| Singapore
Real Estate |
| By John Zhang |
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| Singapore
Made the Hard Decisions to Ensure Growth
Singapore’s
growth has always depended on the “value added.” For years, it
relied on its highly educated population, commitment to the rule of law,
and non-corrupt government to attract and retain investments by high-tech
industries. For years it has also served as the regional hub for
major banking, insurance and financial services providers. However,
when Singapore’s economy crashed in 1997 and continued to bleed out (like
much of Taiwan’s did, as well) manufacturing to the PRC, it took a
long, hard look at itself to determine where it could add value in the
future service economy to keep growing. As Singapore’s planning for value-added
potentials moved forward, it relied on its own Chinese roots and understanding
of the international investment market to determine how to position itself. |
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Newly rich
Chinese, as well as the occasional corrupt Asian government official, were
easy to spot in gambling havens such as Las Vegas and the newly repatriated
island of Macau.
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These days,
PRC travelers from major Chinese cities hop over to Macau for a night or
two of gambling, during which dropping $10,000 US dollars no longer seems
unusual to anyone. The Singapore government saw demonstrated interest by
companies such as the Las Vegas Sands Corporations in other Asian markets. |
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| Despite the
general knowledge that Singaporeans themselves, as stated by a Singaporean
taxi driver recently, “are much too fond of gambling,” the Singaporean
government decided to risk the anger of its diverse multi-ethnic, multi-religion
population by creating an urban development plan in its CBD that focuses
on an “integrated resort,” combining the elements of casinos, entertainment,
convention center, hotels, restaurants and “city living” residential areas.
The expected
uproar among Singapore’s Christian and Muslim populations was loud. A
thirteen month contentious consultative process followed. The government
emphasized that it had considered the matter from every angle, but that
the reversal of a decades old prohibition against gambling would allow
a “value-added” tourism approach that seemed Singapore’s best bet for the
future. |
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Offshore
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| The discussion
ended when the Singapore government finally put out for bid a tender
for the development of a casino and convention center operations in the
CBD. In April 2006 a second tender was put out for a casino/entertainment
resort area on the nearby island of Sentosa, which for years already had
been developed and styled as Singapore’s favorite family entertainment
area.
Why Gambling
and the “Integrated Resort” Will Work for Singapore
In 2003 with
the news of the focus on the Central Business District and with Singapore
interest rates on home loans at a mere 1.2%, smart buyers began
to re-enter a bottomed-out property market, snatching up newly announced-for-development
luxury residential properties in prime locations in Singapore’s Central
Business District (CBD). The SAILS, an innovatively designed
building, began development right on the edge of Singapore’s Marina Bay
with views of the water and of the promised development of the “integrated
resort,” which would be right next door on a nearby peninsula.
Surrounding the area of the SAILS the “integrated resort” plan includes
the development of beautiful walking parks and a brand new national garden
area designed to give the same breathing space to Singapore’s CBD that
Central Park gives to New York City. |
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| Real estate
agents believe the SAILS units will serve more as residences than as rentals,
although they anticipate rental units in the building will be highly sought
after. Completion is projected for 2008.
Singapore’s
balancing act between government pragmatism and community concern about
the incoming casino has ensured the issue of “gambling” will be both high
profile and positive. Interestingly enough, part of the government
tender required that the winner demonstrate sensitivity to social and religious
groups’ opposition to the proposed gaming operation.
The Las
Vegas Sands package reportedly includes extensive training for casino
staff on how to identify and deal with compulsive gamblers, offering help
and educational assistance to recognize and understand this addiction. |
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| It has promised
to produce an ongoing community awareness campaign, as well, so that locals
will understand that compulsive gambling is a disease for which there is
help. The Sands has made it clear it will accompany its third and
most expensive foray into the Chinese-speaking community (the other
two are in Macau) with a community commitment to become an active and
healthy part of Singapore society. A statement released by Las Vegas
Sands Corp. (NYSE: LVS) President and Chief Operating Officer William
Weidner pledged, "Our top priority is to partner with the Government and
the people of Singapore to ensure that we deliver on Singapore's economic
and social goals to enhance its status as one of the world's greatest travel
destinations. We are confident we have the strengths and capabilities to
achieve this mandate……”
In its recovering
real estate market, Singapore has plans for completing 90,000 new residential
apartment units in the CBD alone. The first building that will be
completed, possibly as early as summer 2007 is the 600 unit “ICON,” Singapore’s
first “full amenity condo facility.” Although the architecture and
apartment design reflects the minimalism of city living, the building’s
location next to the subway and its fully wired capacity to meet the needs
of anyone working in Singapore’s electronic age have been widely reported.
