First, the government has no business helping private real estate companies like Kwek Leng Beng’s to attract international business. Nor, as [Straits Times’] Cheryl Ong put it in her opinion article in ST A20 yesterday, no obligation for the government to “give a lift” to the property market.” The real estate industry is an industry that basically thrives on monopolistic rents. It is not a productive industry, in a strict sense of the term.
If Kwek Leng Beng finds it hard to make money, he only has himself to blame for not working harder. Meritocracy, right?
Second, it is of no loss to Singapore if we miss out on Kwek Leng Beng’s so-called [foreign] “investments.” In fact, what we have observed is the extreme negative externalities wrought by the free flow of such “investments” (read: cash) due to excess liquidity which has its roots in the liberal cash-printing US, EU and Chinese central bank policies. The spike in commercial rental increases (again monopolistic rents) has caused consumer prices to increase, and the spike in home sale and rental prices in all sectors has caused plenty of problems for Singaporeans who wish to own a home.
Third, by Cheryl Ong’s calculation, private home prices have spiked 60% since 2009.
Assuming a generous sustainable rate of 6% compound increase for home prices since 2009, home prices should only have increased by 33.8%.
We are about 25% over-valued. Quarterly decreases of 1.5% is nothing.
Forth and finally, the government’s role should be to develop a sustainable, moderate, gradual increase in home prices (just like overall inflation!) so that homes remain affordable for the masses in land-scarce Singapore – and
not to indulge folks like Kwek Leng Beng who are too happy to make a quick buck from policy errors and mistakes.