Monday, December 31, 2007

Tallying The Cost Of Sub-Prime Debacle

Source : The Business Times, Dec 31, 2007

Projections of US$650b losses from the credit crunch tell only part of the story.

IN this season of stock taking, the picture past and future for financial markets is far from pretty. The reason? Sub-prime. If you didn’t know what sub-prime meant at the start of the year, it was hard to avoid its meaning by year end.

The big question now is what will the sub-prime crisis and ensuing credit crunch cost. In mid-July, Federal Reserve chairman Ben Bernanke told the Senate Banking Committee that estimates of losses associated with sub-prime-credit products were US$50 billion to US$100 billion. Those numbers ‘are far too low,’ Jan Hatzius, New York-based chief US economist at Goldman Sachs Group, said in a mid-November report.

Based ‘on historical default and loss patterns in different home-price environments,’ he estimates US losses will be roughly US$400 billion.

Assuming that US and European residential property prices fall 5 per cent to 10 per cent over the next year, investors in non-prime mortgages and securities linked to them - including banks, hedge funds, asset managers and mortgage insurers - stand to lose between US$350 billion and US$500 billion, according to London-based consultants Independent Strategy. Adding in expected losses from prime mortgages would lift the tally to more than US$650 billion.

Yet these loss projections tell only part of the story. The other portion relates to the impact of the losses on the willingness and ability of so-called leveraged investors, institutions that finance their activities with borrowed funds, to keep lending.

These include banks, broker-dealers, government- sponsored enterprises, savings institutions and hedge funds.

A September 2007 study by Tobias Adrian of the Federal Reserve Bank of New York and Hyun Song Shin of Princeton University, published by the New York Fed, found that leveraged investors, particularly banks and brokers, seek to maintain constant capital ratios. As such, when they lose money, they scale back lending to keep their capital ratios - assets divided by equity or risk-free capital, such as cash - from falling.

US commercial banks on average have capital ratios of 10 per cent, which means that for every US$1 of capital lost, they reduce lending by US$10. Thus, assuming that US$200 billion of the projected US$400 billion mortgage-credit loss is borne by leveraged institutions, the supply of credit will decline by US$2 trillion, Mr Hatzius said. ‘The likely mortgage-credit losses pose a significantly bigger macroeconomic risk than is generally recognised.’ Meanwhile, Independent Strategy figures that banks will have to shrink lending by 15 per cent to 20 per cent to return their capital ratios to pre-crisis levels, and hedge funds and brokers by US$18 to US$25 for every US$1 lost. ‘A 10 per cent reduction in global bank lending would damage corporate investment and consumer-spending growth, adding significantly to the risk of economic recession,’ the firm said in a Nov 15 report.

Apart from a decision to supply wads of money to relieve the logjam in global credit markets, the performance of central banks has been anything but sterling. They woke up late to the sub-prime mortgage mess, and some people still doubt that they fully grasp the risks involved - especially following the Federal Reserves’ decision to cut its federal funds rate by 25 basis points to 4.25 per cent on Dec 11, when the market was looking for more.

‘The timid move by the Fed was very disappointing and even appalling in the wake of intense financial-market turmoil,’ Chen Zhao, Montreal-based head of global strategy at BCA Research Ltd, wrote to clients on Dec 12. ‘The most troubling aspect of yesterday’s decision is that it reveals a lack of coherent strategy and focus at the Fed.’

The Fed also has been struggling to restore its credibility and retain its consumer-protection status in the face of congressional criticism that it was lax in overseeing mortgage lenders. Last week, the US central bank proposed various rules barring deceptive loan practices and making lenders responsible for determining whether borrowers can afford their mortgages.

Duh! Like the Fed never realised that some lenders might be unscrupulous, or that there were folks who couldn’t compute whether they could afford a mortgage. This from an institution whose New York district bank publishes comic books - that’s right, comic books - to explain topics such as how the banking system creates money and the meaning and purpose of monetary policy.

