Summary
Similarities between the Swine Flu & the Lower Rents for Landlords- This does not reflect the commercial / retail industry alone but across the board for all properties. Physical Properties & Equities - Too little with Too Much Where shall it be invested in? Reits? Local Companies? Developers? In this situation where we see the H1N1 aka Swine Flu first infecting the host country ( due to toxic habits) & then being 'transported' by global travellers, the same is also happening to our financial world economy. Should we be surprised by the manufacturing output being slow? Should we be surprised by slower consumer purchases? Should we be surprised by lesser consumer pressence? In my country like Singapore, we are the financial hub for the Asean region with neighbouring countries with huge natural resources. Does this impact the way Funds flow to Singapore from developed countries? Can we trust the current normal system & what can be done
Analysis
Being in the Real Estate Industry in Singapore, Malaysia & Indonesia, I have noticed that my high networth clients are poised to invest their funds back into their own business through private fund arrangements.
Their real estate investments in Singapore are basically an insurance vehicle to hedge against their local currency & also acts like a time-deposit that's physical. It's like Gold....touchable & very user friendly. Either for family use - great for mums with kids to study in a safe enviroment then back in their own country.
However, they do have multiple properties of different types & not just residential. Based on my gathering of their habits, they would rather return back to their hunting ground to make more $$ than just parking their money here. ( I will write another analysis about property trends in Singapore) However.....
NOW With the H1N1 Virus, this situation makes the world realise that Globalisation may not be the key to Sustainability. Look at the way the virus works...it infects, spreads from countries & then the community.
Such is the secenario for the financial world, it started out as a Corporate Problem that affected the Country & spreads. To contain the situation, medically we have to keep let the virus go through the natural course & stops it from infecting other right?
That's the same with the business world....we can't stop those who were infected right? BUt we can stop them from Infecting others by containing & monitoring the situation. We have to be self sustaining & not be affected from others. We see this similarity in the business sector like Indonesia (not really affected by the Lehman situation)
Countries with huge financial centres like Singapore will be vastly infected & that includes foreign funds that flows into our normal financial system! It's not about the funds but whom shall they funds be administered to? It's about where the funds should be used for...not to buy flu drugs but to set up a R&D / Investment house.
If the funds are used to purchase Anti-Biotics. It will help the current situation but will cause after effects from the 'killing of all other good bacteria' in the system & Mutation of the virus! Same for the business situation.
Curently we are seeing a surge in Stock prices in SIngapore & this has boosted the 'overall' outlook but will it last? Is this fundementally the right way to go? Will it hold? Money in virtual shares? Are the foundations firm? There are simply too much funds chasing the wrong formula.
In fact, funds coming into singapore should set up a seperate vehicle to tackle the virus & produce good habits instead of cultivating the old system ( huge corporations / developers etc ).
It's like a independant fund that picks & nurtures the good fruit & seperating it from the bad that will infect it. It's like Nautre, we can never stop nature or the world from changing due to current habits but we can cultivate good ones from current situtions. It's like a green house.
In summary, the relation between lower rents collected from landlords & keeping the premises occupied is part of nature's progression. It will happen, farmers will still keep the good crops for themselves even if it means selling away the bulk of their other items to compensate yet still want to look good at the books.
So where will you be? Investing in existing companies that has some good crops with bad crops earning lower rates due to the economic situation or Invest by setting up your own vehicle in the same place to sieve out good crops that will give better yield?
I know for sure that there are many local hunters ( besides my high networth hunters in their prime doing their stuff back home) that's lean enough to work with foreign funds to indepedently set this up in Singapore.
On that same note, it will be the same for other hunters in your own country that is willing to work that out....it's time to stop & rethink about lower returns for landlord & whine if you are just an investor.
It should be about you being the landlord & acquiring instead of passing the buck to the another big boy & Grow up.
