The most shocking news this week is the sudden announcement of Malaysia to terminate the Kuala Lumpur-Singapore High Speed Rail (HSR) project.
When Dr Mahathir declared that “Malaysia’s decision to scrap the HSR project is final“, his words immediately shattered the dreams of developers and home buyers who place high hopes on the value appreciation of properties near the planned railway stations.
Now what for Jurong Lake District?
The original plan of HSR is to set up eight stations, namely Kuala Lumpur, Sepang-Putrajaya, Seremban, Ayer Keroh, Muar, Batu Pahat, Iskandar Puteri and Singapore.
In Singapore, the HSR station is planned to locate in Jurong East. At the station, there will be a new one-stop customs clearance for both Singapore and Malaysia. It will also connect North-South, East-West and Jurong Region MRT lines.
The HSR project was first announced jointly by the Prime Ministers of both countries after a Leader Retreat in February 2013.
What about Jurong Lake District?
A flashback to August 2014 showed our Prime Minister at the National Day Rally saying “I thought tonight I should show … Jurong Lake … at sunset”. He continued to project a beautiful picture of the Jurong Lake District with all the amazing future development, before ending his speech with a sentimental note on “believing in Singapore”.
With his thought provoking speech in mind, I wrote the blog post “Is Jurong Lake District the next hotspot for property hunting?“. My conclusion back then was “It is too early to tell … we are not there yet. We have a long way to go.”
As of 1st Quarter 2018, URA figures show that office vacancy rate is 12.5 percent. For category 1 offices (buildings located in core business areas in Downtown Core and Orchard Planning Area), vacancy rate stands at 14.5 percent.
And there is still a total supply of 791,000 sq m GFA of office space in the pipeline, which is about 3.7 times the total office space of the five Suntec City office towers.
How urgent is it to build a second Central Business District in Jurong?
Buying out of FOMO (Fear Of Missing Out)
Exactly three weeks before Malaysia canceled the HSR, responses were overwhelming at two new launches Twin VEW and Parc Riviera in West Coast area. The former saw buyers snapping up 442 out of 520 units at an average selling price of $1,399 psf.
A property agent told the media that the strong take-up was due to “the project’s proximity to both the Jurong Lake District and the planned Kuala Lumpur-Singapore high-speed rail’s terminus”. CDL bought an adjacent site at a higher price and is likely to launch at an even higher price. So this “might have induced bargain hunters to snap up Twin VEW units while they could”.
How can the buyers of Twin VEW be “bargain bunters”; with a purchase price of $1,399 psf, when all the non-landed private homes transacted in April shows an average price of only $966 psf in Jurong East and $1,166 psf in West Coast?
Are they buying into the future, or are they speculating about the future? We haven’t started building the KL-Singapore High Speed Rail yet. What is the rush?
Now with the scrapping of HSR project and possible downsizing of the development in Jurong Lake District, how many years do these buyers have to wait to break-even? How long does it take for Malaysia to clear RM1 trillion debt and reconsider HSR again?
People tend to go after something that is hot, that is under the limelight or on the radar. Never mind it has nothing special or doesn’t even worth the price. So long as everyone say it is good, they also want the same thing. They go for it under the fear of missing out.
The pros play the property game to win. The amateurs play the property game to not lose out.
– Property Soul
On 28 June 2013, MCL Land launched a red hot new project J Gateway, located only a stone’s throw away from the Jurong East MRT station. It was marketed at $1,450 to $1,800 psf – still the record-breaking price in Jurong so far.
A 1,500 strong crowd showed up on the launch date. Desperate buyers submitted 1,400 blank cheques to their property agents for the balloting of 738 units.
The reporter of the Asiaone article interviewed some buyers who managed to book their units at the sold out project.
“No other area has this,” said Mr Lee Fatt, 50, who lives in Jurong and bought a two-bedroom unit at J Gateway for $1.2 million. Another buyer, Madam Shirlyn Ng, 36, said that though prices were slightly high on a psf basis, she had no problem with it.”
That evening, the “lucky” buyers went home only to find that the government had just introduced the Total Debt Servicing Ratio, on that fatal date of 28 June 2013.
For the “unlucky” J Gateway buyers whose tickets were not picked at the ballot, would they be secretly happy that they didn’t manage to grab a unit at the launch?
Sometimes it’s fate for us to lose out to pave way for our win in the future.
A loss can be a blessing in disguise years later
Many years ago, a friend of mine had a boyfriend she was not exactly happy with. But when she learned that there was a third party trying to steal her man, she refused to surrender without a fight and did everything she could to win him back. But she still lost to the competition in the fierce battle.
A few years later, she managed to move on and tied the knot with another guy. He is a caring husband and a responsible father, and quite well-off too. She no longer feels bitter about her loss in the past.
What about the winner in the love triangle? Her “trophy” turned out to be a bad choice. He is self-centred and abusive. For a long time he was unemployed, addicted to gambling and had extramarital affairs too. She suffered tremendously during their marriage.
