond. Personally, I feel stretching it for more than 10 years after the full loan quantum is dispensed is already too highly leveraged. It is marginally possible but very stressful. If there is a drastic correction, banks will certainly call for a "make-up" due to fall in valuation.versus loan quantum.. It make sense for those over-stretch to build up a small cash reserve.

The story of Madam Kee mentioned in the article is quite typical for defaulting mortage. She was saved after 2 frustrating years in 2007 when her condominium went en bloc ... which is why I cautioned against paying a high price for a 99 leasehold property ... an en bloc is only possible with some pre-requisites. She was lucky that there was a mini-boom in 2006~2007. The real good investors will make a "kill" when a home-occupier is at his worst.

Two prominent MPs attested to the problems faced by the 50-somethings as quoted in TODAY paper.

"Mdm Halimah Yacob said she has seen more seniors seeking help over their mortgage payments. From a few cases a year, she started to see a few cases each month over the last two years.

They typically have lost their job and face difficulty finding another due to their low education levels and skills; even for those re-employed, they take as much as a 30- to 40-per-cent pay cut, she said.

MP Inderjit Singh (Ang Mo Kio GRC)said seniors have always been more vulnerable to losing their jobs. "The best thing we can do is to get them employment that would give them a salary enough to handle the (mortgage) payment," he said.

Financial planning, as always, is key before committing to a big loan, said the MP, who has seen residents whose incomes do not rise as significantly, as had been hoped, or decrease instead.

Financial services consultant Daniel Lee advised home owners to explore re-financing their homes to reduce the interest owed, and not to take a full loan since banks may call for a top-up if there is a property slump."

Let me do a sub-conclusion of the paragraphs above -

(a) So those borned in the 1970s and 1980s may not be so lucky in respect of what they have to pay for a property. They had not benefited from the rising income and CPF phase which most of the baby-boomers did. In particular, those borned after the 1980s are also identified as the defaulting-high-risk group in above DPCB report. Not only they start to borrow from young (21-to-29 age group) but also the quantum of loan is high while the business cycle has shortened and job security is more unpredicatable. More importantly, they should give due consideration before committing on a heavy mortgage or even defer their investment and wait for a good price.

(b) For the 50-to-59 group it is more worrying. From my analysis, it would suggest that they are those who had not gained from our economic growth but also lagged behind due to our policies. Unfortunately, age is not on their side, and they can only be save by "help" or "chance" like Madam Kee. Less fortunate ones who might be caught should explore re-financing their homes to reduce the interest owed. Or as MP Inderjit Singh said, "The best thing we can do is to get them employment that would give them a salary enough to handle the (mortgage) payment", if they are unemployed...this often comes with re-structuring a mortagge repayment loan ... which may drag beyond 20 ~30 years.

Taking responsibility of your property investment and mortgage repayment plan is a sure way to avoid a default. TODAY (Aug 27, 2010) carries another good commentary by Mr Colin Tan captioned "The key to investing in homes". I would suggest this as a must read for beginners and a refresh for those already in the property game and over-leveraged.

I borrow his caution :-

Given today's price levels, the vast majority of Singaporeans who own their homes are sitting on large paper profits. Many are paper millionaires; for them to become real millionaires, they would have no roofs over their heads.

This article clarifies and make a good distinction between the mechanics of investment of an "owner-occupier" and "a fully leveraged investor". The complication is that we are all in the same market. Most of us can only afford to be "owner-occupier" but we share the same "market" with these "fully leveraged investors", who are often speculators. I had personally seen many of them failing to take over condominium units booked and their Bank exercising foreclosure during the late 90s. This is one reason for me doubting the sustainability of having the HDB and private property market all bundled and messed up as one whole when the prices get ridiculous. I will probably amplify this in another posting but finally wish to draw your attention to Colin Tan's conclusions in this commentary which is quoted below :-

"When an owner-occupier mis-times his purchase, he spends his whole working life paying for it. When a fully-leveraged investor gets it wrong, like in the real estate board game Monopoly, he becomes a bankrupt and retires from the game."

I like to add to Colin's cautionary words, the really good "fully-leveraged investor" will make a "kill" on the "owner-occupier" when he is at at his most rough and sticky patch in life.

Note on PM N-Day Rally (Latest) : Last Thursday, I wrote in my posting about the S$54 per hour or $$10,000 a month salary issue, following THOMAS FRIEDMAN's article in the THE NEW YORK TIMES. I also wrote the following :-

"The true reality about life in Singapore is that we are constantly "caught-in-between" the ideals of what the strategic plans, policies, and whatever the GOVT says and crafted as their goals versus what and where you actually can managed to achieve. The rest of it you have to dismiss and resign as fate or even Act of God."

It was not surprising for me that the PM said in the rally that the HDB will raise the income ceiling for buying DBSS flats. Read here : HDB to raise income ceiling :-

"Prime Minister Lee Hsien Loong, who announced this at the National Day Rally on Sunday night, said the higher income ceiling will allow those caught in the $8,000 to $10,000 group to qualify for both DBSS and executive condominiums.

'I think this group is quite anxious about falling in between, as they are not eligible for HDB and they can't afford private property.. And because people are marrying a little bit later, so their incomes tend to be a little bit higher, so they worry that they will get promoted before they get settled. So we will do more to help them own their homes,' he said.

If you are keen to read about the full and true implications about this development, do follow up. With this, allow me to stop here for this posting which I had promised earlier. I will also write in the next posting on Price Comparison Between Yishun Condo Site and Tampines DBSS Site Land Bids, and the likely implications with the PM's Rally announcement. HDB may also come up with more details...I will need some time to digest.


Reference #1
TODAY Aug 24, 2010
by Ephraim Seow

SINGAPORE - With the strong recovery in the property market, the number of mortgagors failing to meet repayments on their loans has dwindled, with the percentage of defaulting borrowers halving over the last two years, according to DP Credit Bureau (DPCB).

In a report released yesterday, the bureau said the average default rate across all age groups fell to a low of 0.43 per cent in March this year, down from the 0.89 per cent in March 2008. This means that, as of March this year, only one in every 233 mortgagors were in default, compared to one in every 112 mortgagors in 2008.

DPCB general manager Lincoln Teo said this was a result of the rebound in the property market, which led to more positive sentiment and, in turn, better payment behaviour.

But the bureau also noted while the proportion of loans in default was trending lower, there were variations across different age groups.

