Working Life

4 years ago, I graduated one of the top few of my cohort and stepped into the working world with high expection and lots of dreams. Then, the economy was just beginning to recover and there ain’t many jobs for real estate graduates like us. A lot of us were forced to switch industry. Some went into bank, some went to join SQ, some just went off the radar. I was ‘fortunate’ to got myself into the management trainee program offered by local statutory board. It was a highly sought after position then. My future looked bright and my salary was the benchmark of my peers at that time. I was eager and raring to go after so many years of study.

In the beginning, work was fun and interesting but after just six months into the job, I have learn whatever I needed to learn and work poses no challenge to me anymore. I can feel the drive inside me slowly being sapped away by all the red tapes and the paperwork.  Don’t get me wrong, it was not a bad place to be at, but I feel that at my stage of life, I cannot afford to just stagnant there, I feel the need to constantly challenge myself. My peers in the private sector overtook me in terms of pay in less than a year. I knew I had to leave, and I grabbed any opportunity that came along, even at the expense of a pay cut.

It is a strange coincidence that a job with the property developer that I applied one year ago called me one year later to ask if I am still interested in the job. That was my lifeline and I took it and never looked back. It was in the job that I found my passion. My love for real estate and the forms and shapes of various buildings never fail to excite me.  I wasn’t earning a lot of money but I was certainly enjoying every moment of my time there. Furthermore , I know that the skills I picked up will put me in good stead for my future career.

Now I have joined my current company, I am exposed to more things, I have a boss who gives plenty of opportunity to learn. Also very important, I am being paid fairly. 

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The Million Dollar Question

Being in the property sector also means that I get a lot of questions on my view of the prospect of the sector. I frequently get questions like, ‘Do you think we reached the peak?’, ‘Do you have any recommendation?’, ‘Is this a good time to buy?’ etc. And in the light of the recent sub prime crisis that caused a slight jittery among the investors, people start asking the question ‘ Will the property market go down in 2008 since US is likely to go into recession?’

I am not a seer but my take on this is that our property market may slow down in 2008 if US goes into recession. It is unliekly that the market will collapse like you have seen in the 1996 financial crisis. Reasons for that are :

1. Big developers who survived the last 10 years of turmoil, having learnt their lesson. They are more well prepared and equipped to handle any crisis. After the past two years of growth, they have even more financial power to hold their prices EVEN in bad times. The past few months, the developers have not only withheld their target launches in view of the weak market, but they are holding up their prices. No panick selling nor reduction of prices are seen in any launches. In fact, FEO has been actively marketing their projects like Jardin, La Casa at a premium.

2. Speaking of holding their prices…. The cost of land has been on the rise in tandem with the robust economy performance. Highly compeititive market has pushed the cost of the land up and coupled with the increase in the construction cost, most developer’s landbank are higher than before. That also means that their breakeven price is higher too. For example, Capitaland’s Farrer court breakeven cost is aproximately $1,000psf (including construction cost), adding a 10% profit margin, the eventually selling price may be $1,100psf for the 99 years leasehold site. That translate to a cost of $1.1million for a 1,000 sq ft unit. How likely is the developer going to sell below breakeven? And how likely we are going to see a Great Singapore Property Sale? My view?

等久久。* Wait long long

3. Some analysts felt that there are no catalyst for Singapore in 2008. I feel that the Singapore Flyer opening in early 2008 and the F1 race in later 2008 may well be the booster we needed to renew the confidence level. Fundamentally , the economy is doing well, salary is on the increase, foreign funds are still flocking here looking to enter the region.

My advice to people who are:

Genuine home owners – There is never a good or a bad time to buy if you are buying for your own stay. Just buy within your comfortable level. Studies have shown that buying property will reap benefit in the long run. You can only profit from the rising market if you have a second property, or it will be a case of buy high, sell high.

Investors – Move out from prime. Location, location, location. Do your homework.

 

How long did Moses lived?