Its luxurious shared spaces (the seventh floor pool/tennis/garden/barbecue
facilities along with the 31st floor spa/garden/gym and outdoor viewing
facilities) provide a 360 degree panorama of Singapore’s skyline and
ocean views. Interestingly enough, a local real estate agent noted,
more than 50% of the ICON units were snapped up in 2003 by recent immigrants
to Singapore, primarily mainland Chinese students, artists and professionals.
Some of those units, prior to the property completion, are now being turned
over for the 15-20% available profit. Singapore real estate agents
and property managers believe that the rental potential of the ICON apartments
is high and anticipate most owners intend to use these condos to generate
rental income from foreigners coming in to work on the new “integrated
resort” and associated projects.
Location,
Location, Location
The same old
adage applies everywhere in the world! As the PRC property market
matures Chinese investors are becoming clearer and clearer about the need
not just to buy, but to buy in the right spot. The already mature
Singapore market knows that when the government throws its full weight
and a 10 year plan behind the development of the CBD, that’s where property
values will rise.
However, many
people mistake the idea of location, location, location as a mere emphasis
of the need to pay attention to where your property is located. However,
on an island as small as Singapore with residential areas clearly designed
for individual purposes, one must analyze the three separate meanings to
each of the repetitions.
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LOCATION (ONE):
The first iteration encompasses the standard meaning of being sure that
you are buying in the best area, the most desired area, and the most attractive
area of any city. Singapore’s CBD, with all the government money
and private development funds pouring in, fits this bill for the coming
five years.
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LOCATION (TWO):This
means that living must be easy and all amenities must be on site or within
easy reach. Transportation must be convenient and provide access
to all the city’s key government, business, shopping and entertainment
locations within minutes. For Singapore’s CBD, three strategically
placed subway stations (Raffles City, Tanjong Pagar, and Marina Bay) provide
easy movement to any point on the island. Singapore General Hospital
is a SNG $3 (US $1.90) cab ride from the CBD if one is need in of emergency
care or regular doctor’s visits. Everything from regular family supermarkets
to upscale food stores to restored local shop houses with local fare to
fast food restaurants or fine dining abound. Banks, money changing
facilities, hotels, ATMs, airline offices and financial service companies
all are within walking distance (no car required) from any point within
the CBD.
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LOCATION (THREE):
The third iteration emphasizes that where you buy must be perceived clearly
as a multi-functional environment, so that a wide range of people will
want to live there. Singapore’s projected upscale CBD can accommodate
anyone from a young engineer imported to help build the new “integrated
resort” in need of a two-three year leased apartment to a foreign retired
couple who want the extraordinary convenience of Singapore’s pristine,
clean and orderly city living as well as proximity to parks, entertainment,
shopping and state-of-the art medical facilities.
The Signs Couldn’t
Be Clearer
It’s true that
the “Gang” hasn’t yet woken up to Singapore’s potential. However, each
aspect of “location” and all the fundamentals are there, so it’s just a
matter of time at this point. Property prices are historically low for
Singapore. Singapore’s opening up for real estate ownership to foreigners,
the PRC’s legal and banking maneuvers to end real estate speculation, China’s
law allowing capital to flow out of its borders, a booming Chinese tourism
industry, the recent win by the Las Vegas Sands Corporation of the Singapore
casino project, the projected 35,000 associated new jobs, and the expanding
residential/rental property market in Singapore’s Central Business District
make Singapore an excellent bet.
Both the “Wenzhou
Gang” and the Singapore government are gamblers. Currently, the developing
real estate market in the CBD is a low risk place where they can both win.
However, if Western investors want to reap the rewards from Singapore’s
solid fundamentals that point to a significant chance for even stronger
mainland Chinese investment, they will have to arrive now -- before the
“Gang” gets there!
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