Li Ka Shing buying more land in Sin

BusinessWeek, 28 Aug 2012

Billionaire Li Ka-shing’s Singapore property joint venture may seek more land in the city’s downtown to replicate its latest development that attracted global banks including Standard Chartered Plc and Macquarie Group Ltd

Should Sinkies greet this news with glee or with fear? Li Ka Shing is a shrewd businessman with great foresight, to see what and where there is a good deal. His intent to buy more land can be seen as a good sign that the future is good here. People selling land will be very happy to hear this news. But for land scarce Sin, what is it going to cost the locals and property prices, good for those wanting to sell and profit and bad for those needing a place.

Sinkieland can grow more land by reclamation, provide more yield by building higher and digging deeper. But if there is no restraint in foreign buying, there will be not enough land to meet the foreign demands, which are as good as the demands of the rich of the world.

The govt has to seriously relook at this issue of housing and land for its population and industry use. It is very tempting to keep selling at higher and higher prices. It looks so great to let property prices spiral up with all the property owners smiling and feeling so rich.

Come 50 or 60 years down the road when most HDB 99 year lease would be due for expiry and owners would need to buy new flats, what would be the prices then? By then they cannot sell to use the proceeds for a new flat with a small top up fee. The old flats would be worthless or at minimal value. Some could be saved through regular en bloc repurchase schemes, but when the bulk expires at about the same time, it is not going to be an easy thing to do. 900,000 units! 50% is going to be 450,000 units for en bloc and SERS.

The land and housing issue here is not the same as countries with big and near unlimited land relative to their population. Housing as a commodity for trading is dicey if not managed well.