Banks: Home Market Should Be Priority
Investors were generally thankful recent sub-prime loan related losses among Singapore banks weren't higher. At a time when US banks consistently announced billions and billions of dollars worth of exposure, and the CEOs of Merrill Lynch and Citigroup resigned, Singapore banks were generally unscathed. But at a time when Singapore's economy is booming and yet many legitimate local businesses still can't get loans, one has to ask why in the world Singapore banks would have any exposure to sub-prime loans at all! Our argument is: DBS, UOB and OCBC should focus on loaning money to Singapore businesses, rather than throwing money at Collateralised Debt Obligations (CDOs).
The earnings statements from the banks tell the story:
DBS reported third quarter enterprise loans of S$22.5 bln, up around 10% from the year earlier. But corporate and investment banking rose to S$45.6 bln, from S$32.7 bln. This is more than double the enterpise amount. DBS's CDOs were S$2.36 bln. None of them were in default, it says, but it took an S$85 mln charge for sub-prime concerns.
"A huge sigh of relief", is how CIMB's Kenneth Ng characterised DBS' earnings in a report dated October 29.
Similar story at OCBC, which had S$270 mln in exposures to the subprime issue, and it took a provision of S$221 mln in case these turned bad.
These exposures certainly aren't large, and the banks are sufficiently prudent to disclose their exposures (although – as we blogged previously – it took DBS two tries to get it right). But it does make you wonder why the banks even have such exposures.
As mentioned, the same earnings announcements documented how strong loan growth had been. Wouldn't it make more sense to lend money to Singaporean SMEs, which continually complain about how difficult it is to get a loan from a bank, than to be "investing" (read, gambling) on subprime Collateralised Debt Obligations. After all, what are sub-prime CDOs, than a funky financial product invented by investment bankers to make money out of Americans who should never have been granted a home loan in the first place.
Mark Laudi
To comment on this blog, visit the Investor Central Blog.
Should Singapore banks have ever invested in US subprime loans?
Tell us...
Yes, they need to diversify their risks across a broad spectrum of assets, including subprime CDOs
No, they should not have invested in subprime loans.
No, they should have put that money towards Singapore SMEs instead
The earnings statements from the banks tell the story:
DBS reported third quarter enterprise loans of S$22.5 bln, up around 10% from the year earlier. But corporate and investment banking rose to S$45.6 bln, from S$32.7 bln. This is more than double the enterpise amount. DBS's CDOs were S$2.36 bln. None of them were in default, it says, but it took an S$85 mln charge for sub-prime concerns.
"A huge sigh of relief", is how CIMB's Kenneth Ng characterised DBS' earnings in a report dated October 29.
Similar story at OCBC, which had S$270 mln in exposures to the subprime issue, and it took a provision of S$221 mln in case these turned bad.
These exposures certainly aren't large, and the banks are sufficiently prudent to disclose their exposures (although – as we blogged previously – it took DBS two tries to get it right). But it does make you wonder why the banks even have such exposures.
As mentioned, the same earnings announcements documented how strong loan growth had been. Wouldn't it make more sense to lend money to Singaporean SMEs, which continually complain about how difficult it is to get a loan from a bank, than to be "investing" (read, gambling) on subprime Collateralised Debt Obligations. After all, what are sub-prime CDOs, than a funky financial product invented by investment bankers to make money out of Americans who should never have been granted a home loan in the first place.
Mark Laudi
To comment on this blog, visit the Investor Central Blog.
Should Singapore banks have ever invested in US subprime loans?
Tell us...
Yes, they need to diversify their risks across a broad spectrum of assets, including subprime CDOs
No, they should not have invested in subprime loans.
No, they should have put that money towards Singapore SMEs instead
Labels: DBS, OCBC, Singapore, subprime, UOB
Manufacturing companies hit a new wave
The words entrepreneur and innovation brings to mind a young individual striking out on his own, struggling to market his new idea or product.
Now what stands out in a world of piracy and cheap replica's?
A new product, yes...that must be unique, not something that the market already has nor a variation.
A product that has added value to its consumers.
And most of all, consumers must like it.
Niche market, that's what we can call it.
But considering that we're advancing as such a breaknecked pace, creating a niche market is one thing, sustaining it is another.
Well, it seems manufacturing companies may have to join in this fun filled world of 'who gets the most customers'.
And of course as the end users, we are in for a treat to a wide selection of products available on the market....we're simply spoiled for choice, but whose complaining? Certainly not me.
According to an article on the Business Times website entitled R&D tolerate short -term pain for long term gain.
