Prime buys are the best bet

Cushman and Wakefiled’s Donald Han offers his views on the property market in the Channel NewsAsia programme, When The Bears Are Out – Invest Wise, hosted by Lin Xueling.

What are your favourite locations at the moment? And for which categories?

It all depends on your investment profile and investment criteria. I always say that you should go into a project or property sector that you are most familiar with.

For someone who is looking at residential properties, you might want to go into the first-tier residential market where you can get fairly good returns for your investment.

The more sophisticated ones are banding their investment dollars to create a larger quantum and investing in markets where we’ve seen substantial depreciation in asset values.

And one of the more common routes would be to go to the United States. This could present an opportunity, in terms of going in to buy US40 cents (54 cents) out of US$1 and getting what we call the deep-sea fishing expedition prices.

So it’s a question of waiting for the right time. But generally, you’re still pretty bullish about the market?

I’m still pretty bullish. I think everyone says it’s all about location, location, location. I think you need to put another important doctrine to that. It’s also about timing, timing, timing.

In fact, history has shown that one can make more money from timing than just from location over a short period of time.

We Asians tend to be really keen on property. Do you think that’s going to continue?

If you’re looking at the market right now, it’s a perfect opportunity for investors who have missed out over the last one or two years and have cash.

This is the investor whose money in the bank is earning interest rates of less than one per cent, considering that inflation is going to be four, or even six per cent.

At the end of the day, you’re better off hedging that and putting your money in asset location – with part of it being in property. This can help because as an asset class, it’s a hedge against inflation.

Also, owners and buyers are now more realistic in terms of pricing. If they were quoting a price 10 to 20 per cent higher than the market value last year, they’re now willing to sell at, or below market value.

You’ve been talking about time being everything. Do you think that the timing is right now?

I think the timing could be anything from the next six to 12 months. A lot depends on what unfolds from the sub-prime and, more importantly, the banking mess. It will affect the demand and sentiment.

At the end of the day, the Singapore property market is affected by sentiment – what you hear and what’s in the headlines tomorrow.

The headlines recently have been pretty much stellar economic growth for the first quarter – 7.2 per cent. That’s excellent. If the stock market doesn’t go down from current levels, that would help sentiment again. And we’ll have to wait for some of the Urban Renewal Authority data in terms of the analysis of the first quarter. We’ll make a decision at that point of time and over the next six months.

What would be your top tips for surviving the next six months?

Go for prime properties … it’s probably the first to go up in any recovery and the last to come down, so it’s very defensive. And measure your investment on the kind of yields that you can get and prime properties typically would be able to be leased out very quickly. Always look into prime properties wherever you go. It works in Singapore, Tokyo and US, too.

The programme is shown on Channel NewsAsia every Thursday at 9.30pm.

Source : Today – 3 May 2008

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