Tackling the great income divide

More help on the way for the low and middle-income families

Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam delivering Budget 2014 earlier today. Photo: Screen grab from Singapore Budget 2014 live webcast.

Expect no changes to the property cooling measures, more help for the low-to middle-income families and more steps to take care of senior citizens – that is the takeaway from today’s Budget 2014 announcement by Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam.

The property curbs, particularly the Total Debt Servicing Ratio (TDSR) introduced in July last year, have worked to reduce sales volumes and transactions.

It takes into account existing loans, making it even more difficult for property investors to obtain housing loans.

As a result, prices of private residential properties fell for the first time since the first quarter 2012.

According to the Urban Redevelopment Authority (URA), the Private Property Index (PPI) decreased by 0.9 percent in the fourth quarter of 2013 to reach 214.3 points.

For the whole of 2013, developers sold 14,948 units, significantly lower than the 22,197 units sold in 2012.

In the HDB market, the Resale Price Index (RPI) fell by 1.5 percent from 204.8 points in the third quarter to 201.7 points in the fourth quarter of 2013.

For the entire 2013, the RPI registered a decline of 0.6 per cent – the first annual decline since 2005.

Meanwhile, zero or low cash-over-valuations are now the norm.

Collectively, the cooling measures seem to have worked effectively to ensure property prices remain affordable for all.

A more polarised society?

Singapore has over the years, become an increasingly polarised society defined by the haves and have-nots.

In early 2000, the government introduced various immigration policies and tax incentives to attract the wealthy to make Singapore their home.

The city is currently home to Jim Rodgers and Eduardo Saverin.

The tiny city-state also has a special zone called Sentosa Cove with the tagline: “The world’s most desirable address”.

Wealthy foreigners applying to buy homes on Sentosa Cove can get fast track approval from the Singapore Land Dealings (Approval) Unit.

According to the Boston Consulting Group, the city-state boasts the highest concentration of high net worth individuals in 2012 at 16 percent.

In less than a decade, the city has become a playground for the rich.

Interestingly, during the same year, Singapore’s income inequality, also defined as the Gini coefficient, was the second highest after Hong Kong among developed economies at 0.478 points.

That, however, had eased in 2013 according to recent government data to 0.463 points.

Budget 2014 – a more caring government?

Singapore’s glitzy city skyline. The city is a playground for the rich. However, it also has the second widest income gap among developed economies after Hong Kong. Photo: Shutter stock.

The measures announced by Mr Tharman earlier today seem to indicate that the government is listening to the growing voices of discontent and is prepared to do more to narrow the income gap.

In fact, it appears more help is on the way to help the less well-off.

One of the measures is a one-off GST Voucher-U-Save Special Payment this year to help low and middle-income families deal with the high cost of living in Singapore.

Those living in smaller HDB flats will also be given a helping hand in the form of housing rebates.

This means the lower income will have more cash in hand to cope with day-to-day living expenses.

Mr Tharman said around 800,000 flat dwellers are expected to benefit from the rebates.

Another reprieve the government has given is the rebates for the Service & Conservancy Charges, ranging from one to three months.

Families living in one- and two-room HDB flats will get the most help with three months worth of rebates for this year.

Meanwhile, three- and four-room households will receive two months of rebates.

There is no way to tell how poor the really poor are in Singapore as there is no clear definition on the official poverty line.

However, a recent BBC report about the poor in Singapore shows just how far some in society have been left behind despite the country’s economic success.

“In this house no one can afford to fall sick at all,” said Nurhaidah Jantan who was quoted in the report.

Mahatma Ghandi once said: “A nation’s greatness is measured by how it treats its weakest members.”

Now, that is something worth pondering on the current state Singapore is in.

This article was first published by PropertyGuru Singapore.

Singapore’s new hinterland?

With a population of 6.9 million come 2030, enhanced connectivity to Iskandar Malaysia by 2018 and the ability to use your CPF Medisave for medical treatment in Gleneagles Medini Hospital, could Iskandar be the new hinterland?

