Kwek Leng Beng - Right Time To Review Cooling Measures - Really?

So, property tycoon Kwek Leng Beng thinks it is time to review cooling measures.  Why?  Let's take a look at his arguments.  But before that, who is Kwek Leng Beng?

He is a property tycoon.  I quote some background information from wiki:

Kwek Leng Beng (Chinese: 郭令明; Pe̍h-ōe-jī: Koeh Lēng-bêng; born 1942) is a Singapore businessman. In 2009, Forbes estimated his net worth to be US$1.2 billion.  Kwek's father started off penniless, but subsequently founded Hong Leong group, essentially a rags-to-riches story.

Kwek Leng Beng was trained as lawyer in London, but chose to join the family business in the early 1960s. He became chairman in 1990 and went on to establish an international reputation for his leadership of the Hong Leong Group, which is now a conglomerate with more than 300 companies, including 12 listed ones. 

Kwek is the Chairman of City Developments Limited (CDL), an international property and hotel conglomerate and the leading real estate developer in Singapore. It operates in 20 countries in Asia, Europe, North America and Australasia. The CDL Group has over 250 subsidiaries and associated companies including 8 companies listed on the stock exchanges of Singapore, London, Hong Kong, Amsterdam, New Zealand and Manila. CDL has a market capitalization of US$5.8 billion and ranks just outside Singapore's top 10 listed companies. It is also the second-biggest property developer in Southeast Asia.

Wow.  Impressive.  CDL is a company with global operations.  So, obviously, Kwek's words carry weight. So let's take a closer look.

His key argument - Singapore would lose our edge as an investment destination unless Government reviews cooling measures.  As evidence, Kwek noted that foreigners have been ploughing their investment dollars in Britain, US, Australia over Singapore. Even Singaporeans have been investing abroad. (hey, this blog is about investing in London properties!)  Therefore, we need to review, presumably to attract these investments back.

What is the problem with this argument?  I believe Kwek was just referring to investments in the property sector, e.g. foreigners buying homes and other properties in Singapore.  In recent times, there is no doubt that London, for example, may have looked more attractive than Singapore as an international investment destination for residential properties.

But, has Kwek addressed the bigger picture?  How would a reduction in foreigners buying residential property in Singapore make us lose our edge?  What about the other types of Foreign Direct Investments in Singapore, e.g. new high-tech manufacturing plants, company HQs, R&D centres and similar investments that create jobs and bring higher value add to Singapore?  Have these gone down?  I don't think so.

In fact, one can make the opposite argument.  If Singapore does not rein in our property prices,  these higher value-add investments would NOT come to Singapore simply because costs are too high!  Imagine a global MNC thinking of setting up a HQ in Singapore.  Office space rental is one cost.  Re-location costs for their expats to Singapore is another cost.  If rentals for commercial and residential property are sky-high, how would that impact our competitiveness?  If land costs were so expensive, would Rolls Royce open a multi-billion dollar factory here?

The Duke and Duchess of Cambridge visited  the Rolls Royce Factory in Singapore

Perhaps Mr Kwek ought to consider these factors before making such sweeping and alarmist statements. We argue base on evidence.  Show us the evidence that Singapore has been losing precious investment dollars in high value add industries, then we will take such statements more seriously.

Otherwise, they all seem a tad too self-serving.

I'm glad that Government has come out to state that Cooling Measures will stay, for now.

Thanks for reading.  All views are mine.  Any factual errors, I stand corrected.

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