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