The situation in Europe isn’t much brighter. With banks balking at lending to one another out of fear of not being repaid - effectively turning the economy’s motor oil into sludge - Jean-Claude Trichet, head of the European Central Bank keeps talking about raising interest rates to battle inflationary pressures.

The massive injections of liquidity by the Fed, ECB and other major central banks have succeeded in lowering interbank lending rates - for now. But central bankers, especially Mr Trichet, continue to insist that these operations are separate from monetary-policy decisions. ‘Reduced stress in money markets will not deliver a cure for financial markets, which are absorbing the pain of substantial credit losses,’ wrote Bruce Kasman, chief economist at JPMorgan Chase & Co on Dec 21.

Now that we all know what sub-prime means, let’s hope it plays a less destructive role in 2008 and becomes a word we can afford to forget. If not, it may become a synonym for the next recession.

The writer is a Bloomberg News columnist. The opinions expressed are his own.

Slight Bump Ahead?

Source : The Straits Times, Dec 31, 2007
THE year past turned up roses in most key indicators: the GDP growth rate, job expansion, corporate profits as well as inward and offshore investment. And the headliner of the year? The long-absent property recovery arrived, to bring with it the most dramatic value appreciation seen in a decade. Adjusted for inflation, Singapore’s real estate is thought to have been the biggest gainer in the world. All of that rosiness showed in the reward premium loaded on personal incomes and the strong festive consumption, which should continue into the Chinese New Year period. We say ’should’ advisedly. Five weeks, the lead-in to the lunar celebrations on Feb 7, is a relatively short time in which to withstand buffeting when Western capital markets are still uncovering the true extent of mortgage-related horrors. What is so far known of the year ahead, for Singaporeans, is that growth forecasts are about two points off the projected final number of 8 per cent for 2007. Could they go lower?

It will depend on global behaviour in the wake of the American mortgage market collapse. The economic historian Niall Ferguson, author of The Cash Nexus, wrote in the Financial Times that the leading finance houses are coming under pressure to put the assets of other ‘novel organisms’ they have designed and invested in back on their balance sheets. He shares the view that the big banks will eventually lose some US$300 billion from sub-prime-related investments. The known writedowns, from Wall Street to Zurich, stand at about US$60 billion so far. Asian capital’s exposure is known to be limited; still less is that of Singapore banks, at least what has been acknowledged.

But capital turmoil and credit contraction in America, whose impact on Singapore is hard to predict with confidence, are coming together with inflationary pressures here which are showing little sign of easing. This is the big imponderable. Inflation, now at a 25-year high, will have to be Singaporeans’ watchword in 2008. The property sector is also cooling. If the slowing is sustained, it is both bad and good. Bad, as real estate’s multiplier effect on GDP growth is considerable; good from the standpoint of broader price stability. One saving grace which will cheer Singaporeans up is that the major Asian pacesetters - China and India certainly, but also South Korea, Japan and some Persian Gulf states - are largely spared the capital whiplash. These nations (and Singapore) are flush with funds with which to pump up growth, if need be. If inflation in China does not get out of hand, the northern region’s aggregate demand will see most of the continent through the worst of the credit and consumption crunch in the economies of the West.

Asia At Forefront Of New World Order As Power Balance Shifts

Source : The Straits Times, Dec 31, 2007

WHILE the year is going out in a blaze of headlines about the sub-prime crisis and its devastating impact on financial markets, 2007 will eventually be noted for other reasons, too.

Chief among them is the emergence of a new world order where Asia - especially China - has become a dominant economic force.

The events that brought this about are clear-cut: the huge initial public offerings in Shanghai and Hong Kong, as well as soaring trade and booming share markets for much of the year.

A far more important driving force, though, has emerged - due to the sub-prime crisis.

The devastation set in motion by the meltdown in the United States mortgage market has resulted in something that would have been deemed absurd even a year ago - proud Wall Street banks going cap in hand to Asian investors.

Anyone recalling the humiliations suffered by Asian nations during the 1997 financial crisis will recognise the irony of this.

