September 27, 2012
In the mutual funds universe, you have index funds on one end of the spectrum, and “special situation” funds at the other. The former simply track the market index, rising and falling in tandem with the market’s peaks and troughs. The latter, on the other hand, attempt to home in on unique upside opportunities and gain alpha.
As a property investor, you should try as far as possible to emulate the latter rather than the former. I draw inspiration from strategies taken by the fund manager behind a special situations fund I once invested in. He looked for themes that were on the uptrend, then dug beyond the obvious to seek out a more targeted vehicle for harnessing that trend. For instance,when he felt that international trade was set to boom, instead of banking on shipping stocks, he bought into ports, as the latter represented a more finite resource – you can have as many ships as can be built, but ports are strictly limited by geographical and administrative factors, amongst other constraints. Similarly, when he sought a means of investing into Asia’s growing need for infrastructure, he avoided construction companies, and went for the one key player providing the cranes to the many construction companies. This all took place years ago, but I reckon there is timeless wisdom in the investment style adopted.
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September 14, 2012
Courtesy of BlueWire Studio
As you may already have read in the papers or watched on the news, Ben Bernanke, the chairman of the US Federal Reserve, just announced the initiation of further quantitative easing, dubbed QE3. The Fed will be purchasing additional mortgage-backed securities of US$40 billion a month until jobs data look better. Additionally, they are extending their low rate outlook until mid-2015. Well, that’s great and all, but how does that affect us here in Singapore?
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September 10, 2012
If I had a dollar for each time I’m asked the golden question “is it the right time to buy?”, I’d have accumulated a tidy sum by now.
Similarly, if I were blessed with such prophetic vision, I’d probably be dictating this blog post to a personal assistant whilst sipping cocktails on some idyllic island resort in the Caribbean.
The thing is, a property bubble will mean very different things to different people, so it’s not so much a question of where the property market is headed (which nobody will be able to tell you will absolute certainty), but where are YOU headed?
The Home Buyer
So much has been said about speculators who flipped properties they could ill-afford for fast profits in the heady days of 2007, but what of the other form of property market speculators that aren’t normally recognised as speculators - those that hold off their home purchases indefinitely in the hopes of a property market crash? Is it wise to hold off getting a permanent roof over ones head in the vague hopes of buying in “cheap”?
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September 7, 2012
Found this article from TODAY newspaper interesting. In the short article, it brings up a few points.
International school students have increased by 25% over the last 4 years. Picture courtesy of Singaporebaby.com
Point 1: Number of international students has increased 25% over the last 4 years.
Significance: Increase in international students = increase in expat families. Singapore remains an attractive location for companies. Additionally, the expats coming over should be relatively high-level for the companies to relocate the entire family. Since companies are unlikely to purchase real estate simply to house their expats, this should continue provide support for the rental market.
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September 2, 2012
I have hesitated to cover this topic for some time, as by my own admission, I am no industrial expert. However, given the high frequency with which clients and prospects have been coming to me waving attractive flyers and recounting killer sales spiels from commercial property agents they’ve encountered, I felt it necessary to at least highlight some key issues to consider before one takes the plunge into commercial property.
It’s always a bad idea to go into any investment sector when it seems like half the world including the taxi driver on your last ride into town is buying into it. A telling sign would be when the true industrialists are staying on the sidelines and renewing their leases, while the bulk of buyers appear to be virgin industrial investors. The industrial newbies are drawn by the promise of high rental yield, and seemingly cheaper pricing as compared to alternative real estate sectors, and of course the avoidance of additional buyer and seller stamp duties affecting the residential sector.
They appear to have completely ignored the fact that in the event of a sharp economic downturn, industrial property will be affected even more than the residential sector. According to URA reports, the median rental for multiple-use factory space (ie. B1 & B2) was about $2 psf/mth in Q2 2012. Given that there is currently over 23,000,000 square feet of factory space lying vacant, and another 49,000,000 square feet coming online over the next two years, one can only imagine what rentals will be like come 2014. (As my learned friend and mentor Mr Ku Swee Yong thoughtfully points out, the total lettable floor space at Vivocity Mall is about one million square foot.** So that’s basically more than 23 times Vivo’s total shop space going rent-less, with another 49 Vivos in the pipeline!)
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