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Thread: S'pore not necessarily the 'costliest city'

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    Default S'pore not necessarily the 'costliest city'

    S'pore not necessarily the 'costliest city'
    Appreciation in exchange rate big factor in rise in living costs for expats: ACI

    BY KARA QUEK
    [email protected]
    PUBLISHED MARCH 29, 2014

    Singapore

    THE steady appreciation of the Singapore dollar was a significant contributing factor to Singapore being ranked first in living costs for expatriates, according to a study by the Asia Competitiveness Institute (ACI).

    The study covered 109 cities, providing cost of living, wage, and purchasing power indices for both expatriates and the average resident from 2005 to 2012. This study is the first of its kind to cover average residents.

    In the study, Singapore was ranked most expensive in living costs for expatriates. However, this was partially due to a 25 per cent appreciation of the Singapore dollar against the US dollar.

    When comparing the cost of living index for expatriates in Singapore against the index for Hong Kong, where the currency is tied to the US dollar, ACI found that while Singapore's index value kept rising, Hong Kong's remained relatively dormant.

    "I was curious . . . how could Hong Kong be so flat in the expats' cost of living index, and Singapore's . . . be steadily (increasing)?" said Tan Khee Giap, co-director of ACI. "When it comes to average residents, they're about the same. So that puzzled me . . . and we decided, let's investigate."

    The "investigation" came in the form of a simulation, where ACI used the Singapore dollar exchange rate from 2005 (US$1 = S$1.66) instead of 2012 (US$1 = S$1.25) to calculate the indices.

    Without the 25 per cent exchange rate appreciation effect, Singapore's ranking fell from first to 16th, not far from its 2005 ranking, where it ranked in the 17th place.

    Hong Kong's simulated result, however, remained in 20th place, as its currency did not appreciate within the same time period.

    The rise in cost of living for expatriates, however, is not solely due to the exchange rate appreciation effect, said ACI. There were some other significant contributing factors, including housing costs (118 per cent increase) and transport (49 per cent increase). In the worldwide rankings for 2012, housing and transport costs for expatriates in Singapore were ranked highest in the world.

    Even with the rise in exchange rate, housing costs still ranked second highest in the world, and transport costs remained in first place.

    This does not mean that Singapore is the world's most expensive city, as it is still relatively affordable for locals to live in Singapore.

    The study placed Singapore's cost of living index for average residents at 60th in the 2012 world rankings - a position unaffected by the appreciation in exchange rate, and a far cry from its ranking in the expatriates' cost of living index.

    However, cautioned Dr Tan Khee Giap, the difference in the indices for expatriates and local residents was not indicative of income disparity or wealth disparity, as the indices were based purely on prices.

    The cost of living being much higher for expatriates than average residents was a trend observed in cities of other Asian countries like Seoul and Beijing.
    "This is a duality effect . . . the filet mignon versus pork chop effect," said Tan Kong Yam, co-director of ACI, explaining that the highly different consumption patterns of expatriates and average residents gave rise to the disparity in rankings.

    He also noted that in cities such as Paris and New York this difference was not as apparent, as it was "roughly equally expensive for expats and domestic residents" to live there.

    Indeed, in comparison to New York - which was used as the base for the study - the average Singaporean's cost of living was 35 per cent lower. Dr Tan Kong Yam pointed out three key areas that were much cheaper for Singaporeans than New Yorkers: healthcare (75 per cent cheaper), education (73 per cent cheaper), and housing (27 per cent cheaper).

    This, he said, was due to government subsidies for Singapore residents in these areas. As expatriates are not covered by these subsidies, they find it more expensive than the local residents.

    Looking towards the future, Dr Tan Khee Giap raised the importance of monitoring the affordability of education, housing, healthcare and transport costs for locals over the next decade, mentioning the possibility of ACI doing affordability indices to monitor those four areas.

    http://www.businesstimes.com.sg/prem...-city-20140329

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    Singaporeans are not supposed to drive but take MRT, and stay in HDB only

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    This study seems to be conducted by a Singapore institute so it is biased and in the news last night, the logo LKY was in the background. It seems to be done to placate Singaporeans upset with the initial survey findings that we r yhe most expensive.

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    basically,he is saying the fault is due to SGD appreciation?
    if without SGD appreciation, our cost of living with be even higher because 99% of food (low class & high class), household items and raw materials to build property, etc are imported

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    But they are also telling the facts!
    The previous research report about Singapore most expensive for Expats is not wrong, but it has to do with life-style costs!

    We all know we are Asians, we don't live the way these Western Expats do....................
    Western Expats can't live without wine and beer a single day, and all these are very expensive in Singapore..............
    They live in prime properties, eat in restuarants, being chauffeured around or drive or take taxi to go around..................