View of Causeway Bay in Hong Kong. Singapore will have the highest density population per sq metre come 2030, outpacing Hong Kong. Photo: Shutterstock.

With the Singapore Parliament approving the motion recently on the White Paper that projects a population of 6.9 million people by 2030, I was left wondering how Singapore can accommodate such a figure.

Since independence, Singapore has been trying to compete with Hong Kong as a hub for finance and commerce.

Today, the Lion City has succeeded beyond its wildest dreams – it has become a favoured wealth management destination among the wealthy, especially since the UBS banking scandal hit Switzerland in 2008.

The Boston Consulting Group in 2011 puts Singapore as a nation with the highest concentration of millionaires in the world at 17 per cent.

That’s 88,000 millionaire households – or one in six homes.

However, Singapore is also a victim of its success – rapid population growth via immigration and the most unhappy nation according to international pollster Gallup.

Singaporeans shopping in Chinatown. Singaporeans are the most unhappy people according to a poll conducted by Gallup in December 2012. Photo: Khalil Adis.

In addition, unlike Hong Kong which has China as a hinterland, Singapore has none to speak of.

It is only a tiny city-state with Malaysia and Indonesia as its closest neighbours.

Singapore’s current population stands at 5.3 million people.

For 6.9 million people to fit into the island, as the White Paper suggests, this begs the question on how sustainable this figure is.

Immigration policy, its effects and the political implications

Living in shoebox apartments – defined as those under 500 sq ft have
become the norm in Singapore. Photo: Shutterstock.

The effects of the current immigration policy have hit Singaporeans hard with creaking public infrastructure and a city already bursting at its seams.

Talk to any Singaporeans and they will tell you of the frequent train breakdowns, high property prices, wage stagnations and a heartland that suddenly seems so foreign to them.

Our current immediate neighbours include those from China and Myanmar, some of whom are not able to speak English – the lingua franca of the nation since independence.

This has resulted in HDB re-looking into its Ethnic Integration Policy (EIP) to include foreigners who have recently become Permanent Residents or Singapore citizens.

In 2011, the public showed its displeasure with the Lee administration at the ballot box which translated to the lowest vote margin ever for the ruling PAP government during the general election.

It also led to the fall of the Aljunied GRC to the Worker’s Party – the first time ever in Singapore’s history since independence.

Subsequently, the PAP lost two by-elections – Hougang in 2012 and Punggol in 2013.

In January this year, Prime Minister Lee Hsien Loong admitted his government lacked the 20/20 foresight and could have planned better.

“I decided that we should try and make up for lost time because you want the economy to grow. You want Singapore to make progress and you don’t know how long the sun is going to shine. As it turned out, the sun remained shining for longer than we expected. So the population grew faster than we expected, our infrastructure didn’t keep up,” he told Channel News Asia.

Therefore, it came as no surprise that the ‘selling’ of the recent White Paper to the Singapore public was met with much derision and opposition online.

The sentiment is – “If the government cannot get current infrastructure right for a population of 5.3 million people, what more for 6.9 million?”

New Singapore investments pouring into Iskandar Malaysia

Due to its small size and geographical constrains, there is only so much land Singapore can reclaim and height limit that our public housing can take.

With more and more Singapore-based companies now investing in Iskandar Malaysia, the closest Malaysian state, Johor, seems the only logical way to expand without encroaching on its territory.

Singapore companies with presence in Iskandar Malaysia include CapitaLand, Ascott Somerset, UOB, MDIS and Raffles Education.

According to Iskandar Regional Development Authority (IRDA), Singapore investments from 2006 to June 30 2012 is around RM5 billion.

Just last week, Global Capital & Development (GCD), the concession holder of Medini, announced that it has inked an investment deal worth S$1 billion in gross development value with Link (THM) Holdings Pte Ltd, a Singapore property developer to develop the Media Village @ Medini Iskandar.

For the uninitiated, Medini is a special economic zone that will be the hub for Islamic finance and creative industry.

It is also the site where Temasek Holdings and Khazanah Nasional will be jointly developing its iconic wellness centre.

