It’s obvious that Chinese money will have to flow elsewhere since the early glory days of real estate speculation/investment in China are coming to an end for all. Not only is the profit potential drying up, but social pressures within China are bringing back to the forefront a historical reality of China’s “class” structure. Rich people in China have never felt safe or completely at ease, knowing that obvious displays of wealth such as the ownership of multiple properties make them prime targets for a community undercurrent which remembers the historical abuses of the “landed gentry.” With a vast agricultural population, the threat of civil disorder in modern China arising from lack of equity between the landed and the poor, a gap which is growing larger daily, has always been an impetus for the extremely wealthy Chinese investor to keep at least one home abroad as a safe haven.

So where will the “Wenzhou Gang” go?

Although they haven’t yet figured it out, the hottest prospect for fast growth in Asian real estate available to mainland Chinese money is Singapore.  And, if the “Gang” is reading the papers, the tip-off came for them in a Saturday, May 27th, announcement by the Singapore government that was carried in papers all over the world, including on the front page of the Wall Street Journal’s internet edition (http://online.wsj.com/home/us).  The Singapore government proudly announced that the Las Vegas Sands Corporation won the hotly contested contract to build a casino in a new “integrated resort” project on Marina Bay.  From there, the “Gang” doesn’t have to look far to see that all the international fundamentals are in place for a quick profit in a Singapore residential property boom.

Laws and Projects in Place – Ready for Take Off

The 1997 Asian financial crisis affected Singapore’s real estate market dramatically.  Residents saw a 50% drop in private property values and rental prices. One Singaporean, who had bought at the height of the market explained, “I now pay SNG $2,300 a month on a mortgage for an apartment I can only rent out for SNG $700 today. My financial advisor is suggesting my friends and I all declare bankruptcy.”   Fortunately, in 2003 things began to look up as the Singapore government made some hard choices.

Two new laws passed in 2005 and 2006 in Singapore and the PRC along with new Singaporean development initiatives form a solid base to under gird growth potential and job creation that will boost Singapore real estate in its own Central Business District (CBD).

• FUNDAMENTAL ONE:  On May 27, 2006, high profile competitive bidding by MGM, Las Vegas Sands, and the Genting International Corporation finally resulted in the Las Vegas Sands Corporation (www.lasvegassands.com)  winning the CBD tender.  Its Singapore dollar $5 billion investment in the “integrated resort” project is expected, according to Singapore’s Prime Minister Lee Hsien-loong, to bring 35,000 new jobs to Singapore within the next few years.  Completion of the casino-resort in the CBD is expected for 2009.  The SNG $1.9 billion land purchase by the Sands will take place in the next 90 days.
• FUNDAMENTAL TWO:  In July 2005 Singapore’s government opened up real estate ownership on 99-year lease properties to foreigners, who previously could invest only in freehold properties (owning property free and clear in perpetuity).  However, with the passage of this new law anyone can invest in Singapore’s private residential/rental properties.   In less than a year, mainland Chinese already have become the third largest group of foreigners shopping for investment property in Singapore.
• FUNDAMENTAL THREE:  In May 2006, the PRC government created laws to allow each and every Chinese citizen to exchange annually the equivalent of $20,000 U.S. dollars and take this capital out of China for any legitimate purpose (e.g., tourism, commodity purchase, business investment, real estate investment).   The amount of U.S. $20,000 is an ideal number for a “gaming” type vacation.  For individual Chinese investors, it could easily cover the cost of an annual mortgage on a private property in the new CBD buildings, the prices of which hover between SNG $500,000 (for approximately 800 square feet of space) to SNG $2 million (for approximately 1200 square feet of space).   For “Gang” speculators moving one-time payments of SNG $2 million or more for property purchases into Singapore will pose no problem as long as the money moves via bank transfers for legitimate purposes.
• FUNDAMENTAL FOUR:  The International Herald Tribune (Wednesday, May 17, 2006) reported on its front page that 2005 saw more than 31 million Chinese traveling abroad, compared with only 4.5 million in 1995.  The projection by 2010 is for 50 million and by 2020 is for 100 million PRC citizens annually to travel outside their nation’s borders for tourism.  What attracts them?  Singapore is gambling that it knows the answer.
• FUNDAMENTAL FIVE:  Along with the development of the “integrated resort,” Singapore will develop value-added services in the area of “medical tourism,” in which medical services for a variety of conditions or for plastic surgery will be available to foreigners.  Singapore General Hospital and Singapore’s private hospitals (Gleneagles, Mt. Elizabeth, and Mount Alvernia) already are impressive, high technology centers where Western medical care delivered by many Western trained physicians and nurses is available.  Singapore General has several research units, a full service hospital, and specialty clinics (an Eye Center, Heart Center, Cancer Center, Cardiac Rehabilitation Center), and Office of International Medical Services as well as a Medical University.
• FUNDAMENTAL SIX:  Singapore’s population is more than 70% ethnic-Chinese.  Mandarin not only is used popularly in signage, but is a widely spoken language in Singapore, making the nation far friendlier to mainland Chinese investors and tourists than other countries to which mainland Chinese could travel.  The lack of extreme weather or natural disasters (e.g., typhoons, earthquakes, tsunamis) and Singapore’s clean air and water provide enticing reasons for mainland Chinese to keep a second home there or to invest in safe investment rental properties.  In general, the island’s cleanliness, orderliness, and Western environment coupled with the upcoming addition of attractively incorporated local gaming facilities housed in an perpetual summer climate makes it a perfect nearby investor and tourist destination. 
• FUNDAMENTAL SEVEN:  Singapore’s Urban Redevelopment Authority (URA) has made it clear that the CBD is the focus of its development plan for the next 10-15 years.  A visit to the URA headquarters (www.ura.gov.sg) on Singapore’s Maxwell Road yielded up a development museum and two comprehensive development models for the city.   The city’s development maps, on public display, demonstrated the city-state’s commitment to the CBD development in full color.  A local Singaporean developer noted that once the Singaporean government makes entries into those development maps, it takes years of consultation and argument to change them.  Usually the consultations are fruitless and original plans remain in place.