Looking to region

IN RECENT months, Citigroup, Morgan Stanley, Merrill Lynch and UBS have all turned to Asia for much-needed funds to shore up their shaky capital bases after losing billions on sub-prime bets.

In their desperation for cash, some have even counted as a resounding coup their ability to sell slices of themselves at hefty price discounts to their July highs.

During this tumultuous period, Singapore grabbed headlines worldwide after the Government of Singapore Corporation (GIC) and Temasek Holdings both bagged sizeable stakes in global banks.

GIC has paid 11 billion Swiss francs (S$14 billion) for a 9 per cent stake in UBS, which runs one of the world's largest wealth management operations.

Temasek's US$4.4 billion (S$6.4 billion) buy into Merrill Lynch will allow it to make inroads into Wall Street and give it exposure to the world's largest brokerage firm, one whose network spans the globe.

These purchases formed part of a mega fund-raising drive by cash-strapped Western banks, which resulted in China Investment Corp taking a US$5 billion stake in Morgan Stanley and an Abu Dhabi fund injecting US$7.5 billion into Citigroup.

And this trend looks set to continue, as more troubled Western financial institutions head into the market to raise funds in the coming months.

It will pave the way for Asian sovereign wealth funds, with more than US$3 trillion at their command, to invest in prized Western assets at bargain prices.

As this new world order crystallises, with countries such as China and India continuing on their march towards becoming economic giants, it is worth reflecting on how unlikely this scenario would have seemed even a few years ago.

Few could have imagined that Wall Street titans would look to Asian sovereign wealth funds for help, just as few would have expected the entire region to rebound as it has from near-calamity.

Consider the run of successes this year.

New listings in Shanghai alone raised US$60 billion, while China oil major PetroChina overtook ExxonMobil as the most valuable company on the planet. Industrial and Commercial Bank of China became the world's largest bank by market value.

The year also marked an extraordinary period of outperformance for Asian stock markets.

Although there was a big sell-off in August, as sub-prime woes soured the appetites of investors, Asian markets soon experienced a new boom, sparked by a promise from China that it would allow mainland investors to buy shares directly overseas.

While renewed credit woes concerns have taken some of the shine off recently, regional stock indexes will still end sharply higher for the year.

Since January, China's Shanghai Composite Index has surged by 97 per cent, while Hong Kong's Hang Seng Index has risen by 37 per cent.

In Singapore, the benchmark Straits Times Index (STI) repeatedly smashed records, hitting an all-time intra-day high of 3,905 points on Oct 10. Although it has since fallen 12 per cent from its peak, the STI is still up 16 per cent for the year.

In contrast, the Dow Jones Industrial Average in the US is up only 8 per cent this year.

Heady role reversal

NOW go back a decade. Asia was then in the midst of a financial crisis that some described as the worst since the Great Depression in the 1930s.

As the crisis took hold, cities such as Jakarta were racked by riots, fuelled by plummeting wages and soaring unemployment.

Billionaires were reduced to paupers literally overnight after plunging local currencies forced many of them to default on their US dollar loans.

Against the backdrop of allegations that Wall Street financiers were bankrupting the region by orchestrating attacks on Asian currencies, banks and other prized assets were sold - often at bargain basement prices - during the restructuring that followed the initial havoc.

It was a time when cash-strapped Asian nations could not raise even a murmur of protest over the harsh terms imposed by the International Monetary Fund if they wanted to get the loans they so desperately needed to repair their battered economies.

Ten years on, Asian nations are no longer downtrodden supplicants forced to do whatever they are told.

Chastened by the humiliations suffered during the Asian financial crisis, many nations now sit on hefty cash hoards, buoyed by an economic boom brought about by soaring commodities prices and fast-accelerating consumer consumption on the domestic front.

So while sub-prime hogs the headlines, it is worth taking a step back to note that the region's stellar economic performance has triggered a shift in the balance of power.

That is the real story of this year.

