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Sinkieland's super rich only amassed wealth thru property, not innovation

Rogue Trader

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Asset
Singapore's super-rich amassed wealth through property


<cite class="byline vcard" style="font-style: normal; color: rgb(125, 125, 125); font-size: 12px; font-family: Georgia, Times, 'Times New Roman', serif; vertical-align: middle; line-height: 2.2em; display: inline-block !important;">Property Guru – <abbr title="2014-04-03T04:36:31Z" style="border: 0px;">Thu, Apr 3, 2014</abbr></cite>

Most of Singapore's super-rich achieved their wealth via bricks and mortar rather than through creativity and innovation, according to media reports quoting Forbes.

In fact, half of the republic's 16 billionaires achieved their wealth from hotels and real estate, while half of the 50 richest persons in the republic are property tycoons as well. This is based on Forbes list released in March and the Top 50 Rich List published last August.

For instance, brothers Philip and Robert Ng run Far East Organization, which was founded by the late Ng Teng Fong. Another is Kwek Leng Beng, who derived his wealth from publicly listed City Developments and his family's unlisted Hong Leong Group.

Other families with a strong foothold in property include the Kwee brothers, whose firm Pontiac Land owns office buildings and five-star hotels.

The property market has also benefitted many Singaporean entrepreneurs, like father-son duo Raj Kumar & Kishin RK, whose Royal Holdings and RB Capital portfolio holds assets such as Gallery Hotel.

While Oxley's Ching Chiat Kwong popularised shoebox flats, the fortunes of Hotel 81's Choo Chong Ngen and Koh Wee Meng of Fragrance Hotel were boosted by the humble budget hotel chains.

Responding, Forbes Wealth Editor Luisa Kroll said: "Markets like Singapore with a finite amount of land and rising property values find that a larger proportion of their tycoons' fortunes are tied to the valuable real estate.

"While entrepreneurs in these cities make their money in various industries, real estate stands out as a strong asset class," she added.




Muneerah Bee
, Senior Journalist at PropertyGuru, edited this story. To contact her about this or other stories email [email protected]
 

myo539

Alfrescian
Loyal
Whether the cat is black or white, if it catches mice, it serves its purpose.
Whether you earn your billions through creativity, innovation, trade or properties, it is still money.
You have achieved your goal in earning your billions.
 

nutbush

Alfrescian
Loyal
i knew one fella at the launch of sentosa cove borrowed heavily from friends and family to invest in sentosa cove, in 6 months after the launch, he made about a million in reselling.
 

tonychat

Alfrescian (InfP)
Generous Asset
Creativity and innovation are only by the ang Moh.. Ang Moh are the best.
 

kaipoh

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Loyal
No standard moron, Kong Hee Fatt Choy just transfer the $ here and there got millions and has many properties and one of those has a low class barber neighbour whom seducing actor wife and lured her daughter to forget her taxi driver father surname and followed his surname. Look like sentosa housed all the despicable - 卑鄙 small man.


i knew one fella at the launch of sentosa cove borrowed heavily from friends and family to invest in sentosa cove, in 6 months after the launch, he made about a million in reselling.
 

Runifyouhaveto

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Loyal
Our pioneer generation and Pre-1980s did made good money from property appreciation. A HDB over over 40-years old can command the same price as a new BTO, however all these are because we were like a developing nation in the first 50-years of our independence. Assuming you invest $1m in Singapore properties and $1m in Jakarta properties + taking away other variables, eg. the need for loan or tax for the ease of comparison, the Jakarta property will certain bring in multifold returns 10 years later. I wouldn't be so confident about sg properties.

It is not so true going forward, if we assume that the easiest way to preserve and create wealth is through local properties.. We are a developed economy and property upside is limited in developed countries; this is why we found it ridiculous for the angmohs or even some japanese to favor rental, than direct ownership, so that money can be invested better areas.
 

borom

Alfrescian (Inf)
Asset
Another example where the pappy's policies are bringing wealth to the property developers/businessmen at the expense of the masses who have to work longer and longer to pay off the mortgage.

In the past it was common to pay off your mortgage (esp HDB) by say 45 , then it became 55 and now most can payoff only at 65 -for a smaller property that cost more. Based on this alone (as property is the biggest asset of most), the quality of life is actually deteriorating for most locals.

Add to it the lack of job security due to the flood of low quality FT's imported by the pappy, the future does indeed look bleak-not even considering the haze, constant train breakdowns, lack of hospital beds, flooding and rising dengue to name just a few.
 

yellowarse

Alfrescian (Inf)
Asset
Good article by TS. Ours is a typical example of a rentier economy, where wealth and income is not generated by innovation and true productivity growth in manufacturing & services, but through collecting 'economic rents' – real estate investment, financial trading & speculation, interests on borrowing, profits from natural resources.


