Property bull an abnormal one: consultancy MD

[reporter2]

http://www.businesstimes.com.sg/prem...cy-md-20130114

Published January 14, 2013

Property bull an abnormal one: consultancy MD

Latest govt move likened to looping a rope through the bull's nose ring

By Mindy Tan


THE bull run that the property market has been on has been an unnatural one. After all, the bull, to take the analogy further, has been fuelled by six pit stops. The seventh, which came into effect on Saturday, however, may well take the wind out of the beast.

"Our (current) property bull run is a bit abnormal," said Ricky Sim, managing director of Chesterton Suntec International and Suntec Food & Leisure.

"Let me give you an analogy. When a bull runs without stopping, it will collapse sooner or later. In the same way, this property bull run has to stop. But this bull run has had six stops, in which the bull has had time to drink water, relax, and regain its strength. Without the six stops, the market would have crashed, just like the bull!"

The latest round of property cooling measures, which takes in several sectors and is expected to dampen speculation across the board, is the equivalent of looping a rope through the bull's nose ring, said Mr Sim.

"I think the measures will dampen the property sales market tremendously, but you will only know the full results after six months. I know of a lot of investors who've made 20-30 per cent profits and have been trying to unload (their investments) in the last six months. Now, finding a buyer will be a problem."

The measures, which were announced by the government on Friday, include steeper additional buyer's stamp duty rates, and lower loan-to-value limits coupled with higher minimum cash downpayment on housing loans.

The public housing sector too saw a host of measures, including the barring of permanent residents from subletting their entire HDB flat. PRs must also sell their HDB units within six months of buying a private residence.

On the industrial front, the authorities have introduced a seller's stamp duty for the first time.

Mr Sim lauded the move to stabilise the HDB market.

"Let permanent residents buy HDB flats, but if they leave Singapore, say for x number of years, they should sell the flat back to the market, specifically, to a Singapore citizen," he suggested.

Alternatively, the government could consider rethinking the concept of 99-year leasehold flats.

"Why not offer HDB flats on 60-year or 70-year leaseholds? This way, you can get a five-room HDB flat for maybe $250,000? Young couples will be very happy because this doesn't stress their finances. After all, how many couples keep their units for 30-50 years? After five to 10 years, they sell their units and upgrade!"

Mr Sim, who is "semi-retiring" - "I am not retiring, to retire means to die!" - joined the Suntec Investment Group in 1994.

Under his direction, the company has penetrated the Middle East and North African markets, providing real estate consultancy and development advisory services. In addition, he spearheaded the creation of a new business unit - Chesterton Corporate Solutions - a one-stop service for investors looking for investment opportunities within South-east Asia.

He credits the three principles he lives by - responsibility, credibility, and integrity - for his success. This, despite having completed only 'A' levels.

"I'm not a scholar, but I'm a scorer," he quips. "People used to ask me, Ricky, which university and field do you come from? I always say I go to the football field. I hit the ground to meet people on the ground, to get the ground reaction, that's my forte."

A man for whom "networking is in my blood", Mr Sim hopes to start a small business based on his vast network of 15,000 contacts.

"Let's just say that I hope to do something that I enjoy doing, networking, but this time, not for free, but for a fee," he said with a smile.

[phantom_opera]

this guy is 10x better than Cooling Tan

very good analogy:

"Let me give you an analogy. When a bull runs without stopping, it will collapse sooner or later. In the same way, this property bull run has to stop. But this bull run has had six stops, in which the bull has had time to drink water, relax, and regain its strength. Without the six stops, the market would have crashed, just like the bull!"

[hyenergix]

This time is over-done. Simply because HDB upgraders will be angry. Let's revisit my point 6-12 months later. Cheers.

[phantom_opera]

why angry? can still buy ECs or try try luck in BTO mah ... it is just if you die die want to own both HDB and PC then pay 7% ABSD loh ... as for loan, u can always redeem your HDB loan to loan 80% for next PC ..

Who should be angry? I think is those bought PCs in 2010/2011 OCR or 2007 CCR .. little profit, softening rental yield ... jialat liao

[hyenergix]

why angry? can still buy ECs or try try luck in BTO mah ... it is just if you die die want to own both HDB and PC then pay 7% ABSD loh ... as for loan, u can always redeem your HDB loan to loan 80% for next PC ..

Who should be angry? I think is those bought PCs in 2010/2011 OCR or 2007 CCR .. little profit ... jialat liao

It is more difficult to upgrade now - be it houses or cars. BTOs are not that cheap so new buyers have harder time to fully redeem their HDB loans.

[eng81157]

agree it's harder to upgrade too. now with ABSD, lower LTV and MSR - need to cough out lots of cash upfront

[buttercarp]

With these measures, it forces people to be prudent when it comes to upgrading.
It is a good CM.
It does not penalize the first timers who are SC.
It just enourages prudence in upgraders.
Should there be a recession or bubble, at least SC won't suffer so much.

[azeoprop]

Time to go for more holidays!

[RCT]

Why is it bad for upgraders?

ABSD - They can get it back after they sell their first flat

The problem I can see is the more cash upfront... But I feel this is a good news for them actually... If the price drop 10%, that will mean their property price drop 50k but the property they are looking at drop 80k....

