Wednesday, March 29, 2017

How I invest in property!

Hi Guys! I'm sorry that I took so long to do my follow up blog. The day to day operations has been taking a toll on me, and I am writing this in between meetings as I feel bad that I have not followed up. Quite a few of you asked me if it is the right time to be picking up properties given the government seems to be relaxing its cooling measures. I would like to think that one should always stick to the fundamentals and I would like to share with you how I hunt for the right properties to acquire.

Long term use

I use very simple old wisdom as a first criteria. I am a long term investor and I must have a way to use the property that gives good yield as a fundamental criteria. Many of you think of acquiring a residential unit and renting it out, which is what most people will do. However do think about the 30 plus thousand units that are coming out in the next 2 years and you better think twice about commanding a decent rental. You need to have very good holding power as it is the eventual capital appreciation that will determine whether you make money or not.

I am blessed that I have a range of businesses that enable me to use whatever I buy and inject the right business in to enhance yield. My fundamental rule is yield to capital appreciation and I stick to that principle in all my consideration. I take a 7 to 10 years view and make sure I have the right resources to last the whole 9 yards till I can find the right buyer for my sites. However, if someone offers me a price that meet my objectives, I will seriously consider to dispose.

Right Price

I was just sharing with a friend how I look for properties. I told him very honestly that I am a bottom feeder. I work very hard to know the market pricing very very well. I am the ultimate 'Giam kanna'. For those of you who do not understand Hokkien, it means that I'm stingy and hate to overpay. I work harder than everybody else which means lots of viewings and of course it takes a toll on me. On average I view 70 sites before acquiring 1. I have exhausted countless agents in the hunt for anomalies which is better sounding than a bargain. You may think it makes sense but actually making the effort to do so is an absolute pain.

I love beautiful sites but I am not willing to pay a premium for them. However, when I am able to get something at my price level, I will be all over the seller. Once I find something I like, I hate losing them too. However, what's yours is yours. I was extremely upset recently that I lost a mortgagee deal in Thailand. It was the right deal but my finances was jammed up at that moment. In the months that followed, the eventual buyer made a ton of money by dividing up the site and selling it. I was extremely upset for a long time and I still am pissed off. I had the cash but it was stupidly locked up. However, the experience has taught me that there are bargains if you look hard enough.

I hope you enjoyed my brief chat about my investment philosophy. I need to go back to work. Just a few quick parting words. Don't panic about the lifting of cooling measures. Go back to basics, make sure you have done your financial calculations and don't trust the agent, make sure you have the yield and potential capital appreciation to make it worthwhile your effort to invest.

God Bless!

Andy Ong Siew Kwee


Catch more news about ERC and Andy Ong

Thursday, March 2, 2017

The Property Market ahead!

Hi Guys! I am writing to you from the air again. This time I am on the way back from the Land of the Rising Sun. I cannot feel but a little sad about the country. The little nuances and peculiarity about the Japanese culture is so interesting and the food is just amazing. I have my favourite joints whenever I am in town. I really enjoy good sushi, tempura and Shabu shabu, and the food here makes it worth the while to come here. I feel so overweight whenever I am back. Here are some pics of my favourite tempura joint.

The Japanese had a lost decade until Abe took control and he is trying to do something for the country. However, I do feel it is a lost cause as demographics is not on his side. A country will be lucky to be constant state of economic growth if the bulk of the population is fast aging, hoping for another fast growth era is just not possible. The Japanese seem to have lost their edge and the only  2 companies that I can think off my head that are world beating are SoftBank and Uniqlo. But 2 companies do not make an economy.

Singapore is in similar situation. The number of Singaporeans aged 60 and above will be rising radically in the next 20 years. Think the number of properties available in the market when older couples downsize. For the moment, we are benefitting from foreigners eager to settle down over here especially the rich Chinese. Singapore is one of the new Chinese speaking countries in the world with a Chinese majority. A recent survey shows that 70% of Chinese millionaires want to migrate. Singapore is a beneficiary likewise Hong Kong of the fund flows these guys bring. Chinese developers are setting new records for land prices in Hong Kong and they are winning quite a few of the residential land tenders in Singapore too, paying record pricing. Chinese acquisitions abroad has caused record outflow of money out of the country and the government is now cramping down on such fund flows. Whether they are successful or not remains to be seen.

