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I think this is ripe for a repost. The first two categories (HK and Singapore was from the site expatspaytoomuch.com .... So I think I better add my contribution for expats in Malaysia.
Accidentally stumbled across a site for expats in Asia. They have a satirical write up on their welcome landing page. Its funny. The site is expatspaytoomuch.comYou know you are a Singapore Expat when:
You forget what chewing gum tastes like. You wear winter clothes indoors and summer clothes outdoors. You think a bus is incomplete without a TV. You say handphone, not cellphone. You order warm water because too much ice water is bad for you. No matter what you're doing at the moment, you'd rather be shopping You are certain that Holland Village has very few Dutch people and is a place for hippie bohemian artist types and overpaid yuppies. Your idea of a good night out consists of having dinner at a hawker centre and then eating again. Durian and belachan no longer stink. You justify every argument with the phrase "in order for us to be competitive in the 21st century". Most of these acronyms make sense to you: NUS, NTU, ERP, SDU, PAP, MRT LKY, GCT, PRC, TIBS, SBS, SMS, JB, JBJ, AMK, AYE, PIE, ECP, ISD, ISA, CPF, CHIJMES, SPG, CWO.
You get annoyed if you don't see a sign telling you how long your wait's going to be for a bus, a train, or the expressway. You think everything should be 'topped up'. You think there is nothing wrong with putting chilli sauce on everything you eat. You think US$1 million is reasonable for a smallish condo, but S$5 for a plate of fried noodles is a rip off.
You know you are an expat in HK when:
You have developed a taste for mooncakes. Your building's security guard is 4x older than the building itself. All your clothes are tailor-made or come from Giordano. You are not surprised to see an 85 year old lady pushing tons of garbage / cardboard boxes up the street. You believe shopping and eating are the only forms of entertainment. You have become a shameless-name-dropper. You have a MontBlanc pen clipped to your shirt pocket. You believe the HK Jockey Club is an honourable philanthropic organisation.
You can tell who is Andy Lau, Jacky Cheung and Hacken Lee. You believe you are really tall when you are only 5' 8". You get offended when people admire your chopsticks skills. You speak enough Cantonese to make your colleagues laugh their heads off. You bring a coat and scarf to fight hypothermia in supermarkets, buses, ferries and cinemas. You are not surprised to find footprints on the edge of toilet bowls. You use the word "Ayyiiieeeaahh" to convey surprise, pain or anger. You are always looking forward to the next Typhoon 8. You think US$2m is a reasonable price for a flat but HK$40 for a plate of noodles is a ripoff.
You know you are an expat in Malaysia:
You think double parking is not really that unconscienable. Everytime you have to visit a government department, you have to take the whole bloody day off. You are so glad to have AirAsia so that you can go to Phuket, Krabi, Bali, KK, Penang for the weekend. You envy the salary packages of fellow expats in HK and Singapore but laugh at their expenses. You worship the sun, but even so, you do not wish to be out in the streets between 11am-3pm. You cannot believe the locals do not use sunblock. You thought OZ was slack but welcomes the most number of public holidays in a single country on earth. You go to the beach but can't bring yourself to swim in it.
You only meet up with friends at Mont Kiara or Ampang. You have never been to Kepong or Gombak. You are not sure if all the girls at Beach Club are really girls. You think the locals drive like failed F1 drivers. You think all Malaysians drive their cars without installing indicator lights. You think crossing the road is Malaysia's national sport. You think Malaysian food is the cheapest and the tastiest in the world. You snigger quietly at how low the rates are for 5-star Malaysian hotels. You think US$25,000 for a locally made car is the biggest ripoff in the world. You couldn't bring yourself to buy a new car at local prices, even though you can afford to, so you end up driving a 5 year old third hand deadbeat.
p/s photos: Rozita Che Wan
1) The stock market effect in Malaysia - If you were to look at the financial turmoil in the past, namely, the mid-late 80s, the blip in 1994, the major monster of 97, the internet bust, the SARS effect, the tsunami effect and now the credit implosion... you can chart a very useful multiplier effect from losses in the stock markets. Prior to 2000, any kind of financial bust ups will see a lot of havoc and bad debts, ask any remisier... Following moves to limit contra and contango trades, this has removed a HUGE "leveraged disaster" from the domestic economy.
