How Norway’s SWF sees S’pore property

In Property on 08/12/2017 at 7:32 am

Talking about commercial property here, Karsten Kallevig, head of the fund’s property business, might have unwittingly explained why S’poreans vote for the PAP:

the fund had found it harder in Singapore due to “different dynamics” but was persisting there. He added that rents were very volatile in the city state while capital values were more stable. “With pricing and opportunities . . . we have not been able to conclude on anything that for us provides the confidence to start investing there.”

FT report

He is saying, he can’t get in at what he considers to be a gd entry price, yield-wise. Global investors especially SWFs look for relatively attractive yields when investing in commercial property.

What this means is that those invested here in commercial property do so because they continue seeing capital values going up long term. Because they know that S’poreans will keep on voting for the PAP, who is the friend of capitalists? Eat yr heart out anti-PAP cybernuts.

  1. Can also be the other way round. Long term patient capital sees Singapore as too expensive. Short term capital is driving up capital values. We would want the former not the latter. The latter requires too much macro-prudential buffers like excessive FX reserves.

  2. In Jakarta you can pay up to50 year’s rental for the price of a piece of property. Most owners pay cash for their properties and don’t really care about selling or renting if they don’t get what they ask for.

    So what’s the purpose of investing in properties, you may ask… capital appreciation! It is a hedge against inflation.

    Can someone tell me what to do in such a situation?

  3. rising capital value, with rental not keeping pace, makes owners asset rich but cash poor; because some reits pay their property management companies using a formula that rises with asset value, higher capital value actually reduces the reits’s income, making them even more cash poor

    also, when a property company pays only part of its profit as dividend, the shareholders end up very cash poor; the yield might be under 1%

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