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Wednesday, September 3, 2014

What I think of the property sector till end of year

Hi Guys, since I posted my last blog entry, I have been getting a lot of emails requesting for advice that relates to a personal basis. However, I need to reiterate that I stopped answering personal questions since end last year (which is my commitment to you). Apologies but I really need to focus on my core businesses. I am updating my blog as an exception due to the fact that I hope to share with you my personal feel, so I hope you can infer from my entries to make the right investment decision.
 
One of my colleagues just asked me if he should be renting or buying now. My answer is if you can crash with your parents now, you are a lucky person. I will not be buying or renting now, however if I have no choice, I will delay my rental decision. Why? Over the next year or so, we will be seeing massive supply of residential unit coming on into the market. They were purchased at market highs pre the cooling measures days. Those were the days of 'irrational exuberance', to borrow a term from the former Fed chairman, Alan Greenspan. I don't blame them as we are in an era of negative real interest rates, that means the bank is actually subsidising you to invest as the value of your dollar cannot keep up with inflation.
 
But guess what, the demand for rental has come down drastically as the government has tightened the eligibility of foreign talent into Singapore. We have witnessed lower rental rates on an absolute basis as well as on a yield basis. Imagine with the added supply to the current stock, and you can expect a lot of competition for rentals. Some investors have already given up as we see mortgagee sales going up but I feel this is the tip of the ice berg. The hardest hit sector is where foreign money have been going in. Sentosa is a case in point, we have seen condos and landed houses there dip by more than 20%. A big unit transacted there at $1100 plus psf! This is a far cry from the heydays.

The high end sector in Singapore mainland has not been that affected but we will be seeing some impact soon. Developers are lowering prices to move their stock, from very prime Orchard vicinity sites like the Hilltops to mass market units like the Sky Habitat. They have moved some units after cutting prices. Developers are hesitant to be launching new projects and have delayed such launches indefinitely. All the signs do not bode well for this sector.

I have sold all my residential sites save one, a small condo.

Well, this is what I shared with my colleague, no condo, no HDB. Chill for the time being and watch the forces of demand and supply play out. I still do not see a crash but even if you need a roof over your head, you should be able to get a more cost effective one in the next couple of years.

 
God Bless and take care!

Andy Ong

Thursday, August 21, 2014

Back from my hiatus,I have tonnes to share!


Its has been 8 long months! I have decided not to write any more entries but I strongly feel I need to forewarn you again. In the second half of 2013, I turned decidedly bearish and for good reasons. I looked carefully at the demand and supply situation and further considered many many other factors. They include the very ample liquidity, world economy, and a host of other considerations.

My conclusion? A very decided sell on the residential front. For those who heeded my advice, very good for you. I predicted a 20% drop by the end of the year. And so far the market is on the way there, in fact, the premium segment has already breached the 20 percent mark. I am not being sarcastic here but the worse is yet to come. I am starting to see more and more mortgagee sales coming off the auction blocks and this is just the start.
Interest rates have not moved up that significantly yet!

I still do not see a crash coming especially when next year will most probably be an election year. The government of course has the option of removing the cooling measures and stabilise the market. However, with the global economy a little shaky and the very ample liquidity gushing in a little less aggressively then before, I prefer to play it safe for the time being. I have sold off my whole residential portfolio save my residence, well you decide what you want to do.

I have been very busy on the business front. The hotel, education and real estate businesses are all doing very well. I applaud my team for their dedication and I am extremely blessed to have such a talented team on our side. Till the next entry, God Bless and take care.

 
Yours humbly,

Andy

Friday, January 10, 2014

On the mark! I hope you did the right thing!

Hi guys, a very Happy New Year to you! I have been traveling intensively in December and I apologise that I have not been able to update my blog often enough. I was in Europe, Vietnam, Seoul and Bangkok. This is all in the space of 3 weeks. I literally was rebuilding the whole entire business up. It is interesting and even though it is tough, I would not want to do anything else. I’m absolutely exhausted dealing from all the issues at hand.

I hope you read the news that residential prices are finally coming down. For the record, in my blog, I repeatedly shared with you that asset prices are due for a correction. I hope you took my advice and lightened up on your property portfolio. I certainly did.  I have been taking care of all my property students for the last 4 to 5 years. In those few years, all they had to do was to follow my forecast trend and all of them made money. Even though I only made one forecast a year in the real estate market, that annual forecast has made my students a lot of money. From premium condos to commercial property to Iskandar land, a few of you have followed me steadfastly and I’m happy that you managed to create all that wealth. If you think the fall is worrying, you should be scared. The Federal Reserve will taper QE even more aggressively given the latest numbers and the situation will get worse. Someone asked me if the government rescinding cooling measures will perk things up and I told him a definite NO! Why? Things are where it is due to a series of trends like China tightening, QE and low costs of funds in Singapore. We are witnessing a reversal of tides and you should be prepared.

I just bumped onto this gentleman after church yesterday. By the way, I’m in church everyday at Saint Andrew’s Cathedral as it is where I find peace and get inspiration. I was at the Tumi store when he asked if I’m Andy Ong. I politely replied him yes and he proceeded to ask me a barrage of property questions and most importantly he wanted to attend my course. I told him that I don’t share anymore and wished him a Happy New Year. I have so many requests to teach as my deals get unwounded and the returns have astounded even market professionals. However, I pay a price. It is tiring watching trends that I do. I must admit I enjoy it but being responsible to those I share with is huge. I wake up every morning to CNBC and Bloomberg TV. And everyday is endless scrutiny of numbers.

Whilst I’m happy to share what I’m doing(I’m still doing deals), it is quite draining. I am about to move into my new office and my team is looking forward to their new home. The business has grown so substantially that I am glad that the people in charge has stepped up and made things work. I am extremely proud of them. We now hire over 300 people and the business is expanding at a pace that is quite scary to me. However, growth also means opportunity and I’m proud that people like my ex-PA, Claire, can now assume director level positions. I’m proud of them and hope to create more opportunities for them in the future.

Till the next blog, take care and God bless!

Your Friend
Andy Ong
10/01/14