Right now, developers are having a field day selling sub-urban condos and sales are very decent indeed. This has the effect of the government using this excuse not to remove the cooling measures, even though more and more property owners are being squeezed. The fact is that the economy is changing structurally and a lot of Singaporeans are not acknowledging this. PMETs are losing their jobs and the situation may not be improving. How do I know this? Just look at the number of pages of properties being listed on the auction pages. You read me right numbers of pages. Auctioneers will be lucky to have 2 to 3 real properties for sale in the past, now they number 20 pages of listings. The worst is certainly not here yet.

What is to come then? Shrewd investors are slowly coming into the market scouring for real deals. Landed properties in great locations seem to be their priority. Choice high end condos are being transacted at bargain prices. For the central district, prices seem to have stabilised even though there are still a few good deals around. So if you want to be positioned for the next cycle, you might want to be working a little harder. Please do not be lazy and follow the crowd. Look at those who bought shoe box units(which I advised you not to buy) 5 to 7 years ago. The units are now ready but they sit empty and untenanted. Paying for what you can afford but at record pricing on a per square foot basis is not a wise move. I will share my investment philosophy with you in the next blog.

Till then, God Bless!

Your Friend,

Andy Ong Siew Kwee

Monday, February 20, 2017

BIGWork, Fitness and Fund, drivers of success!

Hi Guys! In the course of last year, we launched quite a few new business initiatives that are starting to bear fruit. We are very blessed to be executing initiatives that are truly cutting edge. My team and I are very excited and enthused by what we are executing. The early seed of our new business thrust came when the whole initial concept was thrust into my head when I was in church. It has been nearly 3 years after that fateful day. Right now, my whole team is firing on all cylinders to get cracking. This is our most ambitious plan to date and we are proud to be executing in stages. Everything is hush hush at the moment but the adrenaline is amazing.

BIGWork, Fund and Fitness are just 3 co-sharing concepts we have introduced. In the era of shared services, we believe the only way to go is a holistic suite of shared services. It is also great for our schools as our graduating students are able to tap our resources and make something out of themselves besides working for others. BIGWork is now in 3 cities namely Singapore, Ho Chi Minh and Bangkok. The companies we are investing in under BIGFund can tap our shared network and roll out their business plans far quicker than their contemporaries. We had to sell BIG Hotel away as the offer that came in was too good to reject. Given the latest hotel occupancy statistics, I guess we did the right thing.

We are structuring a holistic approach to our clients' needs. We believe in work, living and playing BIG! Just imagine, being able to work in a great environment and access mentorship if needed. Refreshing coffee readily available and the gym is one floor away if you need a quick workout to freshen the body. The response has been encouraging as we believe that our platform of services transcends the traditional office and even the newer co-working concepts. We will be rolling out new services so as to enable our group of companies, invested companies and partners to leverage off our platform and scale greater heights together.

Till the next blog, God Bless!

Andy Ong Siew Kwee


Friday, February 17, 2017

Can Singapore compete? Thoughts about Singapore's CFE findings

 Hi Guys! Im just back from Bangkok where I attended the launch of Thailand's new economic plan launched by no less than the Prime Minister himself. Basically, Thailand 4.0 outlines their ambition to be a first world country by unveiling incentives that leaves the rest of their ASEAN neighbors trailing. I guess the coincidence of Singapore unveiling the CFE report almost at the same time warrants some sort of comparison. 

I cannot help but feel a sense of frustration that the millions spent on putting the CFE together achieved not very much. My first reaction is tell me something I do not already know. I really feel that the report lacks real substance and do not detail enough concrete steps that enhances Singapore's competitiveness. I honestly feel that in the search for ever higher value industries that some more traditional industries are being neglected. There was no mention of tourism and definitely education seems to be cast aside. These are industries that we can rely on until more concrete solutions can be found. Not to forget, the tourism industry is the biggest industry in the world by far and Australia's second biggest contributor to the economy is in the education sector. I think everyone can agree that we need to move up the value chain but our big brother in China seems to have the ability to out-spend and out-talent us. Concrete steps to out-maneuver them seems glaringly absent in the final report. 

Thailand on the other hand, seems to have adopted a far more pragmatic approach. They recognize their shortcomings and boy do they have quite a few. However, they are giving goodies like 15 years tax exemptions, 15% tax ceiling for executives working there(which is the lowest in ASEAN) as well as a host of other incentives simply too good to refuse. This was the strategy adopted by Singapore not too long ago and it seems to be working. However, we seemed to have grown a little complacent. I worry that we may fall by the wayside in the years ahead once our neighbors are able to get its act together.