It said, until the late 1990's, the primary strengths of manufacturing centres was its ability to provide low-cost labour and resources.
However, the industry was in for a rude awakening as China emerged as a leading offshore manufacturing platform.
In terms of pricing, they certainly beat us hands down. Upgrading one's traditional assembly line certainly won't do much good.
Jong Voon Hoo the Chief financial officer of China-based Youcan Foods said in a statement on an article entitled Gaining an edge through innovation on the Business Times website today that 'Competition is intensifying across most industries and it is getting more difficult to find unique selling points on similar products. Therefore it is important that our R&D department remain creative'.
His fears are not unfounded as Fong Saik Hay, the chief technology officer of ST Engineering and president of ST Dynamics is also chomping at the bit through partnerships with research institutes, small start-ups and other mature companies.
So the bigger companies have their work cut out for them. Where does that leave small companies who do not have the resources?
No fear for the government is here!
Allow me to just rattle of a couple of government aids:
First, the Singapore Economic Development Board instituted the Product and Process Development Assistance Scheme to give local companies a hand to improve their design and development capabilities.
Second, Spring Singapore has launched a S$150 mln Technology Innovation Programme last August. It has set up Centers that provide technology consultancy and advise to small and medium enterprises.
It has also launched a S$9 mln Intellectual Property Management programme allows SME's to protect their products from copyright issues.
In the same article, Darius Cheung, the Chief Executive Officer of mobile technology start-up tenCube gives us a glimpse as to why manufacturing companies were not big on investing in its R&D arm.
He says that 'Asian companies are commonly pressured to focus on short-term profits without the freedom to invest in creative processes that may be difficult to justify in terms of monetary returns.
However he added that this very same process may be the one to produce tremendous bottom-line results.
So, we've covered the direction on which manufacturing companies are heading towards and the funding that will be available to them.
Not forgetting that ideas are..ultimately generated from people.
So about the welfare side.
Companies such as ST Engineering and tenCube are pressing hard on creating a 'conducive and supportive environment' and culture which will allow 'creativity to thrive' and some are even offering monetary incentives.
But it seems innovative R&D still has a rather way to go.
Resolving technologies and funding issues are just the tip of the ice berg and i dare say may be the easier obstacles.
With so many variations of products on the market, obtaining a unique selling point and meeting consumer demand is certainly not a stroll in the park.
More effort has to be placed in research gathering, to understand the end consumer before being able to create a product that will stand out and appeal.
After all culture is not something that can be created or changed overnight.
Yeo Sue En
As always, please see your licensed financial advisor before making any financial decisions.
Now what stands out in a world of piracy and cheap replica's?
A new product, yes...that must be unique, not something that the market already has nor a variation.
A product that has added value to its consumers.
And most of all, consumers must like it.
Niche market, that's what we can call it.
But considering that we're advancing as such a breaknecked pace, creating a niche market is one thing, sustaining it is another.
Well, it seems manufacturing companies may have to join in this fun filled world of 'who gets the most customers'.
And of course as the end users, we are in for a treat to a wide selection of products available on the market....we're simply spoiled for choice, but whose complaining? Certainly not me.
According to an article on the Business Times website entitled R&D tolerate short -term pain for long term gain.
It said, until the late 1990's, the primary strengths of manufacturing centres was its ability to provide low-cost labour and resources.
However, the industry was in for a rude awakening as China emerged as a leading offshore manufacturing platform.
In terms of pricing, they certainly beat us hands down. Upgrading one's traditional assembly line certainly won't do much good.
Jong Voon Hoo the Chief financial officer of China-based Youcan Foods said in a statement on an article entitled Gaining an edge through innovation on the Business Times website today that 'Competition is intensifying across most industries and it is getting more difficult to find unique selling points on similar products. Therefore it is important that our R&D department remain creative'.
His fears are not unfounded as Fong Saik Hay, the chief technology officer of ST Engineering and president of ST Dynamics is also chomping at the bit through partnerships with research institutes, small start-ups and other mature companies.
So the bigger companies have their work cut out for them. Where does that leave small companies who do not have the resources?
No fear for the government is here!
Allow me to just rattle of a couple of government aids:
First, the Singapore Economic Development Board instituted the Product and Process Development Assistance Scheme to give local companies a hand to improve their design and development capabilities.
Second, Spring Singapore has launched a S$150 mln Technology Innovation Programme last August. It has set up Centers that provide technology consultancy and advise to small and medium enterprises.
It has also launched a S$9 mln Intellectual Property Management programme allows SME's to protect their products from copyright issues.