Over a dinner conversation with some friends yesterday, I was surprised that Moses (Yes, the funky guy that parted the sea for 2.5million refugees to cross) actually lived till 800 over years old! The lifespan of humans are said to decline till our current average of 80 years over the years due to the ‘corruption’ of the humans. 

* I googled this topic and answers ranges from 102 to 120 to 800 years.

 

At that point of conversation , I was thinking, did our government knows about this? If so, then there is no need to implement the annuity system right?

Taking a break

The Girl and I made a trip to Malaysia for a kelong-fishing trip. Don’t be mistaken, neither of us are anywhere near being ‘avid’ fisherman. In fact, the past few times that we went prawn fishing, I have to drag The Girl there. She thinks that fishing is a cruel activity.

So while I had my doubts when The Girl asked if I wanted to go for a kelong trip, she seems all excited about it. I decided that if she wants to go, no harm going for the sake of the experience.

We travelled approxiately two and a half hour across the causeway to a small jetty at Sibu where we took a 20 mins boat ride to the kelong located off Pulau Sibu. Once there, we settled down pretty fast, the kelong’s condition is way better than what we have initially expected. The Girlquickly got into the groove of being a pro-fishergirl. She was pulling up fishes at the rate of like 5 fishes per minute…. Ok, I am exaggerating but she caught plently of fishes. Needless to say, she was hooked on it and I naturally became her able assistant, to help her put the ‘smelly’ sotong bait to her hook and to unhook any fish she caught.

For myself, I had my fair share of fishes. What I like about the trip is not the fishing per se but the back-to-nature feeling. I enjoyed the feeling of cool seabreeze brushing against my face as I sit there looking out into the vast ocean and sky.

It made me realized how small we are on the bigger scale of things.

It gave me the environment to rest my mind.

It was therapeutic.

kelong.jpg

My country, my home NOT

It was six months ago when The Girl and I started our relentless quest for our matrimonial house.  Our intention then was to find a nice,decent and comfortable HDB flat that we can call our own. Of course, we went house hunting on the locations that we did not striked out. Of course, Western area, Woodlands, Sembawang, Punggol, Pasir Ris fell victim to our striking out exercise. We wanted someplace near enough to her workplace (in Tampines) and somewhere near enough to MRT for me to get to work in CBD.

I had my strategy all planned out. First buy new HDB flat and enjoy the subsidy first, then save enough over the five years so that we can upgrade to somewhere better. We were, like all other couples, trying to chase the ‘Singapore dream’.  

Call it bad luck or timing, the property market went crazy. Prices shot way past historical high and relentlessly setting new record prices. We thought we are not going to be that affected since we are looking to purchase from HDB. Unfortunately, tens of thousands of couple have the same idea. So, ballot after ballot, the Q no. we got was large enough for us to buy 4D lottery. It was a demoralising period for us.

During this period, I changed my job and our combined gross monthly income exceeded the archaic HDB income ceiling rule. That means, we are not eligble to apply for new HDB flats, HDB loans or any HDB grants. Faced with this, we decided to look at the HDB resale market. Together with the buoyant private property market, the HDB resale market was doing very well too. Good location HDB flats are looking for anything from $30k to $150k above valuation. I heard units in Punggol two LRT stops away from the MRT station are looking at $30k cash above valuation. To us, this is simply ludicrous . I don’t blame the owners, they have the right to capitalise on the good market.

We are not prepared to pay $30k cash above valuation to buy a leasehold HDB flat in Pung and the $30k doesn’t even reflect on the valuation of the flat. We had pretty much given up hope to get our own place by then. And the best thing is , after talking to various people, I realized there are a lot of people like us, all caught in the rising market and limited supply situation.

Some bite the bullet and brought their house.

Some are still undecided and unwilling to make their committment.

Some believed in their luck and insist on waiting for HDB ballot.