The percentage of those in the 21-to-29 age group defaulting on their mortgages has steadily fallen to 0.42 per cent, a decrease from 2.2 per cent two years ago.

Notably, the 50-to-59 group has overtaken the 21- to 29-year-olds as the age bracket with the highest percentage of loans in arrears, with 0.62 per cent behind in their payments.

Mr Teo warned, however, that with rising property prices and bigger mortgages, younger borrowers would be shouldering a larger debt burden that may not be sustainable in the long run.

The report also showed that 49.7 per cent of all mortgage defaults took place between the third and the fifth year of the loan, while 31 per cent occurred after the fifth year.

Reference #2
TODAY Aug 27, 2010
50-somethings overtake the young ones as highest loan defaulters
by Alicia Wong

SINGAPORE - With a car loan, three schooling children and daily expenses, it was a "terrible time" some years ago when Madam G T Kee's husband lost his job.

"I was very worried. I didn't know what would happen if I couldn't pay the housing loan," she said. Keeping her job as an accountant was one of her foremost concerns, since Mdm Kee, 56, was using her Central Provident Fund to pay the loan.

She deferred her insurance premiums and borrowed against her insurance to pay "critical loans". Her husband had set up a business after being retrenched but the income was unstable.

Their troubles lasted about two years. Then, their condominium went en bloc, and she cleared the housing loan in 2007.

While fewer in her age group still face difficulties meeting mortgage payments, some observers feel that there is reason to remain concerned, now that it has been revealed that the 50-somethings have the highest percentage of loans in arrears.

They have overtaken the 21- to 29-year-olds, traditionally the group with the biggest proportion of defaults.............

Reference # 3
TODAY  Aug 27, 2010
The key to investing in homes

by Colin Tan

Most of us have heard it all before from the experts. Investing in homes is one of the safest and surest forms of investment. If you cannot re-sell the property for a good profit within a couple of years, you can always hold it for the long term because it will always appreciate.

But if everyone follows this advice, will it still work? Surely it is a recipe for disaster. If everyone is going to earn it the easy way, who will do all the hard work?


Given today's price levels, the vast majority of Singaporeans who own their homes are sitting on large paper profits. Many are paper millionaires; for them to become real millionaires, they would have no roofs over their heads.

Nevertheless, it is hard to argue against such a track record. In fact, the earlier the property was purchased, the greater the capital appreciation ..................

This brings me to my last point. When an owner-occupier mis-times his purchase, he spends his whole working life paying for it. When a fully-leveraged investor gets it wrong, like in the real estate board game Monopoly, he becomes a bankrupt and retires from the game.
Reference # 4
TODAY Aug 26, 2010
by Ng Jing Yng

SINGAPORE - After leaving university, a graduate owed $4,700 that he used from his mother's Central Provident Fund (CPF) account before he finally got in touch with the CPF Board to start monthly repayments of $200. He then had to defer payment, citing personal reasons, before he eventually repaid the loan in one lump sum.

The graduate is one example out of an average of 450 local graduates per year who fail to repay these loans for four consecutive months since the CPF Education Scheme started in 1989.

Responding to media queries, the CPF Board disclosed yesterday - based on data till 2006 - that out of 153,000 graduates who tapped their parents' CPF monies to pay for tertiary education here, 5 per cent have defaulted on their loans.......

Thursday, 26 August 2010

The Property Bubble & Investment Trap Part III - Certainty of Employment ?

Mypaper (19 August 2010) carried an interesting article in the Business section (Page A22). The article written by THOMAS FRIEDMAN was reproduced from THE NEW YORK TIMES. This article given the caption "What's certain is uncertainty" by Mypaper sent me thinking about the current UNCERTAINTY issue facing the world economy and its likely impact upon our own employment market, the "sustainability" of our own income and the property market which is at its record high. I would para-phrase part of his article (in blue italic) here to highlight my own points.

~~~Things are getting better, except where they are not. The bailouts are working, except where they are not. Things will slowly get better, unless they slowly get worse. We should know soon, unless we do not.

It is no wonder that with such “unusual uncertainty”, as Fed chief Ben Bernanke put it, businesses are reluctant to hire.

One reason it is so unusual is that we are not just trying to recover from a financial crisis triggered by crazy mortgage lending.

We are also having to deal with three huge structural problems that built up over several decades and have reached a point of criticality at the same time. ~~~

Hence, it would seem crazy and ridiculous that we here in Singapore, claimed to be the fastest Asian economy recovering from the same financial crisis triggered by aggressive sub-prime mortgage lending, would want to walk back the same beaten path ... as we now seek our version of structural solutions to these structural problems.

~~~ In America and Europe, we are going to need some big structural fixes to get back on a sustained growth path – changes that will require a level of political consensus and sacrifice that have been sorely lacking in most countries.

The first big structural problem is America's. We have just ended more than a decade of debt-fuelled growth, during which we borrowed money from China to give ourselves a tax cut and more entitlements, but did nothing to curtail spending or make long-term investments in new growth engines.

Now, our[US's] government owes more than ever and has more obligations.

America will probably need some added stimulus to kickstart employment, but any stimulus must be in growth-enabling investments that will yield more than their costs, or they will just increase debt. ~~~

If you look at America's structural problem as a country, and reflect in on our own personal financial position, isn't it identical just as if we had taken up a highly leveraged mortgage to finance our own property purchase? Do we need to curtail spending to make long-term investments, when the future returns from such "investment" look so bleak and uncertain.

My Question : If you have no job and no income, how would you "structure" your mortgage repayment plan?