In the same article, Darius Cheung, the Chief Executive Officer of mobile technology start-up tenCube gives us a glimpse as to why manufacturing companies were not big on investing in its R&D arm.
He says that 'Asian companies are commonly pressured to focus on short-term profits without the freedom to invest in creative processes that may be difficult to justify in terms of monetary returns.
However he added that this very same process may be the one to produce tremendous bottom-line results.
So, we've covered the direction on which manufacturing companies are heading towards and the funding that will be available to them.
Not forgetting that ideas are..ultimately generated from people.
So about the welfare side.
Companies such as ST Engineering and tenCube are pressing hard on creating a 'conducive and supportive environment' and culture which will allow 'creativity to thrive' and some are even offering monetary incentives.
But it seems innovative R&D still has a rather way to go.
Resolving technologies and funding issues are just the tip of the ice berg and i dare say may be the easier obstacles.
With so many variations of products on the market, obtaining a unique selling point and meeting consumer demand is certainly not a stroll in the park.
More effort has to be placed in research gathering, to understand the end consumer before being able to create a product that will stand out and appeal.
After all culture is not something that can be created or changed overnight.
Yeo Sue En
As always, please see your licensed financial advisor before making any financial decisions.
Labels: culture, innovation, manufacturing, research and development, RnD, Singapore
With StarHub's earnings, is industry consolidation inevitable?
We saw the earnings from StarHub Thursday night and while there was overall top and bottom line growth, their earnings shed some light on the operating environment in this industry here in Singapore. Competition is fierce amongst the telcos, and with mobile phone penetration floating well above 100%, the pressure on 'the big 3' telcos to come up with alternative revenue streams is immense.
Could consolidation in the industry be inevitable? IMHO, the factors are there pointing to that.
Looking at their earnings, two specific areas jumped out at me: 1) revenue growth was flat for its cable business and 2) its post-paid mobile subscriber customer based dipped. To me, those two things don't bode well at all given that cable is such a an integral part of StarHubs business in addition to mobile. With mobile still being the bread and butter of the business, their post-paid customer base seems to be on the decline somewhat as well.
After reading Starhubs earnings, you really have to ask yourself what the future holds for StarHub and who will out muscle who amongst the telcos here in Singapore.
Quite frankly, I think three major players is far too many here in Singapore. I wouldn't be surprised if you saw consolidation. SingTel without a doubt holds the top spot here in Singapore and undoubtedly will be for some time I think. But you almost wonder if M1 and SatrHub came together what the benefits would be not only for shareholders but for consumers.
Mergia mania maybe will even make its way over to Singapore, as we have seen plenty of companies in the United States come together under situations similar. The only question is, are executives thinking the same thing. Only time will tell.
Curtis Bergh
As always please see your licensed financial advisor before making any investment decisions
Could consolidation in the industry be inevitable? IMHO, the factors are there pointing to that.
Looking at their earnings, two specific areas jumped out at me: 1) revenue growth was flat for its cable business and 2) its post-paid mobile subscriber customer based dipped. To me, those two things don't bode well at all given that cable is such a an integral part of StarHubs business in addition to mobile. With mobile still being the bread and butter of the business, their post-paid customer base seems to be on the decline somewhat as well.
After reading Starhubs earnings, you really have to ask yourself what the future holds for StarHub and who will out muscle who amongst the telcos here in Singapore.
Quite frankly, I think three major players is far too many here in Singapore. I wouldn't be surprised if you saw consolidation. SingTel without a doubt holds the top spot here in Singapore and undoubtedly will be for some time I think. But you almost wonder if M1 and SatrHub came together what the benefits would be not only for shareholders but for consumers.
Mergia mania maybe will even make its way over to Singapore, as we have seen plenty of companies in the United States come together under situations similar. The only question is, are executives thinking the same thing. Only time will tell.
Curtis Bergh
As always please see your licensed financial advisor before making any investment decisions
Labels: Singapore, StarHub, telcos in Singapore
Foreign Funds now buying into Singapore property
The property market in Singapore continues to be red hot as more developments get launched and speculators continue to buy.
But a new trend is emerging in this market, and that lies in foreign investment funds buying up blocks of property in Singapore.
We saw just the other day the sale of two blocks at Reflections at Keppel Bay - a development by Keppel Land- get gobbled up by a recently established fund backed by the Kuwait Finance House and Amanah Raya in Malaysia.
This I think is the beginning of a trend that we will see continue here in the Singapore property sector. Big listed property developers will sell off chunks of developments to foreign holders and take the profits at higher margins straight away.