15 October 2012
Leong Yan Hoi

slidinghouse.jpg


As early as 2005, in the midst of America’s biggest post-war housing boom, some economists and financial analysts were already sounding warning bells that a bubble was forming, and a bust imminent.

The boom had been fueled in the wake of the 2000 dotcom crash by a combination of funds shifting from equities to the property sector and the Federal Reserve’s expansionary monetary policy, resulting in an ample supply of cheap money and easy credit.

The signs were there: between 2001 and 2003, the Federal Reserve cut interest rates 13 times; the amount of sub-prime loans increased from US$332 billion in 2003 to US$1.3 trillion in 2007, an increase of 292 percent; the total amount of derivatives held by financial institutions ballooned even as total cash reserves shrank; and by the time the market peaked in 2006, some of the subprime loans were already going into default.

When credit dried up in 2007, it caused a downward spiral into a financial crisis the likes of which had not been seen since the Great Depression of the 1930s. The boom had turned into the biggest housing crash in the history of the United States (US).

The parallels of the US property bubble with our current housing market boom are eerie: property prices here have been on an upward trend since the 2008 financial crisis, largely fueled and sustained by an economic rebound, influx of foreigners, massive inflow of liquidity, long loan tenures and low interest rates. The recent sale of a Housing Development Board (HDB) flat for $1 million has raised eyebrows and generated much angst among young aspirants to property ownership.

The HDB Resale Price Index, a key indicator of public housing price trend, is now at a historical peak, and is showing no sign of abating despite a recent slew of cooling measures adopted by the government:
chart-flats.jpg

(Source: HDB InfoWEB[1])

To all appearances a speculative bubble is forming; coupled with the near-certainty of a technical recession at the end of 2012 (as foreshadowed by weak export data and a contraction of the manufacturing sector in the third quarter), and the prospect of a sharp correction, if not a major crash, looms for the property market sometime next year.

What lessons can we draw from the historic housing crash in the United States?

First, housing, in particular public housing, should not be considered an investment good, an appreciable asset to be invested in to reap capital gains. Houses are, fundamentally, consumer durables. That is, they are goods that yield utility and depreciate slowly over time.

Second, the proponents of the Austrian School of economics hold that only savings-induced growth is sustainable, while a credit-induced growth will inevitably lead to a boom-and-bust cycle. That is why a housing boom contains the seeds of its own destruction: easy access to credit and speculative frenzy lead to over-pricing as buyers seek to maximise capital gains during the boom phase, and when credit freezes, a marked readjustment occurs with distressed selling amid falling equity and the accumulation of massive debt as the bubble bursts.

These observations were borne out during the 2000 NASDAQ crash and the 2007 global financial crisis.

Many Singaporeans have been conditioned since the Goh Chok Tong prime ministership to see public housing as a sure-fire investment that generates wealth in the shortest possible time. It will take a sea change in mindset before housing as consumption is accepted as common wisdom.

Effects of High Property Prices

Public housing is a consumption, and high property prices therefore extract an opportunity cost. In a country where 80 percent of the people live in public apartments, the deleterious effects of spiraling prices and increasing unaffordability of HDB flats are significant and far-reaching.

Huge mortgages discourage risk-taking and stifle entrepreneurship, which in turn stunts the small and medium enterprises (SME) sector of the economy.

The social costs are tremendous as well. Since installment payments are serviced largely with Central Provident Fund (CPF) savings, large loans whittle away a person’s retirement savings as well as erodes his ability to fund his own healthcare needs as well as provide for his children’s education. This is especially true for people in the lower-income group.

Young couples who find it increasingly difficult to purchase their first home are putting off marriage and starting a family, a major factor responsible for the plummeting birth rates in recent years and the current total fertility rate of 0.78, the lowest in the world. The dire consequences of a low birth rate in conjunction with a rapidly aging population are all too well documented.

High property prices also funnel money from productive sectors of the economy into the rent-seeking sector, creating and entrenching a rentier economy with its attendant problems – asset bubble creation, lack of regenerative dynamics, stagnant wages, structural unemployment, widening income inequality.

Because the prices of resale HDB flats are interlocked in a circular fashion with new flat prices as both determinant and dependent variables, a solution to the problem of spiraling property prices is not immediately apparent. Any attempt to dampen the prices of new flats may precipitate a crash in the value of resale flats as well as the private property market.

Cutting the Gordian Knot


The Singapore Democratic Party has drawn up a holistic plan which will be launched in a few weeks to provide affordable public housing for Singaporeans, without causing undue dislocation to the current property market.

The lynchpin of this plan is to reduce HDB prices and in so doing free up money tied up in property that will forseeably lead to greater investment in private enterprise and a burgeoning small-and-medium-enterprise sector, which has hitherto been stymied by the heavy reliance on multi-national and government-linked corporations to prop up the economy.