The Link (THM) Holdings Pte Ltd investment will specifically result in 5.9 hectares of land to be turned into a development of mixed properties, expected to be completed in three phases, over a period of five years.

On offering will be more than 2,000 SOHO units (Small Office Home Office) and business suites of 1.2 million square feet of net saleable area.

Meanwhile, the commercial properties consisting of mainly food and beverage outlets will take up 1.1 million square feet of net lettable area.

The Media Village @ Medini Iskandar will also support the creative industries catalysed by the adjacent Pinewood Iskandar Malaysia Studios

Keith Martin, chief executive officer of GCD said the Link’s development of Media Village @Medini Iskandar will provide a catalyst for further business activity in Medini and complements the upcoming Pinewood Iskandar Malaysia Studios.

Keith Martin, CEO of Global & Capital Development, sees The Link (THM) Holdings Pte Ltd’s development of its Media Village as a boost for Pinewood Iskandar Malaysia Studios. Photo: Courtesy of Global Capital & Development.

“Together with Singapore’s Mediapolis, we see a ‘blended solution’ where the full value chain of media services from script to final production is offered all within an hour’s drive of each other. GCD looks forward to fruition Link (THM)’s plan to create business clusters and to kick-start this new destination for the production for film entertainment in Asia,” said Martin.

A new playground for Singaporeans?

Cost of living in Singapore is a huge concern that has resulted in many to delay marriages that has subsequently led to the country’s low fertility rate.

So much so that the White Paper sees the need to bring in more foreigners to support Singapore’s ageing population and artificially boosts the replacement rate.

In 2010, the Malaysia – Singapore Joint Ministerial Committee (JMC) for Iskandar Malaysia announced the Rapid Transit System (RTS) connection that will connect from the Tuas West extension and back to Woodlands North MRT Interchange.

In May last year, it was announced that Malaysia’s Land Public Transport Commission and Singapore’s Land Transport Authority were awarded the tender for the Malaysia-Singapore RTS Link Joint Engineering study.

I wonder if this is part of the White Paper’s plan to mitigate concerns of space constrains in tiny Singapore.

For the lucky few, I have seen instances of young couples being supported by their parents and parents-in-law to purchase their first homes as both public and private properties have hit their record highs.

Some, however, are not taking their chances and have started looking beyond their motherland for greener pastures abroad, fearing for their children’s future.

Bayou Creek, located in Leisure Farm Resort, offers a slower pace of life and freehold landed properties at a fraction of what you pay for a Good Class Bungalow (GCB) in Singapore. Photo: Courtesy of Mulpha International Berhad.

“Looking at how Singapore is rapidly developing now, I wonder how my children can afford to own their first homes. The salary of a fresh graduate can barely allow you to save for your future, what more your first property?” asked one concerned parent.

In 2010, GCD secured a landmark RM 500 million landmark deal in 2010 with Malaysia’s leading healthcare provider, Pantai Group for the development of the Gleneagles Medini Hospital in the Medini Lifestyle zone.

The hospital, operational in 2015 will benefit Singapore patients who can use their Medisave for healthcare services under the Medisave programme, enabling them to enjoy cost effective treatment in Malaysia.

With the strong Singapore dollar versus the Malaysian ringgit, enhanced connectivity by 2018 and the relatively slower pace of life, the thoughts of retiring in Iskandar Malaysia seem like an attractive proposition for some Singaporeans, if the local authorities get things right.

In the meantime, are you ready to brace an overpopulated Singapore come 2030?

Fashion event good news for Singapore’s retail sector

Singapore is fast emerging as a fashion destination outside Paris. Seen here are models wearing haute couture collection from Gustavo Lins. Photo: Fide Fashion Weeks.

As fashion models walk down the runway at the recent Fide Fashion Weeks, fashionistas can be seen admiring the haute couture pieces at the front row with nodding approvals (or revolting expressions), depending on what fashion means to you.

Prime seatings at such fashion events are generally reserved for the media, celebrities and fashionistas who do not mind spending a five figure sum for these one-of-a-kind pieces from internationally renowned designers from China, Thailand, Hong Kong, Japan and of course, France.