Good economic data in Singapore, such as GDP, perhaps could be achieved by having 2 casinos but such economic strategy is not going to help very much in sustaining yours and my employment contracts today, though we maybe so called seasoned PMETs.

~~~Second, America's solvency inflection point is coinciding with a technological one. Thanks to Internet diffusion, the rise of cloud computing, social networking and the shift from laptops and desktops to hand-held iPads and iPhones, technology is destroying older, less-skilled jobs that paid a decent wage at a faster pace, while spinning off more new skilled jobs that pay a decent wage but require more education.

There is only one way to deal with this challenge: more innovation to stimulate new industries and jobs that can pay workers US$40 (S$54) an hour, coupled with a huge initiative to train more Americans to win these jobs over their global competitors. ~~~

The glaring issue is simply how our economy can also do just  that? - To pay S$54 per hour or about S$10,000 per month as salary to you and me. I would like to have that sort of a base salary as a bare minimum forever until I do retire, but I don't see any innovation of  a nature which can just stimulate that type of growth in our own economy on a bigger scale to afford me such comfort.

I work as a trained quantity surveyor in the construction industry for over 20 years. This is the very industry churning out those condominiums and HDB flats that each one of these other professional people - Developers (Marketing Agents), Banks, Real Estate Agents, Lawyers and also our Government - are hoping you will bite the investment "cherry", so that they could also make the same "S$10,000 per month salary" that we all want to have. But still I do not see the "innovation" forthcoming. Honestly, without any innovative ideas being adopted, I will still be able to handover to you that "beautiful" condominium you have booked with a "mortgage plan" and loan, as good as it was 10~15 years ago and at almost the same construction cost, if not cheaper; considering the still depressed world economy. That is why I said in an earlier posting, there is little change in the "construction cost" but developers are just making you pay that hike of S$200 psf of saleable area for the "land" or "land use" if it is a leasehold. Quite often, I see no "future" value adding possibility to the land, especially if it is 99-year leasehold. If so, why should you pay for this additional sum at all, especially if it is going to tie you up for the next 15~30 years in mortgage, assuming your employment could be sustained.

It is not the purpose of my posting here to predict whether a double-dipped recovery would manifest. What I do want to emphasise is as what Mypaper had put it in the caption - "What's certain is UNCERTAINTY". However, if you still believe that one's only property is "investment" which you are going to slog your entire working life to re-pay, at least; you should care about the basics an avid stock investor would want to know about the current state of the world economy.

Fear of a double-dip recession was already high after an ominous Fed warning on slow growth, flat consumer spending and decidedly mixed earnings. And that doesn't even take into account worries about a spreading European debt crisis or a slowdown in China.

~~~ But the global economy needs a healthy Europe too, and the third structural challenge is that the European Union faces what former US ambassador to Germany, Mr John Kornblum, calls its first "existential crisis".

For the first time, he noted, the EU “saw the possibility of collapse". Germany has made clear that if the euro zone is to continue, it will be on the German work ethic not the Greek one. Will its euro-partners be able to raise their games? It is uncertain.

Keeping up with Germany will not be easy. A decade ago, Germany was the “sick man of Europe”. No more.

Labour gave up wage hikes and allowed businesses to improve competitiveness and worker flexibility, while the government subsidised firms to keep skilled workers on the job in the downturn.

By contrast, America's two big parties still cling to their core religious beliefs as if nothing has changed. Republicans try to undermine the President at every turn, and offer their nostrum of tax-cuts-will-solve-everything – without ever specifying what services they will give up to pay for them.

President Barack Obama gave us expanded health care before expanding the economic pie to sustain it.

Well then, I say, get ready for a long phase of stubborn unemployment and anaemic growth.

With that said, will you still bite the cherry ? When it is a long term "investment" decision costing you a few hundred thousands or over a million dollars, with borrowing from the Bank and there is so much UNCERTAINTY,  if the BANK don't worry; you must. There is a Chinese proverb which best describe what you must do - 三思 or THINK THRICE ! 而后行 or THEN ACT.

Watch what they do, not what they say. This must be your own maxim, and that includes what our GOVT says.

You must also understand the mentality of a GOVT going for re-election, whether or not conditions might be skewed in their favour.

Are you going to trust 100% what a GOVT imminently going for re-election would say with good economic data, low unemployment figures and increasing land supply to build your EC, DBSS.... without a convincing Economic Review Committee (ERC) Report which offers you the sparks of sustaining your employment and rising your income level. Will you get that US$40 (S$54) an hour salary, with your personal upgrading and innovation you might have put into your job?

Conversely, you may want to factor in a reasonable "discount" over all such positive economic data and raw promises. This is not said to sow political discord but you just have to consider this bare minimum information about  the larger political climate which will help your "positioning" - the launching pad for new investment or reference point to review and restructure a mortgage plan.

My own innovative take is that the old "brick-and-mortar" strategy is not going to work anymore. It is not even enhancing my job and pay package in the construction industry where "bricks and mortar" are abound. I felt the same with the property or real estate investment, the old "enslaving model" to lock-in your CPF money and ensuing mechanics to prop up the private property market is not going to be sustainable. It will not work unless the ERC report is convincing enough to assure all of us that US$40 (S$54) an hour salary is available as a bare minimum and can be sustained for you, me and all others (hopefully including the wives) daring enough to bite this property "investment" cherry, notwithstanding beautiful GDP figures. It worked well in the 1980s & early 90s because rising income & CPF was a norm. But now income is stagnant and your CPF could not be restored even if your job is secure.

At the end of the day when we do retire (MM Lee said there is no need to), the issue is whether MBT or his successor can deliver (or liquidate) the real value of your property (HDB or private) he now promised is affordable but high, whichever way you may dispose off your "investment" later on. What if at the end of the day - he is no more around to tell your children "We must let them fight it out, the Government is not able to settle or fix ...". If you have no debts, your 2 kids may fight over the "estate" because you can afford only one property after being enslaved by your mortgage plan for 15~30 years. If you have debts, your 2 kids will fight over who should pay less of your remaining debts before splitting the "estate". The probability of this ultimate scenario is high with the old "enslaving model" and when all the interested parties is keenly waiting for you to commit to that additional "S$200 psf" right now. You may want to re-cap the maxim "Watch what they do, not what they say".

The present national approach still could not draw a clear line between public housing which requires real subsidy and private property investment, and it all get bundled and messed up as one whole for the average Singaporean (a layman ?). With a widened income gap, the old "brick-and-mortar" strategy needs a re-think and re-engineering, and if the policy needs to be skewed, the average Singaporean must be given the priority in terms of a roof, and not to generate more wealth for the rich developers or even the State as landowners.

SM Goh recently called on Singaporeans to spin their own Singapore Dream and live it, rather than focus on what he termed the Singapore Gripe which include high home prices. SM Goh has recasted the materialistic dream of the 5 Cs (Cash, Credit Card, Car, Condo, Country Club Membership) to a less materialistic form (career, comfort, children, considerate, charitable). While the less materialistic form is noble, these cannot not be achieved if you cannot juggle well with at least 3 of the other 5 materistic Cs. To the SM, "Career means constantly striving to be better in your chosen field", but does it really bring you more income by following his new model? Things on the ground are simply not so simple as he had argued.

The true reality about life in Singapore is that we are constantly "caught-in-between" the ideals of what the strategic plans, policies, and whatever the GOVT says and crafted as their goals versus what and where you actually can managed to achieve. The rest of it you have to dismiss and resign as fate or even Act of God.