Not only will the property funds that are investing in Singapore be from overseas, but more and more will increasingly come from the Middle East and places such as Kuwait, Dubai, and Qatar.
And if that keeps up, I think then the prospect of the property bubble bursting anytime soon goes down significantly only prolonging the streak of rising prices in this ridiculously overpriced property market in Singapore.
Curtis Bergh
But a new trend is emerging in this market, and that lies in foreign investment funds buying up blocks of property in Singapore.
We saw just the other day the sale of two blocks at Reflections at Keppel Bay - a development by Keppel Land- get gobbled up by a recently established fund backed by the Kuwait Finance House and Amanah Raya in Malaysia.
This I think is the beginning of a trend that we will see continue here in the Singapore property sector. Big listed property developers will sell off chunks of developments to foreign holders and take the profits at higher margins straight away.
Not only will the property funds that are investing in Singapore be from overseas, but more and more will increasingly come from the Middle East and places such as Kuwait, Dubai, and Qatar.
And if that keeps up, I think then the prospect of the property bubble bursting anytime soon goes down significantly only prolonging the streak of rising prices in this ridiculously overpriced property market in Singapore.
Curtis Bergh
Labels: Foreign Property Funds, Property Market, Singapore, Singapore Property
The Smoking Ban...watch your bottom lines!
Ah finally, Singapore came around to what the rest of the civilized world was doing: banning smoking indoors. Contrary to popular belief that this will hurt businesses (particularly big listed companies such as Lifebrandz and FJ Benjamin which have a stake in the nightlife scene here), this could be the greatest thing to happen to Singaporean night establishments in a long time.
Lets look at what started the trend and got the ball rolling here in Asia. Hong Kong, a city that I think is way more tobacco savvy than us here in Singapore, went smoke free on New Years, something that I found surprising, and was one of the first cities in Asia to do so.
Thailand has introduced tough anti-smoking laws which have helped people there quit smoking.
Boston, where I went to school, kicked the habit a few years back. Let me tell you first-hand, it's glooooorious to be able to breath in a bar or club without smoking and know you are not pumping cancer causing agents into your system. Now, I like the party scene in Singapore a whole lot more than Boston because it's so diverse and energetic. But on the whole, a night out in Boston was almost better simply because I came home and didn't have to shower to get the burning smell and stench of cigarettes out of my skin.
Thankfully, I'll be able to save the utility bill a bit here too thanks to the new law.
It was really New York that was the trend setter that started the whole no smoking indoors fad. It's unusual for me to heap praise on New York with all the things I don't particularly like about it (you'll have to understand Boston has a bit of a rivalry with New York, starting first with baseball), but in this case i bow down to them for starting a global trend that will only save countless lives and people from the horrors of second hand smoke. New York, I tip my hat to you.
But while die-hard smokers complain about the new law in effect here in Singapore, and club managers are worrying about a drop in volumes and revenue, I say there is absolutely nothing to worry about. In fact, this is great for business! Here's why:
Are a mass of people actually going to stop going out just because of this? Highly unlikely. While I have heard figures that some club managers are predicating a 15%-20% drop in business (maybe even 30% in some cases), did they ever think about those that simply didn't go out before because the stench of smoke in the clubs was just too much? People that stayed home on party nights before the ban could easily make up for those smokers that are so angry that they won't go out.
But beyond this from a business perspective, look at it from a health perspective: we're all going to be breathing cleaner, healthier air, and living longer. Our lungs will thank us. As a WHO conference convenes this week in Bangkok in drafting up a global action plan to get everyone to kick the habit, a story out the other day said that 1 billion people this century could die from tobacco related diseases if something isn't done. 1 BILLION!
According to Douglas Bettcher, head of the WTO's Tobacco Free Initiative, 5.4 million people a year die due to tobacco related products and illnesses, half of those in developing countries.
Initially, health concerns were the main reason for bars, restaurants, and clubs in the U.S. to go smoke free, mainly out of concern for employees of those establishments. The second hand smoke over the course of 15 years could be just as bad as a pack a day smoker for a year or two or more for someone who works five nights a week as a bartender.
Furthermore, the argument that smoking 'is a right' and those that are smokers should have the right to smoke anywhere they want is also far fetched. Smoking is a privilege, not something that you are entitled to. end of story (I won't entertain views of the opposite, but feel free to posts your comments). To smokers making the argument that smoking is a right: you don't have the right to spread toxic garbage into non-smokers lungs in public. If you're in the privacy of your own home, go right ahead. But saying you have the right to smoke in public is like saying "hey, i have the right to kill you...it may take a couple years, but let me get the ball rolling so you die sooner." Give me a break...