I can give you the excellent example of my 6 analysts working with me in mid 90s, their monthly salaries between RM3,000-10,000 and basically under 30 and real net worth probably zero. But each and everyone of them will have zero deposit with 2 or 3 remisiers, but personally will have a contra position of between RM100,000-300,000 in a few stocks depending on the mood of the market. This is not unique to my team of people, everybody everywhere were doing it. Naturally we always see a huge multiplier effect when the market corrects 10% over a week.
Since 2000 every major financial calamity has not seen similar catastrophic personal financial aftermaths. Now you try to buy RM50,000 worth of share with zero deposit, your remisier will ask you to fly wau. This market correction was also unique to the majority of retail stock players. Many were able to sell down most of their stocks or just stop playing stocks when the market retreated from 1,400 to 1,200... sure some will still hold a few stocks in their portfolio but many have been able to avoid the carnage. When a market falls from 1,400 to 850 its the holders of the shares that bear the brunt.
This time around retail players have been able to sidestep much of the disaster movie, its the funds that got whacked royally this time, ... local, hedge and foreign. Thus this will further help explain why most Malaysians are still relatively cash rich and under invested. Fewer job losses and fewer after effects from the stock markets = less likelihood to need to sell properties in desperation.
Hence market commentators should keep this in mind when comparing similar wealth effects prior to 2000 and after. The magnitude of the above financial effect on the broader population should not be underestimated.
2) The expatriates wave in Singapore - Singapore's population, on its own does not really grow on a net basis. However if we were to look total population from mid-2003 till mid-2008, Singapore's population grew by an incredible 17.6% to4.84m. Largely that came from a surge in expatriate staffing. That was an increase of 724,600. Official estimates had it that of the 724,600 some 546,700 were foreigners (expats) and permanent residents. If you were to assume that there were 3 per household, that would work out to an increased demand for 182,233 condo/house either for rental purposes or for purchase.
The large jump in expats and PRs were due to a sharp increase in business services segment, in particular hedge funds and more importantly private banking. The other segment of the industry which was significant was the boom related to the integrated resorts projects. When there is a major structural change in a country's infrastructure and/or the additional of a significant and viable new industry, it tends to attract a lot of investments and liquidity to partake in the euphoria. Needless to say, foreign investors piled into surrounding properties and new developments.
The wave was so strong that many developers were confident enough to lure the best architects to build the best of class condos in Singapore. The interest was so significant that pricing was at the very top end of global condo valuation standards. It even flowed into Sentosa in a big way.
To meet the increase in demand for high end housing, en-bloc sales became very popular. Developers were willing to pay a huge premium to secure good locations. They will then tear it down and build a new swanky and pricier place. En-bloc sales resulted in many Singapore owners suddenly turning into multimillionaires. That in itself, feed well into the demand for the pricier new condos as well. If your condo was worth S$1.0m in 2003, it could have been sold for S$1.8m in 2005 in an en-bloc sale. Assuming you had some mortgage left, you may still have a cash position of S$1.0m-$1.5m. That would be more than sufficient to pay down payment for the pricier new developments, maybe even flip them a few times thus tripling that capital within a short period.
The credit implosion will hit Singapore harder because of the "property and expat situation" cited above. Credit Suisse estimated that some 200,000 expats could leave Singapore in 2009, or a net drop of 160,000.
On the local front, Singaporeans themselves could see a net job loss of at least 100,000 among themselves in 2009.
p/s photos: Nia Ramadhani
Singapore property market is always very interesting. There is a high degree of speculation and much of excess liquidity would always find their way into properties there.
Thanks to its clear cut policies and very stable currency, Singapore properties attract investors from HK, Brunei, Indonesia and Malaysia as well. Hence, when it is hot, it is very hot. When it is not it can go south very quickly.
Its a very brutal market place. One that is not so dependent on "employment" as a main factor - i.e. if you have jobs, you still can make the installment payments. In Singapore, the dominant factor in properties has to be speculative element. The investors that buy 2 or 3 lots per launch. For them, the jobs factor is not in calculation but rather more important to predict the flow of capital. Prices of private homes have fallen for the first time in four-and-a-half years. This marks the end to the property boom that started since 2004.