Star Stockbrokers Buy Workers Dorm

Source : The Business Times, December 31, 2007

David Loh, Han Seng Juan pay $60m for Westlite in Jurong

Morgan Stanley is not the only one investing in foreign-workers dormitories in Singapore. David Loh and Han Seng Juan - two star stockbrokers at UOB Kay Hian, who in October surprised the market when they snapped up a 99-year condo site at Kovan - recently signed a deal to buy Westlite Dormitory near IMM Building in Jurong.

The $60 million they are paying for the dormitory in Toh Guan Road East works out to about $13,300 a bed based on the 4,500 beds at the facility, which is on a site with a remaining lease of about 50 years.

The acquisition is expected to be completed in early 2008.

'Yields are attractive and we have a diverse range of more than 100 tenants - companies in the shipbuilding, marine engineering, construction and engineering industries, minimising risks,' said Tony Bin, CEO of Duchess Development, the majority shareholder of Duchess Dormitory Pte Ltd, which is buying Westlite Dormitory from Westlite Development.

Duchess Development is owned by Mr Loh and Mr Han, who are dubbed the 'David and Han Team' in stockbroking circles.

Mr Bin said: 'Rental is paid by the companies who lease space for their foreign workers in the dormitory. The facility is now 100 per cent occupied, with leases signed on either one or two-year terms, which means there is upside.

' The outlook for the dormitory market is pretty strong for the next few years, with the large number of construction projects going on in Singapore and continued growth in the marine industry.'

Market watchers say that dormitory rents have shot up at least 30 per cent in the past 12 months and the trend is expected to continue into 2008 at least, given the shortage of such facilities.

Of course, dorm rents could cool if the authorities were to step up the supply of such accommodation, which industry observers reckon could be done relatively quickly.

Mr Bin would not say what returns Duchess Dormitory would make on its investment in Westlite Dormitory. But a market watcher, making back-of-the-envelope calculations, suggests that 'by the end of the next two years, when all the leases would have been renewed, the net yield would be in the low teens'.

BT reported recently that Morgan Stanley unit Avery Strategic Investments had invested $153 million in three dormitories it bought from JTC Corp. Morgan Stanley controls 97 per cent of Avery. The rest is held by local company Averic Capital Management, which is owned by Vernon Chua and Eric Tan, Singaporeans with local property experience. The three dorms - Kian Teck at Jurong), Woodlands and Tampines are on sites with remaining leases of about 20 to 30 years. The three facilities can house a total of more than 15,000 workers.

In October, Mr Han and Mr Loh made headlines when Duchess Development subsidiary Duke Development emerged as top bidder for a 99-year leasehold condo site next to Kovan MRT Station at a state tender. Their winning bid of $290.02 million reflected a unit land price of $436.55 per square foot per plot ratio.

Duke Development's other shareholders are construction group Lian Beng and a private equity fund managed by Centurion Investment Management, which is also controlled by Mr Han and Mr Loh.

The Kovan site is expected to be developed into a 17-storey condo with about 520 units and is slated for launch in mid-2008.

Koh Brothers Buys Out Brothers (Holdings) In Construction Venture

Source : The Business Times, December 31, 2007

KOH Brothers Group and Brothers (Holdings) are terminating their deal over joint venture Construction Consortium.

The companies said separately over the weekend that Construction Consortium would become a wholly owned subsidiary of Koh Brothers.

Brothers (Holdings) agreed last Friday to sell its 46.58 per cent stake in the venture to its partner for $18.97 million. It said that the proposed disposal would strengthen its overall financial position - about $99 million of securities (including performance bonds, corporate guarantees and indemnities) that it furnished in support of Construction Consortium's contractual and financial obligations with third parties will be assumed by Koh Brothers.

Construction Consortium undertakes building and civil engineering construction contracts for both public and private sectors and is also involved in the production of ready-mix concrete and cement as well as rental of concrete pumps.

Koh Brothers said that Construction Consortium accounted for 30.37 per cent of pre-tax profit for the year ended Dec 31, 2006.

As at Dec 15, 2007, the venture's construction order book stood at some $848.1 million for projects in Singapore, of which $312.8 million is still to be recognised.

Koh Brothers is bullish on the sector, citing Building & