Property

Why Singapore’s IRs Stopped Boosting Home Prices

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Ryan Ong

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The Integrates Resorts (IRs) were all the rage back in ’07. They were touted as the source of 35,000 jobs, awesome parties, and a major boon to the loan shark industry. More importantly, IRs were supposed to raise the value of nearby homes. Which they did…right up till the IRs were actually built. Then the hype deflated faster than Moses Lim’s stamina on a staircase. In this article, I examine the possible reasons:

 

A Bit About the IR Hype

The Integrated Resorts combine upscale hotels, casinos, and various other ways to waste money. Kind of like Disneyland, retooled for people who are bad at maths. Despite public contention (from conservatives, non-Sarong Party Girls, and people afflicted with common sense), the government started accepting bids in ’04.

By ’07, construction of the IR was under way. And everyone figured the same thing: Investing in nearby property would be like playing Blackjack with 53 aces. And true enough, home prices near Marina Bay rose by 65.3%, and median rent grew by 35%.

Then in 2010 to 2011, the boom ended. Growth slowed to 3.7%, with little improvement since. Why? Here’s some speculative reasons:

  • Recession in Europe and America
  • Reduced Foreign Investment
  • Simple Price Plateau
  • Image Issues

 

Casino entrance
“Ever since we moved here, it’s as if 90% of our income disappears into some strange portal.”

 

1. Recession in Europe and America

With the Eurozone crisis and American debt, the IRs have lost some of their appeal.

In 2011, Americans started to realize their jobs are about as stable as Megan Fox with a case of PMS. Likewise, Europe started to wish the Trojans had won that war instead. Since the IRs and surrounding property are targeted at expats, this is a problem: The intended demographic is like a trout with a broken jaw, unable to bite even if it wanted to.

Now that Greece has accepted its bailout, and America has run out of exotic locales to invade, there’s some hope of better growth. But it’ll be probably be two to three years before we see any effect. Until then, the IRs’ surrounding properties will languish.

 

Greek protest, punching a cop
“Riot police? That’s our travel agent trying to sell tour packages.”

 

2. Reduced Foreign Investment

With the additional buyer’s stamp duty, foreigners fork out an extra 10%. That’s slowed foreign investment, and deprived many property developers of their basic needs (i.e. designer cuff-links, luxury cars, $200 per head dinners).

The government intended the stamp duty to impede foreigners, in order to protect endangered species (like native Singaporeans). A side effect is that more foreigners are now renting instead of buying; and it makes no sense to rent near Marina Bay, when for the same price a foreigner could get twice the floor space in another district.

 

Man holding a presentation...alone
“I take it everyone here agrees with my plan to move investments abroad…”

 

3. Simple Price Plateau

Even with slow growth, property around the IRs is beyond inflated. There is a price plateau with regard to luxury. A practical example: You might pay double the price for a good HDMI cable, but would you pay $1000 for one? Well, apply the same principle.

Yes, it’s nice to have a casino on your doorstep. It’s great to have shows and events within walking distance. But once we’re talking millions, the property price may not justify those conveniences. This is especially the case with Singapore, where half our problems come from everything being too close. Ultimately, the IRs are accessible from any part of the island, and an extra hour on a train (at MOST) doesn’t justify the price difference.

It’s not as if anyone who could afford the property wouldn’t drive anyway. Or have a small army of chauffeurs.

 

Plastic food in window
Speaking of price plateau, there’s the restaurants there. Taste that $40 difference? Neither do I.

 

4. Image Issues

I’ve saved this one for last, because it’s purely a personal opinion.

The IRs and their surrounding properties have a bourgeois stench. Like Abercrombie and Armani, they’re associated with a pathetic attempt to buy class. That’s off-putting, both to expats and locals with a shred of taste. Not everyone who’s rich wants longs to be identified as such; bragging about it is like painting your genitalia on the side of your Mercedes. Or like buying property near IRs.

Increasingly, we’re seeing expats attempt to assimilate. There’s in shift in the old mentality, that they need to congregate in certain “expat only” zones. Of course, property agents will claim expats can’t stand to stay or rent in heartland areas, because that would suit their business nicely. But increasingly, this is becoming the case.

In short, expats are more willing to consider alternatives in heartland areas now.

 

Exapts playing guitar hero in a flat
Which at 4 am, isn’t always to our advantage.

 

Image Credits:
alantankenghoeashleytunderclassrising, Engin Erdogan, gtknj, aenertia, edwin.11

Why do you think properties near the IR have slowed in growth? Comment and let us know!

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Ryan Ong

I was a freelance writer for over a decade, and covered topics from music to super-contagious foot diseases. I took this job because I believe financial news should be accessible and fun to read. Also, because the assignments don't involve shouting teenagers and debilitating plagues.