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Wednesday, April 20, 2011

Wise Consumption Techniques.

Hi guys, I’m back! Quite a few of you asked me how I got started in acquiring wealth. So I decided to share a couple of blogs in wise consumption. The two biggest things we will acquire in our lives(besides expensive wives or husbands) are our real estate properties and cars. In Singapore especially, cars are very expensive items. The government has a policy of controlling the vehicle population so the acquisition costs of a vehicle is high and the running costs is even higher. I will not comment on running costs as it is a personal decision.

However, when buying a car you can certainly try to lower the costs of acquisition. I just bought a Land Rover. Many of my friends are curious about my choice but it has always been a wish of mine. It looks odd besides the rest of my quite exotic cars but I really like it. I bought it because the dealer is charging a realistic price now.

What do I mean?

All dealers have a cost of importing the vehicle. Add all the taxes and cost of the COE, well that forms the cost to the dealer. Of course dealers will need to charge a premium for their services. New market entrants like Citroen will charge a single digit percentage premium and well sought after marques like BMW can charge up to 40 plus %. Yes you read it right. A LOT of your money is going to Performance Motors instead of the car you acquired.

I don’t know about you, the price I paid for my new ride is a single digit premium. I want a lot of quality metal instead of horrendously high profit margins going to distributors. If you want maximum bang for your buck, you might want to do some research. Thanks to websites like sgcarmart.com. You can easily access this information. Just click to SGcarmart.com. They have done all your research for you.

I am very happy to report that I am happy with my new car and I am a person who likes to extract maximum value instead of just going for brands. Just a little side track from my property blogs.


Your Friend,
Andy Ong
20/04/11

Monday, April 18, 2011

Property Trends Cyclical, To Buy or Not to Buy?

Hi guys, I’m back from Europe and it has been an interesting trip. I was up in London before taking a break in Italy. London was dreadful if you ask me but I really enjoyed the Italian food and shopping. We drove most of the way and the weather was absolutely beautiful.

I looked at London properties and I was rather surprised that prices are holding up very well despite the dreadful economy. I was waiting for prices to fall a little before buying last year but it seems that Asian buyers are grabbing all they can. The situation is similar in Singapore.

People have long forgotten about the very recent financial crisis. Property cooling measures have been largely ignored given still strong take up rate in March. I was driving past Spottiswoode Park and the condos there are asking for $1800 to 2000 psf.

How do you make sense of things? Well it all boils down to the below :

Property developers have holding power – Developers have enjoyed record profits and their land bank is dwindling. Given their strong balance sheets and financing capabilities, they will be very hesitant to let go of anything cheap because they don’t have to. Simon Cheong in an recent interview actually said that he is more worried about the lack of quality sites thus he is in no hurry to sell his units. His situation reflects the situation developers are in.

Interest rates – As long as real interest rates remain in negative territory, real estate investments remain very attractive as holding costs are cheap. There is plenty of liquidity out there looking for a home right now. This maybe the crux, as long as interest rates remain where it is, prices will hold.

Anxiety in market place – People are envious of the money being made by their friends and they also want a piece of the action! The Straits Times recently had an article where Chinese men without a home are finding it hard to get hitched. We live in a cruel realistic world where financial security matters. So for those with no exposure to real estate, they feel insecure.
Where does that leave everyone? To buy or not to buy? Its important to stick to the basics. Do not just depend on possible capital appreciation. Look at yields as well?

God Bless!

Your Friend,
Andy Ong
18/04/11

Friday, April 1, 2011

Investing in Property is not just about buying Condos!

Hi Guys! It will be very difficult for new couples to own their dream home in the future. With the record pricing developers are paying for the new government land sales, our dreams are further dashed. The fact is that our incomes have not gone up in tandem with the times. International investors have pushed up prices. I highlighted that the Chinese are coming to buy in my earlier blogs. I told my students in advance and they certainly have made a lot of money.

What about the locals then? A new graduate’s starting pay has perhaps gone up by 20 to 30% compared to 5 years ago but our residential property has appreciated by more than 100%. This is in addition to the fact that the developers are really pushing prices to the max. CapitaLand paid over $860 ppr for their Bishan site; they have to sell the site at perhaps over $1500 psf to make a decent profit. Things certainly do not bode well for anyone with no exposure to real estate.

With the strong international fund flows because of the very low interest rate environment, I do not expect prices to adjust until interest rates go up. This is because there is really no where for the hot money to go. However, the pickings are slim for residential investors.

You might want to explore non-residential investments instead. I will share my insights once I ‘m back from Europe for my business trip. I should be back mid April so till then take care.

Channel News Asia (CNA) profiled me on their site; they basically highlighted how I have my firm in the last few years. You might want to check this link out.

Your Friend,
Andy Ong
01/04/11