Leveraging On Major Changes

by Patrick Liew on October 1, 2011

I bought my first property during one of the most challenging times. The economy was down and the market sluggish.

The property was a rundown shophouse and required major renovation and repair. To make matters worse, there was a long-term tenancy agreement in place and the returns were inequitable.

It was located at ‘Little India’ – not the best location for property investments at that point in time. The location was also one of the worst parts of the area.

This was certainly not what ‘normal’ persons would deem to be a worthwhile investment. When I first saw it, I said in my mind, ‘Chin Chia Ho!’ (Hurray!).

While others saw problems, I saw opportunities. I did not see the property for what it was but for what it could become.

When the property herd zigged, I decided to zagged. I acquired the property for a good price.

Within a relatively short period of time, I sold the property and made a lucrative profit. More importantly, I learned an important lesson.

At any point in the economic and property cycles – good times or bad times – there will always be good buys. There will be people who capitalize on them to maximize their returns.

In particular, during times of major changes and uncertainty, there are better opportunities for investment. There are also less people to compete with to capitalize on these property gems.

When things seem bad, people oftentimes perceive it to be worse than reality. They tend to be overly focused on what can go wrong rather than on what can go right.

Fear, like greed, can drive them to take extreme positions and blind them to reality.

At the higher levels of the fear cycle, there will be more gems surfacing in the property mine. Sellers who have taken a bearish view and are concerned about their financial exposure may decide to sell their properties for a good price.

The recent series of cooling measures is helping to produce such a conducive climate for investment. The doomsday prophets are out in force to strike further fear in the hearts of sellers.

To put these measures in proper perspective, these measures are not designed to crash the market or devalue the assets of property owners.

Bear in mind, if prices continue to increase unabated, it will lead to formation of property bubbles – the bursting of which will have detrimental effects on the economy and society.

On the other hand, as Singapore has one of the highest percentages of home ownership, if the prices stay flat or decrease for a protracted period of time, there will be a cascading effect on both macroeconomic and microeconomic levels.

In the worst case scenario, should the property market slump, the authorities can withdraw some or all of the measures. There is a precedence of such a response in the past.

Fundamentally, the property market is well supported.

To state the obvious, our land mass is limited and there are restrictions as to how much land we can reclaim from the sea. There is no major oversupply of properties unlike during the Asian Financial Crisis.

In fact there are segments that are currently undersupplied and hence, the government is increasing sales of land, supply of HDB flats and Executive Condominiums, and throughput of Build-To-Order flats.

The demand will generally be on the increase if we are to fulfill the planning parameter of increasing the population to 6.5 million. Although this is not a population target, there is a need to increase the number of people working in Singapore to help us sustain and improve the economic and societal engines.

As Singapore positions itself to be a global hub, we will be attracting more enterprises and talents to be rooted here.

The financial standing of potential property owners should also improve with better economic development, educational system, and contributions from a healthy pipeline of foreign direct investments.

On a macro level, the property market is also supported by positive economic growth, relatively low inflation and unemployment rate, rising wage level, and reasonable household affordability for property ownership.

Major developers are generally in a better position to hold steady their selling prices or postpone the launch of their properties.

When negative sentiment clashes with sound fundamentals, it will give rise to opportunities for profit.

Property investments will become more attractive because it is a tangible investment, proven to be a good hedge against inflation and it provides one of the highest leveraged returns in the medium to long term.

Remember, everyone needs a roof over their head. Real estate meets a basic need as compared to other instruments of investment.

It also determines the well being of every individual, family and organisation. In particular, Singaporeans have a comparatively stronger sentiment for real estate.

We are literally born with a ‘key in the tongue’. Every child wants to own his or her own home – HDB or otherwise. Real estate is therefore one of the key pillars of the economy and society.

It is not a wonder that property investment is one of the most common ways to become rich and wealthy.

If timing is one of the keys of success, this is an opportune time to enter the property market.

For sellers, there is no better time to upgrade or downgrade your property than now. When you sell low, you can also buy low or possibly lower.

For buyers, you do not have to rush with the crowd. You can take your time to find the right property that meets your requirements. You can also be assured of closer attention and better service too.

Property investment is not just about market size but market share too. It is not just about the market situation but also your major action to sieve out the property gems.

The key forces are converging into what I believe to be a perfect spring to invest in properties.

In the near future, many people will look back and regret they did not take any action to benefit from it.


I hope this message will find a place in your heart.

By the way, I have also recorded other reflections.

Please go to ‘Notes’ found below my profile picture.

Visit my Transformation blog at http://hsrpatrickliew.wordpress.com

Visit my Inspiration blog at http://liewinspiration.wordpress.com

Please read them and continue to teach me.

Life is FUNtastic!


Question: How can we leverage on challenging times to enhance our profit, advantage, and growth.









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