[repanse71]

this guy is 10x better than Cooling Tan

very good analogy:

"Let me give you an analogy. When a bull runs without stopping, it will collapse sooner or later. In the same way, this property bull run has to stop. But this bull run has had six stops, in which the bull has had time to drink water, relax, and regain its strength. Without the six stops, the market would have crashed, just like the bull!"

Did this guys give his views for the last 6 pit stops?
Or another case of rationalizing on hindsight?

Regards

[phantom_opera]

It is more difficult to upgrade now - be it houses or cars. BTOs are not that cheap so new buyers have harder time to fully redeem their HDB loans.

the new HDB upgraders now are those who bought the cheap BTOs in 2005/2006 (give and take 2-3y construction and 5y MOP) ... sitting on huge gain on their BTOs, cash/CPF OA can redeem HDB loan anytime lah

this also explains why HDB upgraders of today is so "garang" (aggressive)

[reporter2]

http://www.straitstimes.com/premium/...tious-20130114

TALKING TO RICKY SIM, MANAGING DIRECTOR OF CHESTERTON SUNTEC INTERNATIONAL

'It's an uncertain year... everybody is cautious'

Published on Jan 14, 2013


On the issue of HDB flat prices, Mr Sim suggests having shorter leases of 60 or 70 years, 'then maybe there’ll be a 30 per cent discount'. -- ST PHOTO: AZIZ HUSSIN

By Esther Teo Property Reporter


HOME prices could correct by more than 20 per cent in the worst-case scenario, a top industry figure has warned.

But the outgoing managing director of Chesterton Suntec International, Mr Ricky Sim, 60, is not suggesting this is on the cards.

He does not expect a collapse in property prices. The more likely scenario if a correction were to happen is a 10 to 15 per cent dip in prices, said Mr Sim, who has been at the helm of the property consultancy for the past 18 years.

But just when this might happen - or not - depends on various external factors, he said.

The health of the Chinese and United States economies and where interest rates are headed are crucial. And whether the toppish Hong Kong real estate market collapses is also another factor, as that could trigger a correction in Singapore, Mr Sim noted.

He said that the market was in an "abnormal bull run" now where six rounds of measures had still been unable to put a lid on prices.

As a result, the Government last Friday introduced additional measures to curb investment demand for real estate.

"In any bull run, can the bull continue to run forever? There will come a time when the bull will run out of steam and lie flat."

He also pointed out that large and established local property developers have already become less aggressive in their land bids. The newer players in the market are the ones that are still putting in high bids for land parcels.

This signals that those familiar with the market and its cycles are turning cautious, especially in the light of high construction costs and the ample supply of completions in the pipeline.

"Without the measures, the property market would have collapsed a long time ago, because everybody would have rushed to it. Property is so emotional," Mr Sim added.

He noted that this will be an uncertain year for Singapore's economy, especially the first half.

"Everybody is cautious. But some projects out there are only about 30 to 40 per cent sold because of their high prices. They are still struggling to try to sell.

"For projects that cost more than $1,500 to $1,700 psf, they need overseas buyers but if you can't get them because of the measures, then the sales can't pick up," Mr Sim added.

It is the Housing Board segment that is holding up the private market and the Government could consider shorter leases for HDB flats instead, as even Build-to-Order flats and executive condominiums cross the $600,000 price mark, he said.

"I sympathise with our young professionals. Their combined income is $10,000 or $12,000. They are just beginning their lives, but what can they buy? They have a problem.

"Maybe the Government should consider a 70- or 60-year lease for HDB flats, then maybe there'll be a 30 per cent discount. Most young couples also don't live in their HDB flats for more than five or 10 years, so why should we have a 99-year lease when the price is so high?"

The former civil servant started out at the Ministry of Defence, with later stints as a diplomat in Thailand and Hong Kong.

He left for the private sector in 1994, when he joined Suntec Investment Group.

His best business decision was developing the firm's expertise in the niche areas of valuation and project property management in a bid to carve out its own space, separate from the bigger boys in the market.

But plans for a "semi-retirement" are on the cards; Mr Sim, who is married with a daughter, is expected to step down from Chesterton Suntec in March.

He could start some small businesses, building on the networks he has developed over the years, and live abroad in cities like London - his favourite metropolis - for part of the year.

[email protected]

[phantom_opera]

semi retirement ... what a loss of talent but at least he can enjoy life

[newbie11]

this guy is 10x better than Cooling Tan

very good analogy:

"Let me give you an analogy. When a bull runs without stopping, it will collapse sooner or later. In the same way, this property bull run has to stop. But this bull run has had six stops, in which the bull has had time to drink water, relax, and regain its strength. Without the six stops, the market would have crashed, just like the bull!"

Well he is boss of ah tan

[newbie11]

This time is over-done. Simply because HDB upgraders will be angry. Let's revisit my point 6-12 months later. Cheers.

It's all about first timers. The rest can stand aside and take a breather

[kane]

this guy is 10x better than Cooling Tan

very good analogy:

"Let me give you an analogy. When a bull runs without stopping, it will collapse sooner or later. In the same way, this property bull run has to stop. But this bull run has had six stops, in which the bull has had time to drink water, relax, and regain its strength. Without the six stops, the market would have crashed, just like the bull!"

agree. he is firm on what he thinks. after reading the article, at least I understand what is his point of view.