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Thread: 'Buy property stocks now, reap fruits later'

  1. #1
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    Default 'Buy property stocks now, reap fruits later'

    http://www.businesstimes.com.sg/sub/...02432,00.html?

    Published October 23, 2008

    'Buy property stocks now, reap fruits later'

    S'pore is going to be the big beneficiary of current turmoil, says Wheelock CEO

    By KALPANA RASHIWALA


    WHEELOCK Properties (Singapore) CEO David Lawrence, in his private capacity, is currently investing in Singapore property counters. Although Wheelock is in the business of selling apartments, Mr Lawrence reckons that next year may be a better time to buy condos. Instead, his advice to investors looking for value is to buy property counters at the moment 'because they are so cheap and can give you great returns over the next couple of years', he said in a recent interview with BT.

    'The indirect market - which is property counters - is completely out of line with the physical market. So the real value at the moment - and it won't be there for long - is the indirect market. Some of these shares have come down so much. They're good companies.

    'It's an arbitrage opportunity, because they've come down so much they bear no relationship to property prices. What's probably going to happen is that stock prices will go up, property prices will come down a little. They will meet eventually but at the moment there is a big arbitrage opportunity for people,' he added.

    He acknowledged that it will be a tough couple of years for the local property market. 'But then Singapore is going to be the big beneficiary of this crash, crisis, credit crunch, whatever you call it. Because there aren't many places like this left to go. I have a lot of international friends - from Europe, India, China, USA - with lots of money who will be retiring or moving to Singapore.

    'When you look around, where else can you get good security, drug-free culture, government investing heavily in new businesses, a reasonable balance between financial services and manufacturing?'

    Most importantly, Singapore has integrity in government and the banking and corporate sectors, as well as security. 'If ever Singapore loses that integrity and security, then it's finished. But I don't think it will. It's ingrained,' says the 62-year-old, who became a Singapore citizen two years ago.

    Singapore will also stand out in the race among global property investment destinations because of the strength of its judicial system, he argues. 'For me, property investment is all about judiciary. There's no point going into countries where they are very happy for you to lose money. As soon as you start making money, they want to cut it up. You get sued. It goes to a corrupt judiciary. You don't make money. I am not interested. Now I think there's lot of opportunity to invest in financial centres with good judiciaries.'

    He takes issue with investment guru Marc Faber who suggests buying property in the countryside, not financial centres. 'I totally disagree with that. If you buy in financial centres and you buy good-quality products from good developers, you will always be able to let the property. When markets get really bad, and property starts emptying out, people upgrade to the best, and Ardmore Park is a perfect example. . . And long-term, quality property is a good hedge against inflation.' Ardmore Park is a condo Wheelock launched in 1996, around the height of the property bull run.

    Given the current global financial crash, Mr Lawrence acknowledges that Singapore home prices will see a correction, without specifying the quantum of price declines. He does not think the slump will be as bad as the one during the 1997/98 Asian crisis. 'I don't think things will be that bad, particularly for good products, because fortunately we have a strong banking system here,' says Mr Lawrence. 'We have the Monetary Authority of Singapore and strong banks. They never allowed this crazy lending like they did in other countries. Most people can service their loans.'

    Other plus points this time round are low interest rates and huge liquidity in the system, he adds. 'There will be job losses. Some people might not be able to make their mortgage payments. I think most will, if they have not been speculating in too many properties.'

    Wheelock recently collected 25 per cent of sales proceeds for The Cosmopolitan, its fully sold condo at River Valley/Kim Seng roads, when the project received Temporary Occupation Permit. 'We had a 100 per cent payment on time. No problems,' he reveals.

    Mr Lawrence acknowledges that in the short term, some developers - new players and underfunded ones - will have to cut prices. 'But the strong boys like (Kwek) Leng Beng and Ng Teng Fong (chairmen of Hong Leong Group and Far East Organization, respectively), these people are not going to cut prices. They've been here before. They'll hold it through to the next cycle, which will come.'