    Singaporeans many eat at hawker centres or food courts............
    Singaporeans don't need to drink wine and beer everyday................
    Take MRT and buses.....................
    Most live in HDB flats...................

    Just these differences already make a big differences in living costs!

    Quote Originally Posted by mummy View Post
    This study seems to be conducted by a Singapore institute so it is biased and in the news last night, the logo LKY was in the background. It seems to be done to placate Singaporeans upset with the initial survey findings that we r yhe most expensive.

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    To foreigners eg US expats, they are paid in US$, but they need to spend in S$ in Singapore.
    Therefore if S$ appreciates, their living costs in US$ / Income in US$ increases! So more expensive for them lor!

    To Singaporeans, they are paid in S$. They import in US$, Euro, Yen, RMB etc.
    So when S$ appreciates, their living costs in S$ / Income in S$ drops!

    There goes the significant differences!

    Quote Originally Posted by wt_know View Post
    basically,he is saying the fault is due to SGD appreciation?
    if without SGD appreciation, our cost of living with be even higher because 99% of food (low class & high class), household items and raw materials to build property, etc are imported

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    assuming S$ depreciates ... the cost of import for beef, wine, cigar, oyster, caviar, armani suit, LV bag, etc will be more expensive.
    business will raise their price. so having the same US$ changing to more S$, expats need to pay more too, isn't it?

    the problem now is S$ appreciates, import cost is lower, but business cost rise due to rise of property & rental, all kind of taxex, obscene margin, higher labour cost due to rapid expansion, etc

    classic example, conti car OMV drop significantly for the past few years due to euro$ down but car is sold much much more expensive compare to 5 years ago simply because all the saving in currency exchange is pumped into COE and the tax raises in ARF. net result car is much more expensive even though import cost is lower. public transportation cost also go up significantly higher that trickle down to consumer.

    in a nutshell for singapore story, external cost is lower but internal cost is higher 2x-3x

    Quote Originally Posted by teddybear View Post
    To foreigners eg US expats, they are paid in US$, but they need to spend in S$ in Singapore.
    Therefore if S$ appreciates, their living costs in US$ / Income in US$ increases! So more expensive for them lor!


    To Singaporeans, they are paid in S$. They import in US$, Euro, Yen, RMB etc.
    So when S$ appreciates, their living costs in S$ / Income in S$ drops!

    There goes the significant differences!
    Last edited by wt_know; 29-03-14 at 10:29.

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    Quote Originally Posted by teddybear View Post
    But they are also telling the facts!
    The previous research report about Singapore most expensive for Expats is not wrong, but it has to do with life-style costs!

    We all know we are Asians, we don't live the way these Western Expats do....................
    Western Expats can't live without wine and beer a single day, and all these are very expensive in Singapore..............
    They live in prime properties, eat in restuarants, being chauffeured around or drive or take taxi to go around..................

    Singaporeans many eat at hawker centres or food courts............
    Singaporeans don't need to drink wine and beer everyday................
    Take MRT and buses.....................
    Most live in HDB flats...................

    Just these differences already make a big differences in living costs!
    so simple theory and yet many pple dont understand...dunno who is bias...
    Ong lai ah!

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    Yes you scored 1 big point - Business costs increases because of REITs! Many are GLCs owned!

    While there are so many cooling measures for residential properties sector, there aren't any cooling measures for commercial / retail / office properties! The creation of more and more REITs, absorbing the commercial properties sold off by the like of state-owned enterprises like JTC and then jacking up the business rentals are what jack up business costs, which then get transferred and filtered down to consumers!


    Quote Originally Posted by wt_know View Post
    assuming S$ depreciates ... the cost of import for beef, wine, cigar, oyster, caviar, armani suit, LV bag, etc will be more expensive.
    business will raise their price. so having the same US$ changing to more S$, expats need to pay more too, isn't it?

    the problem now is S$ appreciates, import cost is lower, but business cost rise due to rise of property & rental, all kind of taxex, obscene margin, higher labour cost due to rapid expansion, etc

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    A recent article on Riets arose from a close door session of economist, Riets CEO, journalist, etc with Kbw.
    Quote Originally Posted by teddybear View Post
    Yes you scored 1 big point - Business costs increases because of REITs! Many are GLCs owned!

    While there are so many cooling measures for residential properties sector, there aren't any cooling measures for commercial / retail / office properties! The creation of more and more REITs, absorbing the commercial properties sold off by the like of state-owned enterprises like JTC and then jacking up the business rentals are what jack up business costs, which then get transferred and filtered down to consumers!

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    Quote Originally Posted by wt_know View Post
    basically,he is saying the fault is due to SGD appreciation?
    if without SGD appreciation, our cost of living with be even higher because 99% of food (low class & high class), household items and raw materials to build property, etc are imported

    becoz people like to compare with other countries. if our currency is stronger and now even stronger dont we find going to thailand or indonesia feeling things are cheaper there.?