To everyone in Singapore, this is the best thing to happen to public health globally and it is finally coming to our town. Hooray! From the bottom of my heart, and lungs, i have nothing but praise that this is finally in effect.
And to businesses here, don't worry! This is a good thing.
Curtis Bergh
Lets look at what started the trend and got the ball rolling here in Asia. Hong Kong, a city that I think is way more tobacco savvy than us here in Singapore, went smoke free on New Years, something that I found surprising, and was one of the first cities in Asia to do so.
Thailand has introduced tough anti-smoking laws which have helped people there quit smoking.
Boston, where I went to school, kicked the habit a few years back. Let me tell you first-hand, it's glooooorious to be able to breath in a bar or club without smoking and know you are not pumping cancer causing agents into your system. Now, I like the party scene in Singapore a whole lot more than Boston because it's so diverse and energetic. But on the whole, a night out in Boston was almost better simply because I came home and didn't have to shower to get the burning smell and stench of cigarettes out of my skin.
Thankfully, I'll be able to save the utility bill a bit here too thanks to the new law.
It was really New York that was the trend setter that started the whole no smoking indoors fad. It's unusual for me to heap praise on New York with all the things I don't particularly like about it (you'll have to understand Boston has a bit of a rivalry with New York, starting first with baseball), but in this case i bow down to them for starting a global trend that will only save countless lives and people from the horrors of second hand smoke. New York, I tip my hat to you.
But while die-hard smokers complain about the new law in effect here in Singapore, and club managers are worrying about a drop in volumes and revenue, I say there is absolutely nothing to worry about. In fact, this is great for business! Here's why:
Are a mass of people actually going to stop going out just because of this? Highly unlikely. While I have heard figures that some club managers are predicating a 15%-20% drop in business (maybe even 30% in some cases), did they ever think about those that simply didn't go out before because the stench of smoke in the clubs was just too much? People that stayed home on party nights before the ban could easily make up for those smokers that are so angry that they won't go out.
But beyond this from a business perspective, look at it from a health perspective: we're all going to be breathing cleaner, healthier air, and living longer. Our lungs will thank us. As a WHO conference convenes this week in Bangkok in drafting up a global action plan to get everyone to kick the habit, a story out the other day said that 1 billion people this century could die from tobacco related diseases if something isn't done. 1 BILLION!
According to Douglas Bettcher, head of the WTO's Tobacco Free Initiative, 5.4 million people a year die due to tobacco related products and illnesses, half of those in developing countries.
Initially, health concerns were the main reason for bars, restaurants, and clubs in the U.S. to go smoke free, mainly out of concern for employees of those establishments. The second hand smoke over the course of 15 years could be just as bad as a pack a day smoker for a year or two or more for someone who works five nights a week as a bartender.
Furthermore, the argument that smoking 'is a right' and those that are smokers should have the right to smoke anywhere they want is also far fetched. Smoking is a privilege, not something that you are entitled to. end of story (I won't entertain views of the opposite, but feel free to posts your comments). To smokers making the argument that smoking is a right: you don't have the right to spread toxic garbage into non-smokers lungs in public. If you're in the privacy of your own home, go right ahead. But saying you have the right to smoke in public is like saying "hey, i have the right to kill you...it may take a couple years, but let me get the ball rolling so you die sooner." Give me a break...
To everyone in Singapore, this is the best thing to happen to public health globally and it is finally coming to our town. Hooray! From the bottom of my heart, and lungs, i have nothing but praise that this is finally in effect.
And to businesses here, don't worry! This is a good thing.
Curtis Bergh
Labels: bar, cigarettes, club, nightlife, Singapore, Smoking ban
SingTel broadens its footprint...again.
SingTel and Warid Telecom of Pakistan are coming together in yet another deal for SingTel that broadens its scope beyond Singapore.
The 30% stake in Warid is worth an estimated US$758 mln. and now gives SingTel access to another market beyond the shores of Singapore, bringing the total number of markets that SingTel has a major presence in regionally to 8.
This sort of growth for SingTel I think signals 2 things: 1) SingTel is more a regional telco than anything, and 2) SingTel has to broaden its horizons outside of Singapore to stay profitable and revenue generating. Simply put - as most companies will probably agree with - Singapore is tapped out and SingTel has scaled the market and capitalized off the market here at home as much as it possibly can.
But the investment in Pakistan is a good one for SingTel I think, given how much that market is on the rise. It just makes you wonder where SingTel's next move is going to be and what market they will tackle next.
