What is interesting about Singapore is that it has positioned itself as the London or New York City (global finance power) of Asia... and a centerpiece for trade - therefore it is an interesting place to follow for the long run. It also happens to be the locale Jim Rogers moved to when he fled the US. Again, I do believe Asia recovers first in this global disaster but it's just far too early to do anything but "thesis buying" (buy because the crowd is buying, knowing its just to take advantage of the herd thinking) There is still a SLOWDOWN to get through before we can even talk about recovery but people are front running some recovery that is "just around the corner" as they've done over... and over... and over... and over the past year. There is actually an almost global property bubble of varying degrees (including in China) that must be worked off.But as you can see, even with just a tad bit of risk taking back in the market, these indexes are bouncing hard. As always anything in blue parenthesis is superflous editorial content so please feel free to ignore.
As you read below you will hear a lot of the similar facts and language as you read from the U.S. Via the Wall Street Journal
- On almost any major street of this affluent Southeast Asian city-state, cranes tower
overhead -- a reminder of an incredible three-year building boom that now is turning into a bust. Residential property prices rose 60% between 2005 and the middle of 2008, fueled by a massive influx of U.S., European and Asian expatriates drawn by Singapore's goal of reinventing itself as a financial and entertainment hub like Dubai or Monte Carlo. - The global financial crisis has shattered that vision. Many of those foreign bankers and lawyers -- now without work amid Singapore's sharpest economic contraction ever -- are returning home, weighing on demand just as a slew of new luxury properties are nearing completion.
- Banks, meanwhile, are reining in loans to developers. Prices of high-end apartments are forecast to fall back to 2005 levels within a year, property analysts say. "In 35 years of my career, I've never seen anything like this," says Jerry Tan, a Singaporean broker who sold $1.5 billion of property to high-end clients in 2007 but now has time to sip wine and brood in his office.
- For Singapore's trade-dependent economy, officially forecast to contract as much as 5% this year, the house-price collapse is adding to a bleak economic picture of declining exports and shrinking foreign investment. (facts keep getting in the way of thesis buying)
- Singapore, a major exporter of electronic goods and a global shipping hub, grew by more than 6% annually between 2004 and 2007. Eager to diversify its economy, the government offered generous tax breaks to international private banks and high-tech companies to set up shop.
- Half a million foreigners moved to Singapore between 2003 and 2008, many of them wealthy. Boston Consulting Group found in a recent study that 10% of Singapore's residents have investible assets of $1 million or more, the densest concentration of millionaires in the world, and more than twice the ratio in the U.S.
- Residential-property developers started a flurry of new construction. The government stoked the boom by allowing investors to make down payments of only 20%, paying the remainder upon a project's completion. (what? 20%! an outrageously low amount! wait... that is now considered a usurious amount in this country. umm....)
- In a soaring market, speculators with no intention of completing their purchases were able to sell for a profit without organizing any financing. (hmm... are we talking Las Vegas or Singapore?) Amid signs that a speculative bubble was building, the government banned these so-called deferred payments in late 2007. (so they actually had a regulator who tried to... regulate? Another outrage... as Alan Greenspan says, we can never try to stop bubbles - that's impossible. I mean seeing massive dislocations would take common sense, and who are we to apply common sense. The only role of regulators is toclean up the mess he created afterward - with free and easy money of course. But I digress) But by then, the market was already overheating.
- As the only part of Singapore where foreign individuals can own land without special government clearance, Sentosa Cove became the target of bidding wars. By the market peak in mid-2007, property developers were paying 1,400 Singapore dollars (US$935) per square foot for land, more than four times prices in 2003. (boo yah! Sort of like when California's drew down on their house ATM to fight for that cool new lot in Phoenix. Thanks Mr Greenspan!)
- The property sector's woes also represent a major setback to Singapore's efforts to throw off its stodgy image as a wealthy but dull trading entrepôt. A few years ago, the Urban Redevelopment Authority, Singapore's national land-use planning body, drew up blueprints for world-class casinos, theaters and residential areas. It sold land to developers for the projects and gave them time limits for completion. Some elements of the plan are moving ahead -- notably two massive casino-leisure developments set to open in 2009 and 2010 -- but many other pieces are in jeopardy.
- Those pieces include "Sentosa Cove," a luxury residential development on Sentosa Island just off Singapore's mainland. The gated community of $8 million-plus glass-and-steel modernist mansions was envisioned to put Singapore on the map much like "Palm Jumeirah," Dubai's artificial residential island.
- Another casino and theater complex, under construction on Singapore's mainland by Las Vegas Sands, also is planning to open at the end of 2009. (LVS? these guys again?)
- To be sure, the property sector is in better shape than it is in Dubai, where some half-finished construction projects have stopped. The Persian Gulf city developed 50,000 residential units in 2008, much more than the 10,000 private units completed that year in Singapore.
- Despite efforts by developers to choke new supply, there are still 35,000 private homes under construction, according to the Urban Redevelopment Authority, a potentially giant overhang. In 2008, there were 13,644 private residential-property deals in Singapore, down 64% from the previous year. About 15% of residential property could be vacant by 2010, worse than a 10% rate after the Asian financial crisis a decade ago, Credit Suisse estimates.
- "I'm yet to see the light at the end of the tunnel," says Mr. Tan, the high-end broker. (not to worry, the Baltic Dry Index which instead of being down 92% is now down only 84% clearly signals the light at the end of the tunnel is "coming in 6 months". As do US economic reports. Remember you have to buy stocks - and property - 6 months ahead of the ever elusive turn. Not to worry Mr Tan - speculators are going to nail this turn just as they nailed the 5 false "turns" they said stocks were signaling in 2008. Worst case scenario there will be so many paper US dollars flooding the world by Uncle Ben, that even Singapore's assets will be inflated. We have your back - and your welcome!)
