Saturday, August 2, 2008

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Impact of Integrated Resorts on Private Property Price: IR Believers vs IR Skeptics

It's interesting to see how the IRs (Integrated Resorts) have got all the betting going in the Singapore property market even before its casinos take shape.

The following is an forum exchange from the Singapore Property Forum between IR Believers and IR Skeptics:

That's the story the property developers, agents and anyone with a vested interest are painting. But behind the double talk, you will find that developers are no longer bidding up prices at government land auctions, nor soaking up en-bloc land. Actions, not words, show us what they really believe about the prospects of property prices in Singapore. Same thing for retail and instituitional investors. Conspicuously absent are last year's exhuberance. They are no longer buying up blocks of condos wholesale, at least not without hefty discounts. Far too much 'future' has already been priced into current prices. You stand alone in believing that NOW is a good time to buy property. Buyers are waiting for the correction.

Property developers are not bidding while govt is not selling, apparently because now is not the right time to do so with negative sentiments in the property market still in the balance. Once the sub-prime crisis subsides and US economic growth starts to recover next year, you will see they coming back to the market again. Developers are holding their enbloc lands and other lands they owned for future developments. With big pockets, they have the capability to postpone the launch and construction of the condos. This in turn will ensure limited supply coming into the market. To sell 10,000 units in a few months during good times is a 'piece of cake'. As such, developers prefer to wait for better times ahead. Government on the other hand, is not going to flood the market with land banks at cheap prices. Apparently, the Singapore govt is doing what it takes to protect the property market from crashing. Most Singaporeans have a home, and property is one of their main asset. Included are a massive number of foreigners who also have placed their strong confidence in Singapore's property market by investing, and the government certainly will not want to see them losing trust in the government and its economy. As such, a stable and growing property market is the way to go. Beneficial for everyone. Unless of course there are speculators who have dumped their properties last year still waiting on the sidelines hoping to scoop whatever opportunities left behind. The government is bent on controlling speculation as such, a property crash is unlikely to happen. Neither a rapid growth is accepted except central regions where the govt gives the private sector their own hand to decide the market. As such, if you are a smart investor, you would consider property invt in Singapore as the best bet during this time of uncertainties, cause property gives a 100% certainty of profit when the IR/Sports Hub ready and when Singapore transform itself to become a global city. No other investment will !

Lots of tough talk. But actions speak louder than words. Where they put their money, shows what they believe... 1. Developers have suddenly stopped buying - a reflection that future sale prices will not be high enough to justify buying land at the same prices that they have been paying for in 2006-2007. 2. Developers would have you believe they can ride out lean times without cutting prices, and witholding sales to prop prices. But no one believe they arn't bleeding. Shareholders have punished their shares by >30%. Nonetheless, a flood of supply is coming from projects already launched. Remember last year was something of a record for sales volumes. 3. Investors arn't buying. So consistently, no one believes buying now is a good idea. No one, that is, except you. Government gave no assurance that they are going to prop up the property market. MM Lee already warned you not to buy too expensive because he will not bail you out of your indiscretions when property cycle goes down. High property prices do not benefit Singaporeans on the whole.: -Investors who buy Singapore cheap then sell back to Singaporeans high, taking net money out of the country are no benefit to us. -Rising property prices now may seem to create wealth for homeowners. But for the country, its bad. Nothing comes from nothing. Wealth 'created' for current homeowners is a debt eventually paid for by the next generation. Country is no wealthier because there is no growth in productivity. (just shifting debt in time). As for the large majority of homeowners, they bought their flats or condos or houses cheap. So if price doesn't rise, no disservice. And if it falls, majority will not be in negative equity. But for those who do wind up in negative equity, well, that's what MM Lee was warning against, 'don't assume it will keep rising'. - Rising prices raise cost of living for those foreign workers we need so much, and is counter to economic development of the country. No, its safe to say the government is biased downwards. It wants to PREVENT price rises, whilst is neutral towards price falls.

A lot of IR believers to fight. Buyers, dont waste time in this forum. Better focus on some other investments. IR believers won't drop price sell to you one. They are strong IR believers. Unless you can wash thier brain or make yourself become one of them, IR believer. So simple, no need to waste time argue here.

IR believers or IR salesmen? Real IR believers would have gone to buy more properties and would be shouting down the prices for themelves to get good bargains. Frankly, these salesmen are really good and may very well succeed. But those ppl who got sold into this sales gimmicks will be in real trouble because stripping off all those sales talk about IR, blah... there's only one thing that will face you ... a huge mortgage to pay for a property that you can hardly rent out. Logical buyers should think: why do I spend so much money just to lose money ? Btw genuine buyers should remind themselves that sales has declined drastically this year which shows that there aren't many IR believers left.

May also want to read:
History of Singapore Property 1960 to 2008
Buy or Not Buy: How to decide amid mixed market signals
When to Buy, When Not to by
Property Price Index Graph Plotter & Online Property Valuation
Your Property Investment Determines Your Financial Success in Your Life
HDB Resales: West Sees Highest Price Increase


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The blogger here has been affectionately named by close allies as "Smart Buyer" but really, he's not smart. Smart Buyer just believes that being prudent is smart. That's the essence of the message of this blog and Smart Buyer hopes it'll benefit other property buyers.

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