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Singapore: A good long term investment?

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FOREST CITY / Forest Island, Malaysia

From an AsiaXpat thread about Forest Island, in Malaysia, near Singapore

> https://hongkong.asiaxpat.com/forums/hong-kong-property-finance/threads/4e5b219c-1d73-4fec-997d-4134945a0c08/dream+home+in+malaysia+-+forest+city/

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Singapore is still in the down-phase of the 18 year cycle.

I cannot see much enthusiasm in Forest City, until the cycle is Zooming Up again

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(from the article):
"Samuel Tan, executive director at KGV International Property Consultants, said approvals for all new serviced apartments in Johor have been frozen since 2014 and existing projects were introducing more affordable properties at around 600,000 ringgit instead of 800,000 to 1 million ringgit.

“Given the oversupply, we don’t foresee any recovery until 2019 for high-rise projects,” Tan said. He said China’s capital controls were only significant to the Chinese-owned projects.

The glut of properties being built in Johor has also affected local developers, Petaling Jaya-based Tropicana Corp. is giving a 25 percent rebate on the list price of homes they are marketing an interest-free, 36-month deferred payment plan. Resale asking prices of properties in Johor have dropped 2 percent in the past two years, according to real estate listings website PropertyGuru.com.

Yu, the buyer from Guangzhou, worries that the thousands of apartments still to be built at Forest City will be hard to sell without Chinese buyers."

> https://www.bloomberg.com/news/features/2017-06-22/the-100-billion-city-next-to-singapore-has-a-big-china-problem

BAAP's comment:

"who is supposed to live there? Singaporeans won't want to live there, because they don't like Malaysia...

"The scale of the projects is dizzying. Country Garden’s Forest City, on four artificial islands, will house 700,000 people on an area four times the size of New York’s Central Park. It will have office towers, parks, hotels, shopping malls and an international school, all draped with greenery. Construction began in February and about 8,000 apartments have been sold, the company said.

It’s the biggest of about 60 projects in the Iskandar Malaysia zone around Johor Bahru, known as JB, that could add more than half-a-million homes."

And you think there is demand for 1/2 million homes? Haha "

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Singapore Property Stocks Hammered

Singapore’s renewed clampdown on speculative property demand sent real estate stocks reeling on Friday, as analysts predicted the end of a nascent home price rebound and the deflation of a buoyant market for collective sales.

The tightened rules, rolled out a day after the central bank noted “euphoria” in the property market, sharply increase buyers’ stamp duties for entities such as developers. Singapore’s benchmark Straits Times Index dropped as much as 2.5 percent Friday as property developers and banks led declines, with City Developments Ltd. and UOL Group Ltd. sliding more than 16 percent each.

City Developments Ltd ... SG:CDL- update :

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UOL Group Ltd. ... SG:UOL / U14.SI ... chart : 5yrs :

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As major property markets from New York to Sydney show signs of cooling, Singapore and Hong Kong prices are on a tear, causing unease among local policy makers. In Singapore, a sudden rebound in speculative demand, stoked by record land bids and redevelopment deals, threatened to undo years of carefully implemented curbs that had given the city-state an edge over Hong Kong in quality of living.

("are on a tear"?  maybe that is done now.)

https://www.bloomberg.com/news/articles/2018-07-05/singapore-steps-up-property-cooling-measures-after-strong-gains

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FTSE Straits Times Index / SG:STI ... All Data :

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Singapore’s Stock Market Correction is Here: What Investors Should Do Now

Chin Hui Leong

Shares of property developers fell sharply after the Singapore government announced new measures to cool down a heated property market.

The new set of rules include higher stamp duties and tighter requirements around the loan-to-value limits on residential property purchases. Before the implementation, the Monetary Authority of Singapore (MAS) had warned of “euphoria” and “excessive exuberance” in the property market.

As of 10:45 am today, shares of City Developments Limited (SGX: C09) and UOL Group Limited (SGX: U14) had fallen 15.8% and 12.5%, respectively. CapitaLand Limited‘s (SGX: C31) shares also dived 4.1%. Singapore’s banks, which provide housing loans, were not spared either. DBS Group Holdings Ltd (SGX: D05) fell almost 3% while its peers Oversea-Chinese Banking Corporation Limited (SGX: O39), and United Overseas Bank Ltd (SGX: U11) dropped 2.6% and 3.3%, respectively.

As a whole, the Straits Times Index (SGX: ^STI) fell by over 2%, pushing Singapore’s stock market deeper into a market correction.

We Meet Again, Market Correction

A correction is often defined as a fall of 10% or more.

As it stands, Singapore’s stock market is down 12.4% from its high. The sharp decline sounds like a horrible thing to happen, but it also quite a common occurrence in the Singapore stock market. The diagram below shows the maximum decline from peak-to-trough for the Straits Times Index for each year between 1993 and 2016, a period of 24 years.

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Here are some odds to chew on: Of the 24-year period above, all but three years saw a 10% decline or more. To simplify, nine out of every 10 years saw a more than 10% fall from peak-to-trough. That’s a high probability.

With that in mind, I would argue that investors should get comfortable with market corrections as it is likely to happen again in the future.

However, what should investors do in response?

> MORE: https://sg.finance.yahoo.com/news/singapore-stock-market-correction-investors-035544020.html

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Singapore is now selling "shoe box" units, causing some unhappiness

(about 160+ square feet as reported by a news channel in HK)

Several members of the public have expressed unhappiness that with more shoebox units, the size of private residential units is getting smaller and smaller. They have asked the Government to step in to ensure that new developments adhere to a certain minimum size.

Since 2013, the Government has introduced a slew of cooling measures like the Additional Buyer’s Stamp Duty and Qualifying Certificate rules, all of which have had an impact of the buying decision of price conscious property buyers. More recently, the Government introduced an additional cooling measure of buyer’s stamp duty of 4 per cent on the portion of a property’s value that is more than $1 million.

Higher population density will lead to property price escalation

Property price escalation is almost a given with higher population density. A letter writer to The Straits Times expressed alarm at the population figures presented by Housing & Development Board (HDB) chief executive Dr Cheong Koon Hean. In her IPS-Nathan lecture, Dr Cheong said that Singapore’s population density would increase from 11,000 people per sq km … Continue reading

. . .

Members of the public have pointed out that URA’s formula “emphasises only the “average” of an aggregate of sizes per development, but fails to mandate 70 sq m as the size for a shoebox unit or to restrict the number of such units allowed,” and that “smart developers can circumvent the formula and maximise profits by designing apartments of various sizes, which will then meet the “average” requirement.”

shoebox units

A letter to the Straits Times said that it is important for the Government to “mandate that 70 sq m be the minimum size of a unit, and that such units should not make up more than 35 per cent of the units in a development.”

The letter-writer, Paul Chan Poh Hoi, said “half of the 309 units in the Margaret Ville condominium are around 65 sq m or smaller,” and that in “The Tapestry, over 500 of the 861 units are 65 sq m or smaller.”

Another letter writer to the same newspaper agreed with Paul and said that housing is the biggest advantage Singapore has over Hong Kong. This letter-writer, Kwok So Ha, had lived in Hong Kong for 20 years, in a 42 sq m flat. Kwok said that the tiny flat hardly provided any free space for family members to move around, and that the cramped space made one feel stressed.

read in https://www.icompareloan.com/resources/shoebox-units-singapore/ 

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