    For the Singapore office market, prime Grade A rents may ease about 10 per cent in the next 12 months, Mr Lawrence predicts. But this is 'OK and reasonable' given that rents had been getting out of hand previously.

    'But long term, the government has plenty of land to expand. I think as government policy, it's very important to have reasonably priced office accommodation to expand the Singapore economy in the same way as the government always had reasonably priced industrial land and space to expand the industrial economy.'

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    http://www.businesstimes.com.sg/sub/...02433,00.html?

    Published October 23, 2008

    Every cycle I make one mistake, muses Wheelock CEO


    WHEELOCK Properties (Singapore) CEO David Lawrence apologised to his shareholders at an annual general meeting in April this year for having bought a stake in fellow upscale residential developer SC Global Developments last year at the top of the market.

    'I knew the market was not going to do well. The only reason I bought into SC Global was in case my gut feel was wrong and the (property) market kept going up. It was a hedge really,' Mr Lawrence told BT in a recent interview.

    'But SC Global is a well-managed, good company which will do well in the long-term,' he added.

    Wheelock purchased a 10 per cent stake in SC Global in June last year at $6 per share. SC Global has since done a two-for-one stock split and the counter closed at 39 cents yesterday. Wheelock's stake in SC Global currently stands at 15 per cent following open market purchases this year and a reduction in SC Global shares on issue after a recent buy-back exercise.

    'Every cycle, I make one mistake. The last cycle, I bought Ardmore View. And then I had to write it down, but then I did make good money.

    'This cycle I bought SC Global. It was a mistake. But it is a good company, so I'll just have to hold it longer and make money.'

    Wheelock bought Ardmore View in 1999 (after the Asian financial crisis) but had to write down the site's value when property values fell again. The group has since amalgamated the Ardmore View site with the former Habitat II plot next door and redeveloped it into the 118-unit Ardmore II condo, which is fully sold.

    Wheelock also owns a stake of about 20 per cent in Hotel Properties Ltd (HPL), which it bought in March 2006 for $1.80 per share. HPL has since made a renounceable rights issue of one rights share for every 10 shares. HPL closed at $1.01 on the stock market yesterday.

    Wheelock itself is in a strong position to weather the current slump. 'At the moment, we have in excess of $800 million cash for the company - some free cash, some in (residential) project accounts.'

    According to a recent study by DMG & Partners of over 30 Singapore-listed property developers, Wheelock was the only one with negative net gearing as at June 30, 2008.

    Says Mr Lawrence: 'What I try and do for my shareholders is that when things are good, they make money on the share price. But when things are down, I try and keep enough cashflow, (so) I can pay them a decent dividend. I don't always guarantee it but that's what I try and do.'

    The last Singapore residential site Wheelock bought was Habitat One, in July 2006 - at least a full year before the high-end market peaked. The group's purchase price of around $2,000 psf per plot ratio is considered a viable land price for the upmarket residential sector even in today's market. Construction of an 84-unit condo on the prime site has yet to begin and Mr Lawrence says the plan is to keep the site till the market improves.

    Another project Wheelock has yet to launch is the 30-unit Orchard View, which is being built on the former Angullia View site that the group bought in late 2004. This was just before the start of the recovery in high-end residential prices, at a land price of just $643 psf per plot ratio, again testimony to Mr Lawrence's skills in buying land at competitive prices.

    However, he prides himself in selling, and not buying. 'Any idiot can buy things. So you have to be careful when you have cash. Developers like the glamour of buying buildings or sites. It's glamorous buying things. You're in the papers. I'd rather be in the papers for selling things for a profit.'

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    It's like a fruit seller desperately peddling his overly ripe fruits before they rot in the near future.

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    Quote Originally Posted by toaler
    It's like a fruit seller desperately peddling his overly ripe fruits before they rot in the near future.
    No. This fruit seller has sold all his fruits.

    More like you are the fůcking rotten assple!

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    Default Let the rich buy first

    Hopefully the rich see the news and push the market up.

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