As always please see your licensed financial advisor before making any investment decisions.
Curtis Bergh
The 30% stake in Warid is worth an estimated US$758 mln. and now gives SingTel access to another market beyond the shores of Singapore, bringing the total number of markets that SingTel has a major presence in regionally to 8.
This sort of growth for SingTel I think signals 2 things: 1) SingTel is more a regional telco than anything, and 2) SingTel has to broaden its horizons outside of Singapore to stay profitable and revenue generating. Simply put - as most companies will probably agree with - Singapore is tapped out and SingTel has scaled the market and capitalized off the market here at home as much as it possibly can.
But the investment in Pakistan is a good one for SingTel I think, given how much that market is on the rise. It just makes you wonder where SingTel's next move is going to be and what market they will tackle next.
As always please see your licensed financial advisor before making any investment decisions.
Curtis Bergh
Labels: Pakistan, Singapore, SingTel, Warid
Why the property bubble may burst soon.
The hottest investment vehicle now has got to be property.
Property developers owning commercial buildings in town are hiking up rents and companies are paying through their noses because they don't want to lose their spot, especially when supply for prime office space is running dangerously low.
Investors in private property, while waiting to sell off their units for a hefty profit, are pocketing tidy little sums monthly from jacking up rentals to tenants so used to their dwellings they are adverse to the idea of moving out.
All's well and good for the property market, and for the people who had the foresight to invest in it before the big boom came around.
But what of the companies who lease prime office space and the people who rent condos and landed property?
Humanising the effects of this upswing in property will show just how easily, and soon, the property bubble could burst.
First, companies situated in the central business district face burning huge holes in their pockets if they want to stay in their premises. They are reluctant to move because they want to stay close to their customers.
These companies may suffer a double whammy in costs if they hire expatriates, because their salary packages usually include relocation and rental expenses.
So besides paying more to rent prime office space, they also have to pay more for their expat staff to live in Singapore.
These factors might either push firms out of the CBD area or deter them from hiring foreign expertise, even if their business needs them.
Second, the expats have to pay more for their private property rental. Their companies' rental assistance may not be proportionate to their rent increase. Some of them face rental hikes of 50-100%, and many of them have since moved out of districts 9, 10 an 11. Some have even downgraded to staying in HDB flats.
Those who find it increasingly stressful to stay on will have to reconsider their future in Singapore.
Now that will put a huge dent in the country's target of a record population by 2015.
While the empty flats in Sengkang stand more chances of being filled now, the near future of the private property market seems less bright.
After all, if even expats cannot afford condos in districts 9, 10 and 11, what hope is there for the locals?
And now that the expats are downgrading and moving to the outskirts, it may be even more difficult for us to buy property in the suburban areas without burning holes in our own pockets.
Serene Lim
*picture courtesy of www.offthemarkcartoons.com.
Property developers owning commercial buildings in town are hiking up rents and companies are paying through their noses because they don't want to lose their spot, especially when supply for prime office space is running dangerously low.
Investors in private property, while waiting to sell off their units for a hefty profit, are pocketing tidy little sums monthly from jacking up rentals to tenants so used to their dwellings they are adverse to the idea of moving out.
All's well and good for the property market, and for the people who had the foresight to invest in it before the big boom came around.
But what of the companies who lease prime office space and the people who rent condos and landed property?
Humanising the effects of this upswing in property will show just how easily, and soon, the property bubble could burst.
First, companies situated in the central business district face burning huge holes in their pockets if they want to stay in their premises. They are reluctant to move because they want to stay close to their customers.
These companies may suffer a double whammy in costs if they hire expatriates, because their salary packages usually include relocation and rental expenses.
So besides paying more to rent prime office space, they also have to pay more for their expat staff to live in Singapore.
These factors might either push firms out of the CBD area or deter them from hiring foreign expertise, even if their business needs them.
Second, the expats have to pay more for their private property rental. Their companies' rental assistance may not be proportionate to their rent increase. Some of them face rental hikes of 50-100%, and many of them have since moved out of districts 9, 10 an 11. Some have even downgraded to staying in HDB flats.
Those who find it increasingly stressful to stay on will have to reconsider their future in Singapore.
Now that will put a huge dent in the country's target of a record population by 2015.
While the empty flats in Sengkang stand more chances of being filled now, the near future of the private property market seems less bright.
After all, if even expats cannot afford condos in districts 9, 10 and 11, what hope is there for the locals?
And now that the expats are downgrading and moving to the outskirts, it may be even more difficult for us to buy property in the suburban areas without burning holes in our own pockets.