Welcome to Singapore, which according to the Boston Consulting Group, boasts the highest concentration of millionaires at 17 per cent, followed by Qatar and Kuwait.

Held at a tent on the open space at next to Marina Bay Sands, the Fide Fashion Weeks highlight just how far Singapore has come.

From a hub of commerce and banking and now as the epi-centre for fashion, the fashion week signals the first haute couture shows to be held outside Paris.

“Asia has the prominence of economic influence right now. We need to start needing more than just money. We need to get fashion involved in the entire thing. I don’t want Asia to be known as a region for manufacturing among consumers. We want to start leading in the fashion industry. Hence, this entire event,” said Dr Frank Cintamani, chairman of Fide Fashion Weeks.

Fashion equates investments for retail sector

The newly revamped Wisma Atria is home to American label, Tommy Bahama as seen here during its launch. Photo: Khalil Adis.

Indeed, according to CBRE, Singapore is said to be the most targeted market in Asia for luxury European retailers with 39.9 per cent of European brands now present.

On a regional level, only Hong Kong beats Singapore hands down.

“This is testament to the successful evolution of Singapore as a global city and tourist destination,” said Letty Lee, director of retail services, CBRE Singapore.

Notable boutiques that recently opened in Singapore include Coach  (4,600 sq ft), new to Singapore label – Tory Burch (2, 500 sq ft) and Tommy Bahama (1,900 sq ft) at the newly revamped Wisma Atria, Fendi, (2,200 sq ft) at Ngee Ann City as well as Swedish label, J Lindeberg, (1,200 sq ft) at Mandarin Gallery.

Haute couturist looking to expand label in Singapore

Brazilian Gustavo Lins showcased his exquisite designs at the French Couture Week 2012, part of Fide Fashion Weeks. Photo: Fide Fashion Weeks.

Brazilian Gustavo Lins, who is now based in Paris and has his own atelier, feels Singapore is ready for haute couture despite some limitations of such design.

“People here are sophisticated. I don’t think the climate is perfect for haute couture because the real houte couture dresses are a little bit heavy,” said Lins who is known for his highly-wearable and understated stylish designs for both women and men. “I like very much the relaxed way of being in Asia. You are much more soft and sensual unlike in Europe. Your garments in Asia are much more soft – your kimonos, your sarees and your sarongs. It’s very interesting how haute couture could match with your sensitivities.”

With Fide Fashion Weeks as his second showcase in Singapore, Lins said he has better grasp of the local market.

“I think my design is perfect for Asians because they prefer daily clothes and the clothes are very ‘clean’. My drapes and tailoring could sit very well with Asians. We have worked with the Japanese for many years but now the Japanese market is becoming very difficult. Here, in Singapore, we have some customers. We have customers in Beijing and Shanghai,” he said.

Debuting in 2011 at the inaugural Women’s Fashion Week, Lins is now looking at the possibility of opening his atelier here, subject to finding the right business partners.

“I am looking to develop my business in Singapore. I hope to have some customers. The last time, it was a very good opportunity to show my collection here. Now, it is more for the commercial viability to open an atelier here based on feedback,” said Lins who has worked for numerous Paris-based fashion companies including Agnès b., Kenzo, Jean Paul Gaultier, Louis Vuitton and Jean-Charles de Castelbajac.

Eastern label with global appeal

New York-based Polpat Asavaprapa’s ASAVA label has a global appeal. Photo: Fide Fashion Weeks.

While the West is looking East, Thai designer and New York-based Polpat Asavaprapa feels his ASAVA Autumn/Winter 2012-13 Collection, while New York inspired, is suited for women everywhere.

Set against a fantasy of a sassy woman wandering through the flower gardens in Central Park of New York at night, his pret-a-porter collection is still relevant be it for women at Singapore’s Botanical Gardens or Bangkok’s Lumphini Park.

“The clothes themselves are very practical. That is one of my DNA. I believe that women has to be able to wear my clothes. My collection is very comfortable from casual pieces like shorts to evening gowns. You can get anything no matter who you are,” said Asavaprapa.