Consultants say prices are likely to keep falling well into next year. Overall prices of private homes slipped 1.8 per cent, after flattening out in the second quarter. Consultants called it a turning point after almost a year of deadlock between buyers and sellers. Citigroup analyst Wendy Koh predicts that high-end home prices will fall by 25 per cent, the mid-end by 15 per cent and mass market by 5 to 10 per cent.
On the jobs front, Singapore has been the strongest beneficiary of hedge funds setting up shop there. Thanks to proactive measures, many hedge funds have chosen Singapore as their base. The pollution in HK has also seen some relocations from HK to Singapore. The number of expatriates, in particular from India, have also boosted inherent property demand. The events over the last few weeks would have put a halt to many of the expatriate postings. The more severe effects have been from those linked to hedge funds.
A cursory glance would reveal that more than 50% have closed shop over the last few months, no kidding. More are likely to close due to a huge loss in assets under management, poor performance and redemptions. The fact that Singapore dollar has held up the best among major currencies will only cause many of those affected by the crisis to sell Singapore property first to get cold very hard cash. I mean, who would want to sell their OZ properties now if they were a foreign investor?
The last 4 years have seen the Singapore mid-high end market being beneficiary to the enbloc sale phenomenon. Older condominiums were sold enbloc for premiums (to prevailing market prices) from 50%-100%. This freed up a loy of capital and saw much of the seller buying back into the private high end market with their windfalls. The first 3 years were very profitable for these players as they could buy and sell for a quick 30% gain after just a few months. As usual, greed takes over and you will find the same buyer now having 2-4 such properties for speculation (they'd call it investments). How fast can you scale down to protect your capital? First out best dressed.
The other related problem is the ruling that you can pay 10% deposit and nothing till the property is completed. Well, that sounded like a great idea before. Now a lot of properties will be completed in 2009 and 2010 and even 2011. If you have that, you are like holding a call option until the property is completed. The danger is that many would still be able to make the installments but would you be happy to make the payments if your property by then had sunk by 20% in value? First out best dressed again.
Evidence that more downside is to come: a blogger went to a couple of launches and was given the aggressive sales pitch. As long as you can put down 30% as deposit, they can arrange for a line of credit amounting to your yearly income. Hint, hint! You know where this is going. Its almost like maxing out your credit card on cash advance to put as down payment, something's gotta give. Desperate times call for desperate measures.
Naturally, there will be a lot of those who will come in to defend that property prices won't fall by that much, and that things are different in Singapore. I would like to remind all that we are going through a massive de-leveraging process globally. There is a huge aversion to leverage and credit, and the first asset to get de-leveraged will always be property to individual investors. But you say that Asian players are not that affected by the US subprime and CDS crisis. Really?? Asian markets have already tried to factor in the massive downswing. Asian markets have actually fallen more than the US markets dollar for dollar, and if you take in the dollar effect, the market cap loss is even higher. As you all know, Asian economies are tied very closely to their stockmarkets. Many have been able to avert the large losses as there was plenty of time to scale down your stock holdings, almost all could see the correction before it actually happened. Safe to say that the huge wipeout in market values over the last 6 months have been on institutional investors and die-hard traders only. Most of the individual investors have largely been unhurt.
Having said that, most of the rich individuals with substantial equity portfolio have seen their value being decimated. Though they may still have cash and not reached pauper status yet. Their net worth may have shrunk by 50%, just ask Lee Shin Cheng or Lim Kok Thay. Try and sell them a few Sails condo, they would wave you off as being stupid,.... unless it was at least 30% cheaper.
It is very hard to write negatively about properties, even for consultants, journalists and analysts, as most have properties of their own, and would be loathed to write anything bad about it. So, beware of those who try to mount a defensive argument.p/s photos: Ema Fujisawa
I think this is ripe for a repost. The first two categories (HK and Singapore was from the site expatspaytoomuch.com .... So I think I better add my contribution for expats in Malaysia.