Despite having one of the highest per capita Gross Domestic Product n the world, in a UBS study in 2009[2], Singapore ranked only 43rd and 49th for domestic wages and purchasing power respectively, comparable to Kuala Lumpur, Warsaw and Bogota, but lagging behind the other Asian ‘tigers’. Reducing mortgage liabilities will increase disposable incomes and improve quality of life.

Indeed, in many Western countries, a large proportion (up to 55 percent) of the population do not own their own homes, yet enjoy a quality and standard of living superior to Singaporeans’.

Making housing affordable for young people setting up home will help to reverse the trend of declining birth rates, and help parents invest more in their children’s education, which in turn brings positive social and economic returns.

The prevalent mindset that property is an inexorable route to riches via speculative capital gains will gradually be transformed into a mature one that views property as a long-term consumer durable which provides a basic need.

Over time, these changes will gradually shift our economy away from the rentier model into an economy that generates growth through increased productivity, innovation and the accrual of knowledge capital.


[1] HDB InfoWEB: Resale Price Index. Available at:http://www.hdb.gov.sg/fi10/fi10321p.nsf/w/BuyResaleFlatResaleIndex?OpenDocument#Detailhttp://www.hdb.gov.sg/fi10/fi10321p.nsf/w/BuyResaleFlatResaleIndex?OpenDocument#Detail [Accessed 8 October 2012]

[2] UBS. Prices and Earnings, Edition 2009. Available at:http://www.ubs.com/1/ShowMedia/weal...contentId=170298&name=PreiseLoehne_2009_e.pdfhttp://www.ubs.com/1/ShowMedia/weal...contentId=170298&name=PreiseLoehne_2009_e.pdf [Accessed 9 October 2012]

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tanwahtiu

Alfrescian
Loyal
good article.

Those mentioned are not the top of the List. PAP HDB is.

These rich owned their hard earned money in private properties and used their private property equity growth as collaterals to refinance their projects. They can lose everything in a recession, but not the landlord PAP HDB.

Whereas PAP HDB give you 99 years lease and 80% of their renters in HDB dwellings cannot use their property equity growth to refinance to start a biz or borrow to refinance their biz. They can use your HDB as collaterals to borrow more but the 80% can't.

The 80% HDB dwellers in the 60.1% dafts did not get it and keep voting them and make them the world's wealthiest landlord.




Singapore's super-rich amassed wealth through property


<cite class="byline vcard" style="font-style: normal; color: rgb(125, 125, 125); font-size: 12px; font-family: Georgia, Times, 'Times New Roman', serif; vertical-align: middle; line-height: 2.2em; display: inline-block !important;">Property Guru – <abbr title="2014-04-03T04:36:31Z" style="border: 0px;">Thu, Apr 3, 2014</abbr></cite>

Most of Singapore's super-rich achieved their wealth via bricks and mortar rather than through creativity and innovation, according to media reports quoting Forbes.

In fact, half of the republic's 16 billionaires achieved their wealth from hotels and real estate, while half of the 50 richest persons in the republic are property tycoons as well. This is based on Forbes list released in March and the Top 50 Rich List published last August.

For instance, brothers Philip and Robert Ng run Far East Organization, which was founded by the late Ng Teng Fong. Another is Kwek Leng Beng, who derived his wealth from publicly listed City Developments and his family's unlisted Hong Leong Group.
 
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Runifyouhaveto

Alfrescian
Loyal
Big boys casted the nets and now rest of the world is addicted to debts now.

The way to get rich in the past WAS to borrow money and to lever........ Not going to happen because basically we’ve been priced into the market. Assets are artificially priced. And from this point forward, double-digit returns, getting rich on leverage, NO. - Bill Gross, PIMCO founder and co-chief investment officer

http://www.bloomberg.com/news/2014-...ets-vulnerable-with-economic-growth-slow.html
 
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cocobobo

Alfrescian
Loyal
Most of Singapore's super-rich achieved their wealth via bricks and mortar rather than through creativity and innovation, according to media reports quoting Forbes.

In fact, half of the republic's 16 billionaires achieved their wealth from hotels and real estate, while half of the 50 richest persons in the republic are property tycoons as well. This is based on Forbes list released in March and the Top 50 Rich List published last August.

For instance, brothers Philip and Robert Ng run Far East Organization, which was founded by the late Ng Teng Fong. Another is Kwek Leng Beng, who derived his wealth from publicly listed City Developments and his family's unlisted Hong Leong Group.


and yet the very same sinkees lamenting about the high cost of living and inflation are the very ones flocking to mass market condo launches at inflated prices...

i give up on my fellow citizens
 
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rushifa666

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Loyal
The rich used to move the economy by increasing productivity. Invested in businesses etc. that helped society as a whole. Now they're just a liability. They will drive housing prices and everything else sky high and then wipe their arses and leave the dump.
 
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