My friend said she doesn’t pity “that woman”. But she is secretly happy that she narrowly escaped the tragedy of marrying “that man”.
This is exactly what Hong Kong writer Yi Shu (亦舒) said in her book,
“We aunties all have this similar experience. That X, Y or Z whom all of us once admired, now you give him away with one million US dollars still nobody dare to take over. His aged appearance, self-righteous attitude but lack of knowledge and manners … If unfortunately one day you saw him in the street, you would quickly dash across the road to avoid bumping into him. Imagine last time if you had got this guy, today you would be crying uncontrollably.”
Next time before you jump on the bandwagon, be sure to open your eyes.
Subscribe to my YouTube channel and I will share with you the lessons, opportunities and risks of the KL-Singapore High Speed Rail crisis in my next podcast.
I’m looking forward to buy a condo at sgd600 psf below 1000 sqft for my own stay. I’m still waiting though I have household income more than 20k and cash few hundred thousand. The property price too high now
Take your time. The good bargains are all in the rental market. Spend your spare cash to buy nice food and holidays. Buying an overpriced property only benefits the middleman.
When the market is hot, just settle for something that you can well afford. And when nobody is buying, pamper yourself by buying the nicest house that you can afford.
FOMO is what driving the prices and thanks to all the ‘experts’ who are nothing but property agents, companies and banks the hype is terrible. Fundamentals itself present a very gloomy picture in the very near future and I dare say the current increase is nothing short of dead cat bounce.
Developers must show good quarterly results. Agents need to make commission. Banks have housing loan quota to meet. Media depends on advertising dollars from all of them. No one know what’s going to happen in the near future. So everyone must make hay while the sun shines.
You sound like a sour grape.
Better safe than sorry.
Agree with the analysis that the West Coast Condos launches are all overpriced than other places due to HSR hype.
It is sad that the industry stakeholders make good use of infrastructure development and talk naïve buyers into purchasing overpriced properties. Government masterplans are for developing the country in the long term, not for making speculations or quick profits.
I wonder how CDL is gonna launch its project in the West Coast area next year without taking a hit on their profit margins (they bid for the land at a ridiculously high price). To me, it seems like the current boom is a result of developers FOMO into land acquisition and/or en bloc deals to “refill their land bank” and we buyers happily follow along. Just too much speculation on both sides. I sense the “property cooling” hammer will be coming soon.
The developers are most bullish. The property bubble is on the supply this time. The media is happy to echo it to sell more advertising space. The government has nothing to lose with record bidding price, raised development charge, ABSD, etc. We home buyers are footing the bill and bearing the risk. Just beware of being the victim when reality kicks in.
Red flags are well warranted. There will always be a “this time its different” mentality but that’s the way the market operates itself.
In another matter not related to the HSR, I have found a method to second-guess if the units sold by developers are on DPS (Deferred Payment Scheme). For example in the case of New Futura, if you go to the URA website to check on the transactions (include “new sale” & resale”), you will find that about 40 units (till date) are listed under “resale”. That is rather peculiar as New Futura is a new development and for resales to occur so fast (and at 40 units) is rather well, peculiar. Hence, it is deduced that those listed under “resale” are most probably units sold under the DPS. May not be the correct way to go but I guess it is good to put it up to gather the wisdom of the masses. Apart from the New Futura units, we can apply the experiment to other newly built units to see if this is the case and find out how many people are purchasing units on DPS. It happened with Fulcrum as well. At the end of the day, we have to question if the units sold under DPS are recorded under the URA PPI data and if yes, will these DPS sales influenced/skewed the data?
Apologies for posting something not related to HSR but thought of sharing this observation with the rest.
Thank you very much for your sharing. Good observations!
By the way, the returned units can be checked at this site -> http://www.squarefoot.com.sg/market-watch/returned-units
Thanks! The people of Singapore are a smart lot and they are tech savvy as well. It would not take long for people to decipher the facts & figures amidst the euphoria to come to a logical conclusion. Cheers!
Hopefully. Otherwise the mistake will be very costly.
Malaysia PM remark today that HSR is not cancelled but postponed Thus it seem that HSR would be still on the table.
Malaysia PM remark that HSR is not cancelled but only postponed Thus it seems that HSR is still on the table.
Do you see that the fundamental problem is not about mounting national debt? It is all about Mahathir’s perception of Singapore.
Why he chose to scrap HSR and not the other infrastructure projects? Why he mentioned the stock market trading link? Why he revived the talk of the water agreement? Just wait, there are more to come.
Why every time he only talked to the media about the issue , while Singapore being the party concerned had to hear from the media, leaving Singapore officials in the unknown, waiting for “formal notification” and asking Mahathir to “clarify position”?
To Mahathir, Singapore is not a friend of Malaysia. See how he shows the world that Malaysia always has an upper hand. He is the one to pick the issues and also the one to make the decisions.
Do you really think that we will have PMs from both countries join hands to do a press conference like the Marina One project? Those were the good old days.