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Thursday, November 15, 2007


Economics applied: a government imposed price ceiling is bad for the economy and supply and demand regulate the price. Cool! Sounds fun as long as you don't have to live with the prospect of sending all your money to your landlord.

Singapore has seen a dramatic growth over the past few month - which is great - and with that people gained a lot of confidence. People started investing again and the next big trend was to EN-BLOC residential and commercial property (If all tenants agree, the entire place is sold, most likely to be knocked down and redeveloped). As there is a lot of $$ to be made, a lot of people happily joined the selling and demolition spree.

Demolishing a building takes a few days, while building it a few years. Congratulations! The net effect is now that both, residential and commercial properties have become very expensive. Our Landlord, at the end of our lease, is offering to extend, but at market value. Which means a 53% increase. Funny! The place we are living in is going to be demolished soon as well. Would you want to move into a place for only 8 month and pay the same as for a serviced apartment????
Sure, people should make money, but wouldn't it be nice to say "hey, the place is sold, I already make millions on that. Why not increase the rent a bit, keep the tenants and have 8 more month hassle-free rental income...." Let's hope the place stays empty till it is knocked down!

Consequence for us is now that we will have to move into a HDB (Public) housing estate.
A fellow sportsman in the gym yesterday mentioned that Exxon is moving it's operation from Singapore to Thailand. I would do the same... Imagine, the rents have increased by 50% and few hundrets of your staff rock up, asking for payrise to cope with the increased cost of living.

Now, this whole issue is very exciting to monitor... On one hand, Singapore wants to attract "foreign talent" and also grow the population, on the other hand there is little or no intervention to deal with the rising rents. Not only private individuals may go elsewhere, but small businesses may seek other locations. Eventually, this place might loose its competative edge and then all the greedy people may end up loosing money big time.

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