June 17, 2007


Financier's property investments double in value

Besides buying waterfront units in Singapore and Sydney, Hong Leong Finance head also invests in stocks

By Lorna Tan, Finance Correspondent

IF THE president of Hong Leong Finance, Mr Ian Macdonald, could turn back time, the 51-year-old would have bought a bigger unit or perhaps even multiple units at The Sail @ Marina Bay.

He had bought a two-bedroom 936 sq ft unit at $1,000 per sq ft at the condominium developed by City Developments - but that was back in late 2005 when the property market was still in the doldrums. In less than two years, owners at The Sail are looking at a doubling of their property values, thanks to the current property boom.

The person instrumental to Mr Macdonald's decision to buy the unit was none other than his boss Kwek Leng Beng, who is executive chairman of Hong Leong Group and its property unit City Developments.

Says Mr Macdonald: 'I was lucky. I spent a bit of time with Mr Kwek. His enthusiasm and passion for that property and knowing how astute he is on properties - those were my deciding factors to invest in The Sail. I wish I had bought a bigger unit.'

This is not the first time his decision to invest in a waterfront property has borne fruit. In terms of capital appreciation, a home he bought on Sydney Harbour has achieved the best performance.

'It is a two-storey house with four bedrooms. I bought it 10 years ago at A$1.5 million.' That amount is about S$1.94 million. The house is now worth A$3.5 million to A$4 million.

He joined Hong Leong Finance, Singapore's largest finance firm with 28 branches, in February 2002. He was formerly with a subsidiary of Australia's Westpac. While Mr Macdonald is based here, his wife and two children, Nell, 18, and Harry, six, live in Sydney.

Q What are your money habits?

A When I was younger, the whole focus was on asset-based saving. This means getting money together to buy the first property and the first car.

But as you get older and have a family, you also have more disposable income when salary goes up, then you start looking at how to plan your wealth management.

Q What financial planning have you done for yourself and your family?

A I invest primarily in real estate but I have diversified into shares and other investments, especially retirement savings. I have about half a million in a superannuation fund in Australia that has achieved more than 10 per cent per annum in some years.

From 2005, another half a million was invested in an Australian share-market portfolio. This has seen returns of about 10 per cent a year and we re-invest the dividends.

I'm also invested in Hong Leong Finance and recently received a dividend of 7 per cent.

A sum of A$400,000 is earmarked for my younger child's education and invested in a conservative fund which is like a fixed deposit.

Q What about insurance planning?

A Both my wife, a lawyer, and I are insured for A$2 million.

Q What about property investments?

A Besides my home in Sydney, I have three investment properties there. These apartments have enjoyed rental yields of 3 to 4 per cent a year.

Sydney is a good place to invest in and the property market has gone up by 50 to 100 per cent since the 1990s.

Q Any other investments?

A In the past 10 years, we have enjoyed going round art galleries and buying art pieces in the range of A$2,000 to A$20,000. So far we have collected about a dozen pieces. The values of two of them, by artist Angus MacDonald, have gone up by more than 100 per cent.

I also buy 10 to 20 dozen bottles of wine a year. These are a combination of Australian, French and Italian wine, mainly red. I've 60 dozen bottles of wine in the cellar of my Sydney home.

Q Moneywise, what were your growing-up years like?

A I was not born with a silver spoon. My father worked in an import business and finally bought it. My mother was an occupational therapist and worked hard to put her four kids through good private schools. It was tough on her so I knew the value of money from young.

Since I was 13, I worked during school vacations, taking on jobs like mowing lawns and later as a waiter and bartender in pubs. If you want something, you have to work for it.

Q What has been a bad investment?

A My worst investment was in my younger days when I got a tip about a platinum mining firm that was going for an initial public offer (IPO).

Four friends and I put in A$2,000 each for the IPO shares at 50 Australian cents. The stock price immediately went up to 80 Australian cents and I thought it was an easy way to make money. I wanted to wait till it hit a dollar but the firm disappeared when the share reached 98 cents. It was a great lesson. I learnt not to be too greedy.

Q What's your investment philosophy?

A I'm pretty conservative. When something shows a good appreciation, when it's a return I am comfortable with, I crystallise the profits.

For stock investing, look at the company's fundamentals. There is also a need to diversify.

In the past, I got too greedy because I looked at the top of the market and as a result, missed opportunities. Also, don't invest in anything unless you understand it. For property, it is all about location.

Q And your home now is.....

A I'm renting a 2,000 sq ft unit at Chelsea Garden in Stevens Road.

Q And your car is...?

A A dark green BMW 5 series.

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Profit-taking strategy

'I'm a pretty conservative investor. When something shows a good appreciation, when it's a return I am comfortable with, I crystallise the profits. In the past, I got too greedy because I looked at the top of the market and as a result, missed opportunities.'
MR IAN MACDONALD, who invests in real estate, equities and retirement funds