From: Dr Sing Kong Yuen   Date: Thursday, November 27, 1997 4:57AM

To: ...$@**#^.hk.....

Subject: Re: Property Problem

Hi

Let us be Internet friends and if I can find a Buyer or Agent to your expectations, I will inform you. In the meantime, I have asked Mr Richman, my webmaster to help by advertising in the Surfers' Girl USA, New housing agent and Sellers and Buyers educational articles.

The girl I know is interested but I doubt she will pay you a premium as I think you will be losing money if you sell at "market" or valuation price if experiences of other Sellers are a guide.

Almost all Owners are under great stress seeing their capital values depreciated so much, some as much as 25%.

 Date: Thu, 27 Nov 97 12:03:00 -0800

Subject: Re: Property Problem

Hi Dr Sing,

I am indeed very happy to receive your sincere and helpful advise. Inorder not to put us into stress, I agree that we shld be Internet friends and will always look forward for your personal advise.

As to what I intend to do, together with some of your advise, I have 2 alternatives :

I will talk to my banker when I return to S'pore 2 weeks later. I hope to be able to do a re-financing on my Melville Park and rent the apt out for the time being .... I won't insist on the >$2K as my ultimate aim is to save 10s of thousands of dollars (in losses) and not just hope to make another $2K a yr by renting it out $200 higher. As such, a rental of $2K will be fine. Even $1.8K is acceptable to me. If u have such a client, we can talk about it. Thanks in advance.

Though I may be in a little distress, as I have told u in my earlier mail, I have managed to raise a futher 10% in cash. ie. I have met the 20% cash requirement and thus have temporary settled my problem as at now. I am not rich, otherwise I won't have to worry over several 10s of thosands of dollars, but I think I can still hold on for another yr or 2 (capitalising on my overseas allowance now). But I certainly need to sell it when I return (in 1999). But my next question .... will the market recover in 12-18 mths ? If so, I will be alright, but what if it had not. Can u forsee whether the market will recover back ? (I will lose a further 1.5K in interest cost every mth).

I have also been talking to my other friends. From my observations, it is unlikely that the govt will allow sharp depreciation in prices ... as BG Lee had put it (when the govt was criticised for granting the extension of time and lifting the stamp duty penalty ) : "S'pore is a nation of home-owners, the govt can't allow the people's wealth to depreciate thru' falling property prices .... " As such I am highly confident that the market will rebound. Meanwhile I believe the losers will be those distressed owners with "weak holding power" and "desperate sellers".

I will get 2 valuations as per your advise, probably JLW and Collier Jardines (o.k ?)

I will then futher determine the "market price" based on the transacted price (actual caveats lodged) and assess what "loss" I am talking about. I hope to re-iterate again, I am a realistic and bona fide seller willing to sell at the market price. But what is the market price ? Till now, I haven't got any answer. (There are 2 market price, a price in which a seller is willing to sell; and a price in which a buyer is willing to buy

.... so far there had not been a market equilibrium ... therefore, no sales as selling price not equal to buying price .... this, I Ieaned when I studied economics in school)

Your Internet Friend,

.......

 P/S. You are sharp. I am indeed still quite young (will b 31 tomorrow).

Bye.

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Nov 28 4.41 a.m.

Thank you for your compliments of me being ‘sharp’ (minded?). I am much older. Here’s to wish you a happy memorable 31st birthday and lots of good health..

• Re-financing to get cash or lower interest rates. If you don’t need any cash, you do not need to re-finance. You re-finance if you can get lower interest rates. All Singapore bankers will love to have your business because you are sweet 31 and have high earning prospects.

If your mortgage interest is $1,800/month, your rental income of $1,800 (after expenses) will cover at least 60% of your mortgage interest. If you sacrifice going on expensive holidays, you will make it through the next 2 years.

• Shop around and talk to many Bankers if you want to re-finance. You may save some money in interest rates.

• Rental at $1,800 - $2,000 for 2-bedroom Melville Park apartment is not a problem. It should not be difficult for you to rent out your apartment but this is now the holiday season and you will have to decide fast.

I managed to secure $2,300 for the Owner around July 1997 after a vacancy period of 1.5 months as the Owners were particular and there was intense competition from the Bayshore Condos. All realtors will recommend new developments because expatriate wives want new bathrooms and kitchens and Owners of older apartments have had been unaware of the need to lower their rentals (till recently).

