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Q & A: Year 2022 – Will it be the next Property Boom or will Skynet rule the world?

Will it be the next Property Boom or will Skynet rule the world in Year 2022?

Probably Skynet… with it’s armada of Terminator Robots!

I’m just kidding!

As you know, I’m a guest contributor for Mr. Propwise (Singapore Property Weekly).

 A reader emailed Mr. Propwise on a question regarding one of my original posts in March 2016, “What Is Going To Happen To The Property Market In Singapore?”

The edited post re-appeared on Mr. Propwise and Yahoo News as,

“Is it Time to Jump in to the Singapore Property Market?”

Original Email from Reader:

Thank you for your weekly news insight, I personally find them very useful.

I was just reading your 255th edition, and would like to leave a
question to your guest contributor, Gerald Tay. It will be great if
you are able to direct this email to him as I am unable to find his
email address anywhere on the weekly issue.

He mentioned “it’ll be years before buyers see another great boom in
the overall local property market – not unit 2022 and later
optimistically”

This statement triggers a question in me. Though I am not a fan of
forecast, I believe strongly that predictions should be taken as a
pinch of salt.

However, I was wondering “Why 2022?”. Or rather, what is it that from
2016 to 2021 period that Gerald sees differently from the year 2022?
Is there something fundamentally different that might take place in
2022 that is different from the prior period?

I thank both of you for your kind and insightful weekly issues!

Thanks!!

My Reply to Reader:

Great to know you love the articles!

Thank you for sending in your questions. I’ll reply you just how I write my articles – candidly.

Most emails I commonly received from fans/readers are,

“Is it a good time to buy now?”

“When will the property market turn?”,

“Do you think property X or Y is good to buy?”

“What’s my opinion?”

Some people already possess some form of bias confirmation in their minds – answers they want to believe is correct to suit them – but what they want are not the truths – rather they want certainty from someone else like an “expert” or “friend”, or someone “up there” to advise or help back up their assumptions that they are right. In other words, a clear lack of independent thinking.

So when I reply them otherwise, they either never reply back due to perhaps a lack of etiquette or missed my reply or would reply back with their own counter logic.

I’m not at all frustrated if people don’t reply with a simple “Thank you”. What frustrates me is some of these people take others for granted – taking advantage of free advice and freebies.

You may or may not reply me on this email and what I’ve replied to your question. The question is “Do you already have a presupposition to fit the facts you think you have, than to accept the truth?” If you have, please stop reading from here.

If you’re asking because you’re sincere to learn more, below are my answers to your questions.

Like you, I hate predictions and never a fan of it. People often claimed to hunger for the truth, but seldom like the taste when it is served up.

Why do I “predict” 2022 for the next boom?

Firstly and importantly, it’s not a prediction meant for anyone else, i.e readers who read my post or blog.

Rather, they’re my personal analysis and assumptions. My entire writings and blog www.crei-academy.com are my personal journal, to pen down personal thoughts, otherwise I get massive headaches thinking of them every single second.

Once a while, I contribute posts like this to reputable bloggers like Mr. Propwise for sharing purposes. Sometimes they appear in Yahoo News.

Like you said, I expect every reader to take my “predictions” with a pinch of salt. If I’m wrong, the world continues. If I’m right, people including myself benefit. Either way, I don’t make money profiting from being a fortune teller, unlike market analysts or those with vested profit-interests. (It’s surprising how many of them are still keeping their jobs for so many wrongful predictions)

Secondly, why year 2022 is my personal analysis and assumptions?

1. The USA economy is completely inverted to Singapore’s economy and Asia – so is their real estate markets. Interest rates in the US is currently at all-time low, 4.5%p.a. From FED meetings, we know it’s going to take quite a while (years) before interest rates revert back to their previous norms – and some years before we see another 2008 type of bubble.

2. USA economy is still in recovery mode, while our own economy is spluttering and so is the rest of Asia and Europe. Residential property prices in US has somehow peak (or still rising amidst slowly) since its recovery. But prices are certainly not the kind of bubble we saw prior to 2008, not even close. So don’t expect the US to face the kind of 2008 recession any time soon.

3. USA Commercial property prices is still going strong and has gone up 10% since last year. It’s has became extremely hard to find quality investment deals in this segment recently. We’ve been looking for another quality commercial property to add to our current portfolio since 8 months ago and yet to find one! There are, but we’ve to accept lower yields. (i.e 3%-5% Net Rental Yield, MNCs like Macdonalds was 4.5% yield last year, currently drop to 3%)

4. How does USA RE (Real Estate) has everything to do with what I said in my article? EVERYTHING! If USA is the only global economy on positive recovery mode currently, and her investment yields are getting lower, what makes anyone thinks they will find any yields in smaller global markets like Singapore?

5. I follow US economic and RE news closely and read that it’s RE market will face serious decline by 2024 according to it’s the market’s cycle. So 2022 for Singapore RE market to turn positive might not be too far fetch a prediction. It may be beyond 2022 but I doubt it will be earlier.

6. It only 2016 now. Cooling measures are still in place. Interest rates are still low. Property prices have peaked and on decline and so has rental and business profits. USA economy is on its recovery cycle, while the rest of the world is in doldrums. Where do you think money is going to flow to at least for the next few years?

7. The Singapore RE market will not fall drastically without the USA falling drastically first. Economic history had proven that since 1975.

8. So people who say now is a good time to buy property because prices have fallen 8%, are either in denial, desperate or misinformed about simple economics.

Reader’s Courtesy Reply:

Hi Gerald,

Thank you very much for the reply. Though a simple “thank you”, but I really appreciate your reply a lot because I see much effort in your reply. I honestly do not expect your reply would be a lengthy and insightful one. I certainly learnt a lot from your email.

I guess due to my profession (investment analyst), I can relate to what you mentioned in your first part of your reply. Likewise, some of my clients simply take advantage of free advises. I was asking you the question purely due to my curiosity, and always prefer to keep my mind open for opinions.

Regardless, thanks for the reply. I think the biggest lesson I learnt from your email is the strong correlation with the US RE market. I never think of this before, and I admit that I do not have any knowledge on the US RE market.

I guess now, this would spur me to read up more on the US RE. Also, I tend to agree some of your pointers, such as not expecting the US to face the kind of 2008 recession any time soon, and the normalisation of Fed Fund rate.

Thanks (super) a lot Gerald, for the wonderful insights!

 

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To your investment success,

 


About the Author

Gerald Tay Author, entrepreneur, professional investor and loving father, runs crei-academy.com with a tongue-in-cheek approach to property investment - and himself. He is widely regarded in the industry as 'The Common-Sense' Investor. Gerald writes with passion and straight-forwardness, disclaiming wild claims and impractical investment strategies behind lies and ignorance pervasive in the property industry for vested interests. His well-known statement, "All I did is to value my investments with science, logic and common sense.'

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