The article attached below reflects the "reality" on the ground despite the author presenting it as as one nice  picture "Fewer defaulting on mortgages". What do you make up from these statistics? I will have to end this post here lest it get too tiring to read and follow. There is a sudden surge in traffic to my blog the last one week and I see a few more thanks. The majority read about "The Property Bubble & Investment Trap".
Mr James Neo commented :- It is good that there is a Singapore blog that warns of the danger of the illusion of housing as an investment and that liquidity is still very important ... Hope that you will continue to highlight the property problems ... Singaporeans will be in a big mess like the western people are or will be facing when they placed such a big percentage of their net-worth into one asset class ... He also shared a Canadian blog which warned of the unafforability in Canadian real estate and debunk all the myths of real estate ... [
Link]. Without deviating too much from the general objectives I have set for my blog, I will oblige James and the others who may be keen to follow up on this topic.

Coming Up Next :
(1) Statistics on Defaulting Mortgages - What it really Means?
(2) Price Comparison Between Yishun Condo Site and Tampines DBSS Site Land Bids


Reference #1 :-
TODAY Aug 24, 2010
by Ephraim Seow

SINGAPORE - With the strong recovery in the property market, the number of mortgagors failing to meet repayments on their loans has dwindled, with the percentage of defaulting borrowers halving over the last two years, according to DP Credit Bureau (DPCB).

In a report released yesterday, the bureau said the average default rate across all age groups fell to a low of 0.43 per cent in March this year, down from the 0.89 per cent in March 2008. This means that, as of March this year, only one in every 233 mortgagors were in default, compared to one in every 112 mortgagors in 2008.

DPCB general manager Lincoln Teo said this was a result of the rebound in the property market, which led to more positive sentiment and, in turn, better payment behaviour.

But the bureau also noted while the proportion of loans in default was trending lower, there were variations across different age groups.

The percentage of those in the 21-to-29 age group defaulting on their mortgages has steadily fallen to 0.42 per cent, a decrease from 2.2 per cent two years ago.

Notably, the 50-to-59 group has overtaken the 21- to 29-year-olds as the age bracket with the highest percentage of loans in arrears, with 0.62 per cent behind in their payments.

Mr Teo warned, however, that with rising property prices and bigger mortgages, younger borrowers would be shouldering a larger debt burden that may not be sustainable in the long run.

The report also showed that 49.7 per cent of all mortgage defaults took place between the third and the fifth year of the loan, while 31 per cent occurred after the fifth year.

Monday, 23 August 2010

The Property Bubble & Investment Trap Part II

Further to my posting and comments in this Blog on 16 August 2010, these few "good" pieces were published in TODAY on 20 Aug 2010. Read them all and my previous blog posting, you will understand and see the whole "helicopter" perspective that I am coming from and taking you there.

Despite the limited traffic to this blog, 2 persons had thanked me for my posting and comments.

It all depends on "who they are and what 'message' they want to send" in this maze ! The caption of the first piece caution what you have to do most aptly : Watch what they do, not what they say.

Where are you in the PROPERTY MAZE? Understand THEIR strategy, and see the RISKS and TRAPS before you pursue YOUR OWN strategy.

Read these pieces taken from TODAY.

(a) Watch what they do, not what they say
Link : http://www.todayonline.com/Commentary/EDC100820-0000039/Watch-what-they-do,-not-what-they-say

(b) Pushing price boundaries in private residential market
Link  :  http://www.todayonline.com/Commentary/EDC100820-0000034/Pushing-price-boundaries-in-private-residential-market

(c) New kid on the block is good news
Link   :   http://www.todayonline.com/Commentary/EDC100820-0000032/New-kid-on-the-block-is-good-news

(d) Twin Peaks of luxury
Link   :  http://www.todayonline.com/Business/Property/EDC100820-0000069/Twin-Peaks-of-luxury

(e) Sibor or SOR ? Now you can have them both
Link  :   http://www.todayonline.com/Business/EDC100820-0000062/Sibor-or-SOR?-Now-you-can-have-them-both
 

Who are those who want you to "bite" this cherry? - Developers, Banks, Real Estate Agents, Lawyers and also our Government.

Does regulating supply through the land sale programme as announced by MBT helps to stabilise price and helps to cool down the property market ? - Not when the price of EC is going to be priced at $650 to $750 psf. Not when DBSS flats are going to be priced at $550 ~ 580 psf.

Why would MBT not say this is unhealthy? He needs all these statistics to prove his HDB BTO flats are still "affordable" and not to make it any cheaper for all . If not, he needs to give more real subsidy to those who could not afford HDB BTO flats. Where will the Govt find the money? From those who buy EC or DBSS flats? But the same piece of enslaving policy is "killing" those who buys from the resale market with ever rising COV.

For now, MBT recognised that the concern is over the Cash-Over-Valuation (COV) quantum. The latest median figure is $30,000. But he stressed this had to be decided by the market and the GOVT will stay on the sidelines.

"It's in the interest of buyers to have low COVs, but it's in the interest of sellers who own the flats to have high COVs."

"So, between these two groups, we must let them fight it out. The Government is not able to settle or fix COVs to say that it should be this or this figure," he said.

"The Government prefers not to interfere. But we can interfere in the supply. This is something we can control."

But at what rippling impact on the new BTO and HDB resale markets? Chasing and propping up near to $200 psf through DBSS & EC pricing?

Read also :- The Property Bubble & Investment Trap

Reference :-
TODAY
Aug 18, 2010
An assurance to private home buyers

SINGAPORE - The Government will inject an even larger supply of private housing in its land sales programme for the first half of next year "if demand continues to be strong" - surpassing the record supply pushed out in the second half of this year.

National Development Minister Mah Bow Tan gave this assurance to prospective private home buyers in a written reply to a parliamentary question by Nominated MP Calvin Cheng.

Mr Mah's reply was released on Monday evening as the latest data from the Urban Redevelopment Authority showed a surge last month in sales of new private homes, with 1,544 units sold - almost twice the 847 units transacted in June.

For the second half of this year, the Government is making available sites that can yield about 13,900 private housing units, of which about 8,100 units will be from sites on the Confirmed List. Mr Mah pointed out that this was the largest supply the Government has offered since the land sales programme started in 1991.

As at the second quarter of this year, there were about 61,800 uncompleted private residential units in the pipeline. Of these, 32,600 units have not been sold yet.

Ngee Ann Polytechnic real estate lecturer Nicholas Mak noted that the oncoming supply "will slow down the rate of growth of private home prices". "But that will only also happen in some time next year. Based on recent statistics, demand for mass market homes is still very high," said Mr Mak.

Wednesday, 18 August 2010

Hidden Dividend Policy

It was reported that Genting Singapore is bound by a bank loan agreement not to dispense dividends until it has fully repaid its loans.

This is strange. Why should the dividend policy of a listed company to pay dividends to "third party" equity holders be bound by the terms and conditions of the loan agreement between the Banks and the listed company as Borrower (Genting Singapore).

Has Genting Singapore declare this as a hidden "dividend policy" to shareholders and the SES?

Reference :-
Straits Times Online
Aug 18, 2010

By Tessa Wong

GENTING Singapore shareholders will not be receiving dividends this year, despite the company's stellar performance in the second quarter.

This is because Genting Singapore is bound by a bank loan agreement not to dispense dividends until it has fully repaid its loans.

In 2008, Genting International, the previous incarnation of Genting Singapore, raised $4 billion in loans from five banks to build the Sentosa integrated resort. The banks are DBS, OCBC, HSBC, Royal Bank of Scotland and Sumitomo Mitsui Banking Corp.

The issue of dividends was raised at an extraordinary general meeting held on Wednesday at Resorts World Sentosa (RWS), attended by 1,100 shareholders. Some were disgruntled at the news, given the latest company results.

A year ago, Genting Singapore was in the red with $51 million in losses. But the latest quarter saw it back in the black with $503.5 million in pre-tax profits, largely thanks to RWS' performance.

The shareholders were invited to RWS to vote on a proposed divestment of Genting Singapore's 46 casinos in the United Kingdom to another subsidiary under the Genting Malaysia Berhad group. The majority voted in favour of the divestment. It is expected to net Genting Singapore 340 million pounds (S$716.8 million).

Monday, 16 August 2010

Why photographer was handcuffed ?

A "cow dung" has to be described as "cow dung" no matter how and where a bull or cow shitted it.

The explanation given by this million-dollar Minister is ridiculous and certainly beyond what the normal man could understand and comprehend. Do I have to be a Million-Dollar Man in order to understand?

Will a photographer holding a camera be able to take aim and shoot like a M-16 rifle?

If the photographer had stopped his car illegally on a road during the flood, how would this act be causing "clear danger" to the photographer himself and other motorists ? I am certainly and still unclear about this.

He was uncuffed after his identity was verified. So the media photographer was excused after showing his pass? If a civilian had been caught taking those photographs, would he be sent to jail for endangering himself and others? Then why the "double standard"? Are we in a "WAR ZONE"?

Even with his reply, can one truly understands what were the "dangers" caused?

Come on, be more "productive" than this. Good try though, in my Army Days when I was doing my NS, this would have been "classified" as "throwing smoke".


Reference :-
Straits Time Online
Aug 16, 2010
 
POLICE handcuffed a photographer taking flood pictures along Bukit Timah Road last month because public safety was involved, said Law Minister and Second Minister for Home Affairs in Parliament on Monday.

Mr K. Shanmugam, replying to a question from Marine Parade GRC MP Ong Seh Hong, said the police generally do not interfere with the media or members of the public taking photographs of floods 'so long as it does not obstruct police operations or does not pose a danger to others or themselves.'

Dr Ong had asked the minister on guidelines for the use of handcuffs following an incident which concerned Lianhe Wanbao chief photographer Shafie Goh in Bukit Timah, near Maplewoods Condominium, on July16.

In his reply, Mr Shanmugam said it was raining heavily that morning and the rain had caused a road divider, which had been excavated, to be flooded. Ordinarily, the construction work would have been surrounded by safety barriers, but the safety barriers had been washed away due to the flood. Motorists driving along the road were unable to see the depression, leading three cars to land in the depression.

The photographer had stopped his car illegally along the road at about 7.40am to take the photographs, causing an obstruction to other motorists, he told the House.

'There was clear danger not only to the photographer but to other motorists as well,' said Mr Shamugam.

When the photographer ignored a second advice from police against taking pictures on the flooded centre divider, he was handcuffed. He was uncuffed after his identity was verified.

The minister also explained that police officers are trained to assess the situation when exercising discretion in using handcuffs. Handcuffs may be used if a suspect is violent or if there is a flight risk, or if a serious offence had been committed.

'In this case, although it was not intended to be an arrest, the Police Officer assessed that it was necessary to use handcuffs to restrain the photographer and stop him from continuing an action which the officer felt posed a danger to others and the photographer himself,' he said.

He added that both the police and the media have important roles to play.

While the police respect and understand the role the media has to play, the police have a duty to ensure public safety and security.

'We cannot allow our officers on the ground when performing their duty to ensure public safety and security to have their directions ignored,' he said.

However, Mr Shanmugam said in hindsight, both parties could have handled the situation better.

The Property Bubble & Investment Trap

Mr Tan Kin Lian wrote this piece "Burst of property bubble" in his Blog; and expressed that "Property prices are too high in Singapore" and "The sharp increase in recent years is due to temporary factors, such as immigration and low interest rate. The danger is that property prices (and rental rates) are out of line with income levels, and cannot be sustained."..."A warning sign - there is a report that no bids were received for an executive condominium project in Jurong".

I have worked in the construction industry for more than 20 years as a quantity surveyor. I have done major  hotel upgrading, mega-scaled projects and a few private condominiums (condo) in Singapore and I agree totally with Mr Tan that property prices here are too high and not sustainable. Without any prejudice, I feel obliged to highlight this "investment trap" in my blog.

It was reported in TODAY that our GOVT is pushing out more EC sites. 4 sites to be launched in next 3 to 6 months; about 2600 units. The last EC launch was in 2005 and completed 2008.

Based on current land prices, the EC will be priced at $650 to $750 psf. The median price for private suburban condo is about $824 psf (at least 10~25% higher) assuming the historical 30 per cent gap between private suburban homes and new ECs. Slightly upmarket locations are selling at $850~950 psf for mid range condo, especially "Freehold" ones. Even properties in the West Coast area have caught up with this price craze.

How high are current prices as compared to the highs of 1996 "peak" ? After the 1996's peak, the GOVT stepped in with control mesaures in 1997 to curb the "hot" property market. However, it seems that the GOVT is joining the fray of speculation this time, despite the current "highs" by pushing out more ECs at current land prices. Such high prices also have a rippling price effect on the HDB re-sale market and new launches of DBSS and BTO HDB flats.

In 1996, the price of mid range private suburban condo was about $700~750 psf (freehold). Hence, a hike of at least 15~18%. EC was priced about $480 psf then or even lower. Lower range private suburban condo was going for $580~650 psf, often due to a shorter lease, say 99 or 999 years or less popular locations.

Imagine EC is now about 35% more expensive. This is ridiculuosly high !

SIM Lian Land had put in what is likely to be a record bid for DBSS plot at Tampines this month, amid buoyant prices in the Housing Board market. At $261 psf ppr, a developer will have to sell three-room flats for $380,000 to $400,000, and four-room flats for $530,000 to $550,000, as projected by a Ngee Ann Polytechnic real estate lecturer. He expected five-room units would have to be pitched at between $640,000 and $670,000.

This works out to at least $550 ~ 580 psf. With DBSS flats priced at such high costs, is it ridiculous? This was the lower range private suburban condo price in area such as Hillview during the 1996 market peak for 999 years leasehold condo.
The real secret about the construction costs is that other than "steel" and "aluminium", other costs are relatively stable. Condos use less "aluminium" than "Commercial" or "Institutional" buildings. So, the critical factor is "steel" price.

But with the global slowdown, steel price has consolidated a lot just like stocks. Euro$ is cheap now and you get marble and good quality tiles (from the PIGS EC countries) quite cheaply. Bangla and Indian workers ... still cheap ... because they are not building condo back home. Chinese workers are slightly more expensive than before but still managable.
The problem with current high property prices then lies with the private Developers and GOVT as landowners. Both are aiming for an appreciation in price benchmark of about $200 psf in their launches.

Put simply, you are getting a "lesser value" in property than the peak of 1996 prices, in terms of number of years of leases. It is one grade down...meaning at 1996 freehold price .. you now get 99 or 999 leasehold. If it is 999 leasehold, it is still not that bad for future investement. You also get EC now at 1996 99 or 999 leasehold mid range condo prices. You also get HDB DBSS now at 1996 EC or 99 private low range condo prices.

DBSS HDB flats goes as high as $580 psf. In 1996, you could buy suburban 999 years leasehold / freehold condo at that price. Ridiculous, Right? !!! Due to HDB tendering out land sites to China Design & Build  contractors cum developers, local firms also join in with high bids for lands ... TRAP for Investment, I call it.

Why would MBT thinks this is healthy? He needs these statistics to prove his HDB BTO flats are still "affordable". If not, he needs to give more real subsidy.

The next "investment trap" I like to share is the length of lease.

Developers have come out with 103 years leasehold titles for condos. This sort of take into account the few years of development time, so that when you actually buy and takeover, it is close to 99 years leasehold.

The developers are very smart. They control this "land bank" for their "family assets". If freehold titled, an old condo has high "en-bloc value" in future. So developers carved out shorter leases and supposing sell the units at lower affordable prices ... but actually buying such properties means losing future "en-bloc" value although you are buying at prices equivalent to 1996 high prices of freehold condo and / or even at much better locations.

Hence, in Katong area, 103 years leasehold condo are priced at over $1,200 psf. You buy now at higher benchmarked price of additional $200 psf but lose the future "en-bloc" value. After the 103 years, land and property titles revert back to the "developers" and their "family" enjoys the future values.

Another price trap (also investment trap) is "bay window area" ... which is counted as "saleable area" ... but actually does not constitute as actual GFA of your property ... suddenly at time of handing over of new condo apartment, but how come you find that all the bedrooms and even living area become so small ? Even smaller than that of your old HDB flat actual GFA which has no bay windows. But you pay each sf of the bay window at say $1,200 psf as per above example. The problem is when you view the show unit, you could have been misled by the Inetrior Designer's spatial gimmick.

Imagine, you can't even put a Queen-sized bed with a study table into the bedroom. Forget about side lockers and very often the TV antenna point is not at the right place.

Say you have 2 bedrooms with bay windows and the living room also has a bay window, you will lose about 12~20 sq metres or about 125 ~ 210 sf. i.e. almost one bedroom in total or about $250,000 based on 1,200 psf saleable area.

Hence, you find you lose "1 bedroom" in space but pay the developer as if it is one bedroom equivalent to your old HDB flat.

So for EC ... it is easily 35% + 10% more expensive than before, if you fall into the "bay window trap".

Your property agent is not going to tell you this if it is a sub-sale and the 1st buyer is a speculator in the private property market. He gets his fixed percentage of sale price. Your lawyer is most slightly also not with you when you place and sign the booking option. And he gets his fixed fees based on % of sale price. For DBSS and EC, you get caught in the lock-in period and have to bear the cost of investment (Interest) over this period.

Be wary of the EC to be launched soon and also HDB DBSS flats.

I feel these would be priced to catch up with other categories of private condo already launched or to be launched which are inflating the property bubble...Govt announced good GDP results ... don't be tricked into it.

My reservation is that you will be buying a lower category of condos and flats but at the high price of 1996 for a higher better quality (Finishes / Location) class of properties ... the Govt curb prices in 1997 ... but now due to low interest rates, and with the Govt joining the speculation fray, I am skeptical and must advise "CAUTIOUS" in your move.

There is now a hike of $200 psf for all categories from 1996 high prices.

The "investment" trap is also the "employment" trap.

With a high mortgage to service, the enslaving model means you have also fallen into the "employment trap" and uncertainty of the volatile business envirnment.

Employers will demand that you work at lower salaries. When times are bad, they will asked the Govt to cut CPF. If you rely on CPF to service a substantial part of your mortgage, you will be hit hard. Remember the "faster" and "cheaper" slogan? The worst culprits are the MNCs and some GLC companies.

In the worst case, you may be retrenched, and even without "retrenchment benefits". The MOM is still silent on statutory protections for those earning above $4,500 per month, particularly PMETs.

Based on salary of $4,500 per month, what category of property can you try to invest? Say your wife earns the same $4,500 per month. Mr Tan recommends : 5 years x $4,500 x 12 x 2 = $540,000 property ... probably a HDB 5 Rm flat. On the conservative, even the DBSS is out, and forget about EC. [ Note : This is not considering "maid" and "car" expenses ]

Based on current land prices, the EC will be priced at about $650 to $750 psf. The median price for private suburban condo is about $824 psf.

The smallest of EC say about 1000 sf (95m2) will cost $650,000 ~ 750,000.

So be wary of the EC to be launched soon and also HDB DBSS flats. It is simple Maths...no big theory.

Do not "over-leverage" yourself, it is stressful and future returns may not justify it ! There may not even be returns as the cost of investment may eat away the small capital gains just because it is a 99 leasehold. Those who invested in the 1996 "High" and managed to sustain the mortgage perhaps had only "break-even" or made marginal gains if they had invested in 999 or freehold properties.

Do not be carried away by these press reports and news snipplets on TV about soft launches selling like hot cakes. I bet the beautiful lady interviewed by the media , who said she bought a few units - one for her own stay and the rest for investment, must be a staff from the Developer or Marketing Agent's firm. 

Who are those who want you to "bite" this cherry? - Developers, Banks, Real Estate Agents, Lawyers and also our Government. Who will have to bear and see through the mortgage and the "enslaving" model - You and Your Family, especially for those borned without a "Silver Spoon".


Reference :-
TODAY
Aug 13, 2010
Condo comeback

Government to ramp up flat supply for middle-income home buyers
by Jo-ann Huang

SINGAPORE - The executive condominium (EC) market looks set to stir when new projects are launched over the next three to six months. According to property consultancy CB Richard Ellis, ECs are making a comeback after a hiatus of five years as the Government steps in to ramp up flat supply for middle-income home buyers.

Four new EC projects in Compassvale Bow, Punggol Field, Buangkok and Yishun - yielding some 1,400 units - will be launched in the next three to six months.

These sites were awarded in the first half of this year. The Government will also be selling another five EC sites later in the year - at Jurong West, Punggol Drive, Pasir Ris, Tampines and Segar Road - which are expected to yield about another 2,600 units.

The last EC launched was La Casa in Woodlands in 2005, which was completed in early 2008.

CBRE said the comparatively cheaper pricing of ECs is expected to attract a large number of HDB upgraders.

Executive director of CBRE Research Li Hiaw Ho said assuming the historical 30 per cent gap between private suburban homes and new ECs, the median prices of new ECs are likely to stay around $650 to $750 per square foot (psf).

The median price for private suburban homes as of the second quarter stood at $824 psf.

Ms Tay Huey Ying, director for Research and Advisory at Colliers International, expects prices for ECs to rise moderately. "It will still fall below private units in terms of absolute price per square foot simply because there are conditions attached," she said.

For example, foreigners are not allowed to buy ECs. On top of that, those whose monthly household income exceed $10,000 cannot buy ECs.

Mr Li added that the prices of ECs will match those of comparable private apartments in the same locations after five years, as they will be treated as private properties.

Currently, the non-landed private home market is attracting a lower share of HDB upgraders compared to last year with only 36.1 per cent of them making new home purchases in the second quarter.

At its peak in the first quarter last year, the proportion of HDB upgraders reached 63.6 per cent but it has steadily dipped below the 10-year average of 44 per cent.

Mr Li said with the steep rise in prices of new private homes, more HDB upgraders face a bigger burden of servicing huge mortgage loans.

"The lowering of the housing loan limit from 90 per cent to 80 per cent since March this year also meant that HDB home buyers need to pay more cash upfront," added Mr Li. "Despite this, HDB upgraders can find a less-costly alternative with the upcoming ECs."


No bids received for EC site at Jurong West.

Despite a buzz generated by a resurgence of the executive condominiums (EC) in the coming months, the Housing and Development Board (HDB) has received no bids at the close of the tender for an EC site at Jurong West Street 42 yesterday.

The land parcel has a land area of over 16,800 square metres and a maximum gross floor area of about 50,445 square metres.

It has a lease period of 99 years ...

Tuesday, 10 August 2010

The Most Ironic Awards - Lee Kuan Yew Water Prize & National Day 2010 (The Distinguished Service Order)

The PUB Chairman, Mr Tan Gee Paw, tops the list of National Day Awards Recipients this year when he was conferred this year's highest National Day Award honour - The Distinguished Service Order.

The Singapore International Water Week this year awarded the Lee Kuan Yew Water Prize 2010 to the Yellow River Conservancy Commission (YRCC). This prestigious award recognizes outstanding contributions towards solving global water problems by either applying technologies or implementing policies and programmers which benefit humanity. With its success in transforming China's second-longest river, YRCC outshone 49 other nominees to become the third recipient of the Lee Kuan Yew Water Prize.

Commenting on the achievements of YRCC, Mr. Tan Gee Paw, Chairman of the Lee Kuan Yew Water Prize Nominating Committee said: "The Lee Kuan Yew Water Prize celebrates the outstanding achievements of YRCC in integrated river basin management that is unrivalled in scale. In rejuvenating the Yellow River and managing floods, YRCC has brought about widespread and sustainable social, economic and environmental benefits to over one hundred million people. We look forward to YRCC sharing its innovative, holistic and sustainable river basin management practices at the Water Week, and inspiring greater impetus in establishing sustainable water solutions for increasingly urbanized communities worldwide."

The citation of award for the Lee Kuan Yew Water Prize to YRCC by Mr. Tan Gee Paw said that "In rejuvenating the Yellow River and managing floods, YRCC has brought about widespread and sustainable social, economic and environmental benefits to over one hundred million people..." and we "look forward to YRCC sharing its innovative, holistic and sustainable river basin management practices" at the Singapore International Water Week 2010 from June 28 to July 2, 2010. Minister Mentor Lee Kuan Yew presented the award during the Water week and YRCC also delivered the acclaimed Singapore Water Lecture to 300 government, business and academic leaders at the Water Leaders Summit, where the Commission shared its experience and success factors in returning life and vitality to the Yellow River.

The "WATER WORLD" reported ~ ~ ~ The winning factors include its river management approach "Maintaining the Healthy Life of the Yellow River," a systemic and holistic approach to the management, allocation and regulation of water supply. With 9 provinces and regions along the 5,464-kilometres long river, YRCC adopts a consultative approach to secure the support of the provincial governments and the people to equitably allocate water for domestic, industrial and agricultural uses, thus preventing abuse and over-exploitation of water resources. YRCC has also implemented an integrated operation of reservoirs along 3,000 kilometers of the river, to regulate river flow and boost storage capacity. Remote sensing and automation is employed to collect real-time river system information to monitor and control the reservoirs and dams. Through the coordinated operation of Xiaolangdi Dam and other reservoirs, YRCC has carried out 9 flushing operations since 2002 to regulate the flow of water and sediments in the lower reaches of the Yellow River. This has deepened the riverbed by an average of 1.5 meters for some 900 kilometers downstream of the river and more than doubled the river's maximum flow capacity from 1,800 m³/s to 3,880 m³/s to substantially improve flood safety . ~~~

Ironically the Great Orchard Flood happened on 16 June 2010, just before the Singapore International Water Week 2010 from June 28 to July 2. On 20 July 2010, MM Lee said " No amount of engineering can prevent flooding" after touring the waterfront development at the Kallang and Kolam Ayer areas. "Singaporeans expect everything to be perfect, which we try to do. But some things are beyond (that) - it's an act of God, unless you want to lose half the roads and have canals," Mr Lee said.



What have we learnt from the highly acclaimed Singapore Water Lecture by the Yellow River Conservancy Commission (YRCC) in "managing floods" as the host country giving out the prestigious Lee Kuan Yew Water Prize award ? - That it is "an act of GOD" and no amount "No amount of engineering can prevent flooding" ?

Lu Xun, one of the great thinkers of the democratic May 4th Movement in the first decades of the 20th century, made a famous attack on the then ruling elite for issuing telegrams that blamed God for the woes befalling China. Lu quipped, "God replied in dismay: 'But I wasn't even there!'”

The winner of the Lee Kuan Yew Water Prize receives a cash prize of SGD300,000, an award certificate and a gold medallion. The award is solely sponsored by the Singapore Millennium Foundation, a philanthropic body supported by Temasek Holdings that has pledged SGD1.5 million over five years since 2008.

These AWARDS must be the most ironical ones given out, with the Lee Kuan Yew Water Prize named in honour of our MM who believes that "No amount of engineering can prevent flooding" and all just when our own Orchard Road had just flooded due to "2 bursts of heavy downpour 30 minutes apart - 100mm of rainfall within 2 hours and clogged drains were the causes as explained by the PUB. No wonder Mr Tan Gee Paw felt "deeply honoured" to receive this prestigious National Day Award - The Distinguished Service Order.


Lee Kuan Yew Water Prize 2010


Straits Times Online
Aug 9, 2010

By Maria Almenoar

2010 National Day Award Recipients

BACK in the 1960s, a young civil engineer in the Environment Ministry by the name of Mr Tan Gee Paw was transferred to the ministry's drainage department.

That was the day he saw his dreams of building housing estates and bridges go up in smoke.

To him, he was being sent to look after longkangs, the Malay word for drains, as he once wryly said.

But something about drains got to him within three years.

He stayed.

Those three years have stretched into 40 in the environmental and water engineering field here, the last nine of which he spent as chairman of national water agency PUB.

For helping to solve the islandwide flooding problems in the 1970s with a drainage system, for pioneering urban catchment areas, for his role in developing Newater and for his dedication to the field, he is being given the Distinguished Service Order in this year's honour roll of National Day Award recipients.

It is the highest award being given out this year to 3,195 individuals for outstanding contributions to the country, in public service or in community work.

Mr Tan, replying to reporters' questions through e-mail, paid tribute to the tireless work of his staff at PUB.

'I am indeed deeply honoured to receive this prestigious award, and my first thoughts are of the dedicated staff of PUB, who have worked professionally and quietly over the past decades.'

This award is only his latest: He was among 10 people given gold medals in 1987 for meeting then Prime Minister Lee Kuan Yew's challenge to clean up the Singapore River.

In 2007, under his watch, PUB bagged the prestigious Stockholm Industry Water Award, the water industry's equivalent of the Nobel Prize; that year, he also won the President's Award for the Environment.

Mr Tan Gee Paw, chairman of PUB, with the national water agency's mascot Water Wally. The bright blue water droplet was introduced in 2005 to promote water conservation. Mr Tan has been conferred this year's highest National Day Award honour - the Distinguished Service Order - for his contributions to the country. -- ST PHOTO: MUGILAN RAJASEGERAN


Reference # 2 :-
Abracted From :
WATERWORLD 

Lee Kuan Yew Water Prize awarded to Yellow River Conservancy Commission

SINGAPORE, March 3, 2010 -- The Singapore International Water Week today announced that the Yellow River Conservancy Commission (YRCC) has been awarded the Lee Kuan Yew Water Prize 2010, a prestigious award that recognizes outstanding contributions towards solving global water problems by either applying technologies or implementing policies and programmers which benefit humanity. With its success in transforming China's second-longest river, YRCC outshone 49 other nominees to become the third recipient of the Lee Kuan Yew Water Prize.

The Lee Kuan Yew Water Prize Council recognized Arc's remarkable progress in overcoming natural and man-made challenges through innovative and sustainable policies and solutions that have enabled the Yellow River to flow unabated over the last 10 years. YRCC's integrated water allocation programmed balances water availability with social, economic and ecological developments. The improved, reliable supply of water brought about by YRCC's efforts have benefitted and enhanced the quality of life for over one hundred million people both in the basin and in regions served by the river. Large areas of wetlands and biodiversity in Yellow River Delta have also been restored over the years, returning life and vitality to the river.

By regulating water and sediment flow in a river that has the highest average annual sediment transporting volume and concentration in the world, YRCC has been able to significantly reduce the risk of devastating floods that the Yellow River was previously associated with - protecting the 90 million people living in the flood-prone areas downstream of the river from loss of lives and damage to livelihoods and property.

Commenting on the achievements of YRCC, Mr. Tan Gee Paw, Chairman of the Lee Kuan Yew Water Prize Nominating Committee said: "The Lee Kuan Yew Water Prize celebrates the outstanding achievements of YRCC in integrated river basin management that is unrivalled in scale. In rejuvenating the Yellow River and managing floods, YRCC has brought about widespread and sustainable social, economic and environmental benefits to over one hundred million people. We look forward to YRCC sharing its innovative, holistic and sustainable river basin management practices at the Water Week, and inspiring greater impetus in establishing sustainable water solutions for increasingly urbanized communities worldwide."

YRCC will receive the award from Singapore's first Prime Minister and present Minister Mentor Lee Kuan Yew at Singapore International Water Week 2010 which will be held from June 28 to July 2, 2010. YRCC will also deliver the acclaimed Singapore Water Lecture to 300 government, business and academic leaders at the Water Leaders Summit, where the Commission will share its experience and success factors in returning life and vitality to the Yellow River.....