The new Bayshore Condos were ready and the 2-bedroom apartments magnetized many prospects, especially those with sea views. The Bayshore is a massive development, nearer to the sea and Raffles Place banking area. A Hongkong Owner who has few properties in Singapore, was flexible and decisive (unlike most Singapore Owners) and I rented one in May 1997, by co-broking, at $3,000 partially furnished to an Indian American single. High floor > 20th floor, panoramic sea-view and balcony. My client was prepared to pay $3,500 (his budget). Such investment-minded Owners are rare though. He wasn’t interested in the Melville Condo, even at lower rentals.

• Will the market recover in 12-18 months? A long Time Lag is a characteristic of property investments. When there is a great demand, there will be over-building. This leads to over-supply and loss of confidence by buyers. It will take more than 2 years to clear the stock and since foreigners like the "rich" Indonesians and Malaysians have their own financial currency and share depreciation problems, there will be few foreign buyers. If there are, they will not buy apartments, not in prime Districts 9, 10 and 11 areas and usually they prefer brand new apartments.

Many local buyers (usually 4 or 5-room or executive HDB Owners) have seen a drastic fall in the capital values to > $100,000. They cannot upgrade to private housing. Your target market will be singles or barren couples with no children but much Central Provident Fund savings rather than families.

Families upgrade to landed properties as evident by the fast sale of new Countryside 3 semi-detached houses in Yio Chu Kang. The houses were selling like hot cakes at around $2.1 - 2.2 million and were sold out within 1 week in November 1997. Still there were non-stop viewers (I am staying around there) the next few days because the Developer (anticipating a longer marketing period) could not withdraw the 2nd weekend advertisement in time. Looking at the crowd, you would think that the property market is booming. Who would be buying $2 million houses? Shouldn’t they wait for prices to drop?

Owners of smaller HDB apartments had no means to upgrade and prefer the new HDB apartments which are sexier.

I doubt the Singapore Government can do anything to raise capital values in the next 12-24 months because there are external factors beyond its control and its bureaucrats are always thinking of how to extract as much money from the private businesses as possible (by increasing fees regularly). When the net profits of the business are reduced considerably by the high fees and salaries, there will be very little spending power. Economics is your territory so I better stop.

Small business owners now can feel grateful if it does not raise rentals which it has had been doing every year so that rentals reach "market rate" irrespective of what business. The government and its government owned or related companies control a lot of rental properties and compete with small businesses in almost every facet of the economy.

Because of the above factors, I am not as optimistic as you. But then, I am not 31 too. You should look at 10 years from now (you will be 41) and I believe your Melville Park Condo will be worth more.

• Reputable valuers. JLW and Colliers Jardine valuation reports are familiar to most Buyers and are acceptable to banks for re-financing. However, it is best to ask your bank first. Buyers may think that Sellers’ valuation reports are inflated a bit.

• 2 market prices. As I have not studied the subject of economy, I thought "market price" refers to is the price range for a similar class of property sold recently or the transacted price of a property. Please accept my apologies.

• To sell or not to sell? There is a local saying that means that the "stupid who knows nothing, makes more money" which may be true of those old uneducated fellows who bought those Chinatown shophouses at S$70,000 each and such houses are worth $2.5 million now. One person bought 7 and operates them as a hotel in Chinatown.

• Ask an accountant. My sister-in-law, who is an accountant has decided to sell her Southaven (not completed yet) and cut losses. Her apartment may not be "rentable". The theory is that she can buy back at a lower price.

• Asset accumulation. My advice is that property investments in Singapore are meant for the long term. If you do not need the money or can sacrifice some enjoyments like buying a bigger/branded car, semi-detached or bungalow and take holidays, you will end up wealthier.

• Use of leverage. You had another property which means you had accumulated an extra asset through the use of leverage. You are using "other people’s money" (the bank loan) to accumulate assets (properties). The next stage will be to let tenants pay most of your mortgage interest. Very few people understand/are interested in the use of leverage as there are risks and personal sacrifices of immediate gratification involved.

However, I find most young couples nowadays believe in "quality of life is important" and will buy bigger apartments with expensive renovations and go on yearly expensive holidays. Therefore they have no savings to apply the principles of leverage. One does need 20% down payment and some savings for property expenses.

Since you have only one property and are young, can you apply the principles of leverage so that you can afford to retire at 41? If you can, you will have a happiest birthday at age 41 and will not need to be an employee anymore.