Serene Lim*picture courtesy of www.offthemarkcartoons.com.
Labels: companies, expatriates, property, Singapore
Your success could be your downfall
While interviewing a certain Company A one day, the colleague and me heard from its CEO an account of how he was trying to set up Blackberry accounts for his managers.
He said he had approached Telco S for help to set up those accounts, which then told him to fill in some forms downloaded off its website. He then called Telco M, which immediately sent a representative down to his office to discuss the company's needs.
Needless to say, Telco M got his business. It also got one of the CEO's counterpart's business.
Telco M is a relatively small player in the mobile field, compared to Telco S.
Company A's public relations advisor offered that Telco S' focus was probably not on Singapore, but on regional expansion.
Even if that is the case, Telco S sure isn't doing itself any favours by giving would-be clients the impression that their business doesn't matter.
The moral of the story is: Remember where you came from, and try to stay grounded at all times.
First, companies should always remember who their customers are.
It's just like how American Idol Kelly Clarkson would remember how she got her big break – by public votes (not that I know if Kelly Clarkson is actually that grounded).
Second, never turn away business, even if it seems like it'll do nothing to enhance your portfolio. Word of mouth is a very powerful marketing tool. So if you turn a seemingly small fry away and he complains to his godfather of a well-known venture capitalist with major contacts, you're as good as fried.
So try to stay grounded even if your business is scaling heights like never before, or at least try to act like you aren't that taken by the bright lights.
On a side note, if Telco S continues to be this complacent, it would soon find the carpet being pulled from under its feet. Without its competition even trying to outdo it.
Serene Lim
He said he had approached Telco S for help to set up those accounts, which then told him to fill in some forms downloaded off its website. He then called Telco M, which immediately sent a representative down to his office to discuss the company's needs.
Needless to say, Telco M got his business. It also got one of the CEO's counterpart's business.
Telco M is a relatively small player in the mobile field, compared to Telco S.
Company A's public relations advisor offered that Telco S' focus was probably not on Singapore, but on regional expansion.
Even if that is the case, Telco S sure isn't doing itself any favours by giving would-be clients the impression that their business doesn't matter.
The moral of the story is: Remember where you came from, and try to stay grounded at all times.
First, companies should always remember who their customers are.
It's just like how American Idol Kelly Clarkson would remember how she got her big break – by public votes (not that I know if Kelly Clarkson is actually that grounded).Second, never turn away business, even if it seems like it'll do nothing to enhance your portfolio. Word of mouth is a very powerful marketing tool. So if you turn a seemingly small fry away and he complains to his godfather of a well-known venture capitalist with major contacts, you're as good as fried.
So try to stay grounded even if your business is scaling heights like never before, or at least try to act like you aren't that taken by the bright lights.
On a side note, if Telco S continues to be this complacent, it would soon find the carpet being pulled from under its feet. Without its competition even trying to outdo it.
Serene Lim
Labels: downfall, listed companies, Singapore, success
Selling your place En-Bloc...RESIST!
So the red hot market may have you thinking about whether or not your place should go up for sale En-Bloc so you can make a somewhat decent return and move to another place.
Well I say...RESIST THAT URGE!!!
Despite what initially looks good (basically, you buy a place...and when it collectively sells, you make a profit), but where are you going to go afterwards?
Property has been on fire in Singapore lately, rates have gone up, selling prices have doubled in some cases, and people are flipping properties and cashing in left and right it seems.
Prices are probably going to be higher for a place of similar quality, or, further up the luxury chain than what you're already living in. The rush to flip property has given some people a very short-sighted view of what happens beyond the sale when they have to move out and live someplace else.
In some cases, you may have to downgrade just to be able to afford a place of lesser quality because housing prices have shot up so much the past year. I should know, I live way out in Tampines cause I couldn't afford anything downtown!
So if you get caught in that predicament of selling your place en-bloc (or just selling it in general) make sure that you have a realistic expectation of what your next dwelling will cost you, pick it out ahead of time and do your homework. Then when your place sells en-bloc, you'll be confident to know you wont be stuck in the same predicament all your neighbors are in.
Thats just my 2 cents worth, but, it always makes sense in life to me to think 10 steps ahead instead of 2, especially for something like this.
Curtis Bergh
Well I say...RESIST THAT URGE!!!
Despite what initially looks good (basically, you buy a place...and when it collectively sells, you make a profit), but where are you going to go afterwards?
Property has been on fire in Singapore lately, rates have gone up, selling prices have doubled in some cases, and people are flipping properties and cashing in left and right it seems.