For us? We decided to hell with the Singapore dream and committed to buy our small private apartment in the area that we like. Of course, we have to entertain questions/comment like:

Wah! You very rich leh, can afford private apartment! But very small hor, my 4 room HDB flat is bigger than your unit.

Seriously, private apartment was the last thing on our mind when we are looking for our home. We don’t have much choice. And the important thing is that we like it. We have to spend a bit less each month so that we can financing it but we did our sums. Yes, your 4 HDB flat is so much cheaper and bigger than my unit but technically you don’t own your HDB flat ok? The government only lending you for 99 years. Mine? Mine is freehold, everything above and underneath is mine forever! (together with 15 other owners lah).

Why don’t you wait for HDB to change its rule?

And wait for the cow to come home too?

HDB still got a lot of flats in Sembawang and Jurong West! Why you don’t try there, all walk-in selection !

Huh? where?!?!

Buy EC mah!

The only EC in town for sale right now is La Casa and Far East is not selling them cheap now . No offense to current La Casa owners but $560psf is NOT CHEAP for a EC in the middle of Wood land Woodlands.

Next time got kids how?

I reckon we can stay there for a number of years before the kids need their own room, but seriously, one thing at a time man. Anyway, if we have a boy, he can go attend Rosyth Primary and a girl can attend The Girl’s alma mater nearby.

 

Something from the email…

Putting tax cuts in terms everyone can understand.


Suppose that every day, ten men go out for beer and the bill for all ten  comes to $100. If they paid their bill the way we pay our taxes, it would go  something like this:

The first four men (the poorest) would pay nothing.
The fifth would pay $1.
The sixth would pay $3.
The seventh would pay $7.
The eighth would pay $12.
The ninth would pay $18.
The tenth man (the richest) would pay $59.

So, that’s what they decided to do.

The ten men drank in the bar every day and seemed quite happy with the arrangement, until one day, the owner threw them a curve. “Since you are all such good customers,” he said, “I’m going to reduce the cost of your daily  beer by $20.”Drinks for the ten now cost just $80.

The group still wanted to pay their bill the way we pay our taxes so the first four men were unaffected. They would still drink for free. But what  about the other six men – the paying customers? How could they divide the $20 windfall so that everyone would get his ‘fair share?’ They realized that $20 divided by six is $3.33. But if they subtracted that from everybody’s share, then the fifth man and the sixth man would each end up being paid to  drink his beer.

So, the bar owner suggested that it would be fair to reduce each man’s bill  by roughly the same amount, and he proceeded to work out the amounts each  should pay.

And so:

The fifth man, like the first four, now paid nothing(100% savings).
The sixth now paid $2 instead of $3 (33%savings).
The seventh now pay $5 instead of $7 (28%savings).
The eighth now paid $9 instead of $12 (25% savings).
The ninth now paid $14 instead of $18 (22% savings).
The tenth now paid $49 instead of $59 (16% savings).

Each of the six was better off than before. And the first four continued to drink for free. But once outside the restaurant, the men began to compare  their savings.

“I only got a dollar out of the $20,”declared the sixth man. He pointed to the tenth man,” but he got $10!”

“Yeah, that’s right,” exclaimed the fifth man. “I only saved a dollar, too.  It’s unfair that he got ten times more than I!”

“That’s true!!” shouted the seventh man. “Why should he get $10 back when I got only two? The wealthy get all the breaks!”

“Wait a minute,” yelled the first four men in unison. “We didn’t get anything at all. The system exploits the poor!”

The nine men surrounded the tenth and beat him up.

The next night the tenth man didn’t show up for drinks, so the nine sat down  and had beers without him. But when it came time to pay the bill, they discovered something important. They didn’t have enough money between all of them for even half of the bill!

And that, boys and girls, journalists and college professors, is how our tax system works. The people who pay the highest taxes get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy, and they just may not show up anymore. In fact, they might start drinking overseas where the atmosphere is somewhat friendlier.

David R. Kamerschen, Ph.D.
Professor of Economics
University of Georgia