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.

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.  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.  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.  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.  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.  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.

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.

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.

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!