Opinion here is entirely my our, please use information at your own risk.

Headlines

- Banks write off billions (European banks, i thought it was US sub prime)
- China real estate company close down (What has it got to do with US sub prime)
- Government building more roads, more MRT (Microeconomics 101, stimulus plan?)
- No. 1 rogue trader appears
- Developers delay launch

Seems like everyone is using the start of 2008 to announce bad news so perhaps can expect a lot more to come. This US financial crisis seems to be different from the asian one, or else how is it possible to make the same mistake twice. We know how the asian crisis felt because we were the ones affected by it. Now this US one seems to be a much bigger problem, the last time asian banks collapsed like a deck of cards. US banks are indeed different, loosing much bigger amounts and somehow still solvent. So if that's the case we need not worry about another great depression because 'they' won't let it happen. The point is global economy is not going so great.

Okay so we know there will be more bad news coming, and the economy will not be allowed to crash for a long period of time. So now what?

My assumptions:

Enbloc money

What does $2m dollar mean? Let's take the Farrer Court example, they should receive their cheques in March 2008. 4% return on $2m is $80,000/ year or $6,666/ mth. It does not go very far in Singapore, however elsewhere you are done, job finished, thank you for coming. Let's not start with Australia or New Zealand's interest rates. What about the cheap living expenses in Malaysia, Thailand or China? Suddenly living overseas becomes an option. Get real who cares about citizenship when i have cash? Everywhere will welcome me, i don't need to work overseas so don't require employment pass. Don't need to borrow from banks. Don't need to buy property overseas when i can rent. All this financed by interest only, i still have not touched my principle. Perhaps buy a small flat in Singapore and the option of living overseas 80% of the time is now available.

*Tip: i can send my kids overseas to study in Perth $100k for 4 years i can also go and live there as a guardian, can go casino need not pay $100 entrance fee. Come back after 4 years buy property also not too late!

My guess: Property market to remain soft this year and maybe so for the next 3 years. Only direct flats from HDB will do well as people refuse to pay so much cash even when they can afford to. In 2010 when there is excess supply, enbloc money will come into the market again, don't forget the cash rich can afford to wait out for 3 years. Paying $5k rent a month doesn't hurt as much as going from $1500 psf to $1200 psf. The poor just declare bankrupt, oops! no more casino.

Rentals

The only reason for the escalating property prices is rental demand. I assume a lot of foreigners want to come to Singapore to work for the next 2 years. After all $18b of foreign direct investments in 2007 is a lot of money. If demand remains, all will be good, however if this changes. Well, let's not think about it. If you have 2 or more properties it will be great for cashflow in this low interest rate era. However, if you are thinking of cashing out and downgrading perhaps in your 40s and could be laid off or don't expect business to be so positive within the next 3 years. Sell if you can because nobody knows how long or how deep the pit is.

2007

I feel 2007 was a very good year to sell. Not a very good time to buy, buying should have been done 24 months before during periods of soft demand. Is now a good time to buy? I don't think so! It's a bit different as the past 12 months market and economy good and many can afford to hold and still ask for crazy prices. I'm observing sellers asking for $1500 psf for 8 @ Mt Sophia 2 months ago are now dying to sell for $1200 psf, and still no takers. When sellers get desperate, trouble begins like i mentioned nobody knows where the support is? Because no offers or buyers means no money and no stop to the bleeding. So those with tenants congratulations! You are safe for now.

As an agent of course i like to ask everyone to buy, but let's look at the stock market 3500 to 3000 in first month 2008, 15% gone just like that. Prudence is the key, at least for the next 3 years. My 2 million sense.

Physical properties have done well in 2007. However, we see rising systematic risks
as a real issue going into 2008. Possible US sub-prime spillover, rising land costs
and possibilities of further cooling measures from the government are factors that
will likely moderate upside surprises in 2008. On the residential front, we see the
mass market providing most upside at current low base driven by flow of displaced
buyers from enbloc sales, attractive rental yields and recovery in the HBD resale
market. We are less positive on the mid-high segments currently. Overall, our price
forecasts for private mid-high end and mass market housing are lowered from 15%
and 25% to 8% and 15% respectively. While office supply continues to be tight, we
see demand and rental growth for prime office space moderating in 2008 given
rising decentralization trend and resistance in recent commercial land bids. That
said, we maintain our 30% prime rental growth forecast for 2008 as significant prime
office stock are unlikely to come through till 2009-10.