Prices are probably going to be higher for a place of similar quality, or, further up the luxury chain than what you're already living in. The rush to flip property has given some people a very short-sighted view of what happens beyond the sale when they have to move out and live someplace else.
In some cases, you may have to downgrade just to be able to afford a place of lesser quality because housing prices have shot up so much the past year. I should know, I live way out in Tampines cause I couldn't afford anything downtown!
So if you get caught in that predicament of selling your place en-bloc (or just selling it in general) make sure that you have a realistic expectation of what your next dwelling will cost you, pick it out ahead of time and do your homework. Then when your place sells en-bloc, you'll be confident to know you wont be stuck in the same predicament all your neighbors are in.
Thats just my 2 cents worth, but, it always makes sense in life to me to think 10 steps ahead instead of 2, especially for something like this.
Curtis Bergh
Labels: En-Bloc, Housing, Real-estate, Singapore
F1 Race in Singapore: Do it
By the time you read this the news may have already broken about whether or not an F1 night race will be staged on the streets of Singapore (announcement expected at 0900 GMT).
I'm going to go out on a limb and say that this would be the best thing to happen to the Singapore sports scene in the nations history, and, the biggest and best opportunity to benefit local businesses that we've seen in a long time. Everyone should be rallying around this in Singapore, especially local businesses, here's why.
There is no single, better opportunity, to pump as much money into the local economy as a major international sporting event.
We've seen what the throngs of thousands of delegates to major international exhibitions and conferences can do to the local economy (case in point: IOC meeting in 2005, IMF/World Bank meetings in 2006).
Sports by in large, are a much bigger draw as you don't have to be credentialed and granted permission to enter, you just need to buy a ticket.
In the United States, cities that host major sporting events such as the Super Bowl, and the NCAA Final Four, all benefit extremely well from such an event.
The thousands of tourists pump millions into the local economy, and local businesses reap the rewards through increased sales, but also exposure that they otherwise wouldn't get.
Even more the case for olympic cities which practically get an "extreme makeover" for the games, and have be known to see an economic turnaround afterwards. Look at the boom in Beijing for next years games. Barcelona is probably the best, most recent example as the city before the games wasn't necessarily high on peoples list of places to visit, thats now an almost must see in Europe.
For Singaporean companies, this is a chance to showcase themselves on the world stage, and any company that invests in advertising and supporting the race here will reap the benefits. I bey maybe 10, 20, maybe 30 fold! (sorry I can't contain my enthusiasm). What a great ROI that would be.
For the country, the economic benefits as well as the image of Singapore as a hub of sporting events globally will be cemented, benefiting everyone I think.
So, we'll find out here in just a matter of hours.
Next up: Singapore for the 2020 olympic games! No I'm not kidding, I think they would be great here.
-Curtis Bergh
ArchivesI'm going to go out on a limb and say that this would be the best thing to happen to the Singapore sports scene in the nations history, and, the biggest and best opportunity to benefit local businesses that we've seen in a long time. Everyone should be rallying around this in Singapore, especially local businesses, here's why.
There is no single, better opportunity, to pump as much money into the local economy as a major international sporting event.
We've seen what the throngs of thousands of delegates to major international exhibitions and conferences can do to the local economy (case in point: IOC meeting in 2005, IMF/World Bank meetings in 2006).
Sports by in large, are a much bigger draw as you don't have to be credentialed and granted permission to enter, you just need to buy a ticket.
In the United States, cities that host major sporting events such as the Super Bowl, and the NCAA Final Four, all benefit extremely well from such an event.
The thousands of tourists pump millions into the local economy, and local businesses reap the rewards through increased sales, but also exposure that they otherwise wouldn't get.
Even more the case for olympic cities which practically get an "extreme makeover" for the games, and have be known to see an economic turnaround afterwards. Look at the boom in Beijing for next years games. Barcelona is probably the best, most recent example as the city before the games wasn't necessarily high on peoples list of places to visit, thats now an almost must see in Europe.
For Singaporean companies, this is a chance to showcase themselves on the world stage, and any company that invests in advertising and supporting the race here will reap the benefits. I bey maybe 10, 20, maybe 30 fold! (sorry I can't contain my enthusiasm). What a great ROI that would be.
For the country, the economic benefits as well as the image of Singapore as a hub of sporting events globally will be cemented, benefiting everyone I think.
So, we'll find out here in just a matter of hours.
Next up: Singapore for the 2020 olympic games! No I'm not kidding, I think they would be great here.
-Curtis Bergh
Labels: F1, Olympics, Racing, Singapore, Sporting Events
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