Singapore does have its advantages as its the only First world country in ASEAN. The whole package of ease of doing business, low corruption and protection of assets for high net worth individuals is alluring. Let's hope we can preserve our lead in the years ahead. However, we need to bear in mind that our neighbors like Vietnam, Thailand have far larger domestic markets so we need to be on our guard. Our domestic economy is dwarfed by international economy as we are still a very export oriented country. In the face of a rising protectionist environment due to the Trump presidency, it will be good if we guard our own back yard besides wanting to conquer new territories.

It was a very hectic trip as the event was very early in the morning and the little perk I allowed myself was eating my favourite Crab Meat Fried Rice. I have my list of favourite restaurants that I crave going in all my travels. This store in Bangkok boast the 2nd best fried rice in the whole wide world.(according to me)The best was in Phuket but they lost their chef and until they get their act together, this store claims the crown. If you are keen on where I love eating at, I will be happy to share if you so desire. Just leave a message and let me know.

I will chat more about the launch of our BIGWork co-working space as well as BIGFund our funding mechanism for new emerging enterprises in my next blog so keep posted!

God Bless

Andy Ong Siew Kwee


Friday, February 10, 2017

Its been an amazing 7 years!

Hi Guys. I have been really busy over the last 7 years making long term investment moves in the Singapore real estate scene. To recollect ERC Holdings led investments into Bugis Cube, House of Tan Yeok Nee and BIG Hotel. All were meant to be use assets and long term investments but since markets moved in our favor and all made very significant returns, we divested and that caused a bit of ruckus as our silent partners all wanted bigger chunks. 

The returns we generated were very ok in my humble opinion. We made double digit millions from HTYN to well over a hundred million for Bugis Cube. All were meant to be use assets for our businesses and the joke is now we have to be leasing from others. However, we need to be counting our blessings as we have been blessed with the right deals even in difficult conditions. 

I am writing to you from the air as I find it tough to generate similar returns in Singapore now. So I have been very very busy putting together our next portfolio, which is of course outside of the country. I have just been handed a 'game changer' as this acquisition just enabled the execution of our strategy. I have been going to church and praying very hard as our very disciplined investment approach prevents us from making investments outside of our investment approach. The move just enabled us to execute our strategy for the next 10 years. I am extremely excited as I have been working on this for the last 3 years. That is why I have been so quietly and busily working hard. I flew so much in 2016 that I just counted that I made 70 odd trips in that year alone. That is 1.5 trips per week. I was joking with the air crew that I almost fly as much as them.

I have not neglected the Singapore market too as I want a bit of exposure. I just acquired a premium near Orchard Road landed property at half the peak price just 3 years ago. I have been very carefully studying the market and foresee that once the government shows any sign of removing the cooling measures, process will recover nicely. Quality always prevails and the freehold landed shows all the characteristics of quality. A stone throw away from Orchard Road and yet so quiet, you think you are in a kampong. I have been eyeing the site and bid my move when the time is right.

I will share more with you what I think of the Singapore and overseas property markets in my next post. Apologies to those of you who have been emailing me. I am not able to reply you on an individual basis as I have been very much overwhelmed. My sincere apologies again.

God Bless!

Andy Ong


Wednesday, February 8, 2017

You could have WON BIG, if you had heeded my advice

Hi Guys! Its been 2 years since my last post. I originally decided not to write anymore but many of you have been asking me what is my view of the markets. It is certainly very interesting times since my last posting. To recollect, I said almost exactly 2 years ago, the carnage we can expect. What I shared almost happened precisely according to prediction.

The finance, oil and gas as well as real estate almost ground to a halt, shedding thousands of jobs. The repercussions reverberated across the economy. To illustrate, the oil and gas sector bond defaults caused hardship to even high net worth individuals. I recalled a story where a relatively rich individual bought S$250,000 of bonds issued by a prominent oil services firm, she was eyeing the 6 plus % yield. The next day, her private banker called her and told her that the bank will loan her another quarter million at 2% so that she can double down on her bet. The result? She not only lost the first quarter million, to add insult to injury, the bank immediately set aside the other quarter million. She's out of pocket by half a million. You can hear many of such stories so its important that you know what you are doing with your money.

I told you I expected the worst to happen in 3Q of 2016. Well, prices have tumbled significantly since then across the board. This is exactly what I predicted, please do not take my word for it but check the contents of my last posting. Kudos to you who managed to liquidate at the right price. However, if you did and feeling rather naked without any real estate, what should your next moves be? Of course, I always put my money on where my mouth is and I will share with you what I am investing in now if you can LIKE this post. Till then, Happy New Year and HUAT AH!

Your Friend,

Andy Ong