    Or do we rather have a weak currency which also mean weak economy. and then going to thailand or indonesia feeling expensive. In so means singapore is also cheaper than the latter 2. So do we feel any better? coz singapore is cheap?

    if want to compare with the high end rent of $7K a mth which is stated in the report. these are also higher end expats. many expats I know only can afford rent in the $4K region. and with the currency of US weakening that $4K they use to pay already feel more expensive.

    Do locals pay $4K rent? many own HDB no need to rent. those renting in the same working level as the expats will go look for rental ard $2600-$3000. or even rent HDB coz its a different life style and a localized behaviour. Localized expats also go rent HDB too! only most newbies or those with budget or those who need lifestyle pay more. Which is fair. u want more expect more pay more. I dont see anything wrong with that.

    So the BBC article that compare singapore are comparing the high end expats which are mostly in snr level. So as usual Singaporean who KPKB only like to belive in the negative stuff even if its explained its not accurate depicting their situation.

    How many signaporean live like that? only those really really well to do ones. And if they make their $ they can choose to live they way they like its not a CRIME.
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    Why need close door? Many things cannot let the laymen know?

    Why MND and MAS did not implement cooling measures for commercial / retail / office etc business property prices so that inflation will be lower and Singaporeans won't be hit by jacking up of business rentals (which are then transferred to consumers)?

    Quote Originally Posted by DC33_2008 View Post
    A recent article on Riets arose from a close door session of economist, Riets CEO, journalist, etc with Kbw.

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    Quote Originally Posted by wt_know View Post
    assuming S$ depreciates ... the cost of import for beef, wine, cigar, oyster, caviar, armani suit, LV bag, etc will be more expensive.
    business will raise their price. so having the same US$ changing to more S$, expats need to pay more too, isn't it?

    the problem now is S$ appreciates, import cost is lower, but business cost rise due to rise of property & rental, all kind of taxex, obscene margin, higher labour cost due to rapid expansion, etc

    classic example, conti car OMV drop significantly for the past few years due to euro$ down but car is sold much much more expensive compare to 5 years ago simply because all the saving in currency exchange is pumped into COE and the tax raises in ARF. net result car is much more expensive even though import cost is lower. public transportation cost also go up significantly higher that trickle down to consumer.

    in a nutshell for singapore story, external cost is lower but internal cost is higher 2x-3x

    There is a fair market price that luxury goods bench mark. If SGP drop so much. and the locals dont have the consumption powers... and there is no market the luxury product will pull out.

    Car dealership comparison u will also have to compare volume. if the no. of COE drop they sell less cars then the dealership would also demand higher margin to stay in business here. if margin is no good and no volume. then must well go setup shop in other places where margin is equally bad but got volume.

    one internal cost is also income. if all income are raised across board without a skill set improvement. then its put opex uplift. then that cost will have to be bore somewhere. then it go back to the margin question.
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    Quote Originally Posted by wt_know View Post
    assuming S$ depreciates ... the cost of import for beef, wine, cigar, oyster, caviar, armani suit, LV bag, etc will be more expensive.
    business will raise their price. so having the same US$ changing to more S$, expats need to pay more too, isn't it?

    the problem now is S$ appreciates, import cost is lower, but business cost rise due to rise of property & rental, all kind of taxex, obscene margin, higher labour cost due to rapid expansion, etc

    classic example, conti car OMV drop significantly for the past few years due to euro$ down but car is sold much much more expensive compare to 5 years ago simply because all the saving in currency exchange is pumped into COE and the tax raises in ARF. net result car is much more expensive even though import cost is lower. public transportation cost also go up significantly higher that trickle down to consumer.

    in a nutshell for singapore story, external cost is lower but internal cost is higher 2x-3x

    SG is a net export country - i.e. it gains more with a weakened SGD than a strong one. by the way, businesses raise prices regardless of the currency movement.

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    true ... just take a look at petrol price
    however, the study put all the blame to currency exchange gain ... LOL

    Quote Originally Posted by eng81157 View Post
    SG is a net export country - i.e. it gains more with a weakened SGD than a strong one. by the way, businesses raise prices regardless of the currency movement.

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    Quote Originally Posted by wt_know View Post
    true ... just take a look at petrol price
    however, the study put all the blame to currency exchange gain ... LOL
    and to put it more aptly in your example, oil providers raise petrol prices regardless of crude oil movements, sans gravity

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    Look at the petrol price in JB.
    Quote Originally Posted by eng81157 View Post
    and to put it more aptly in your example, oil providers raise petrol prices regardless of crude oil movements, sans gravity

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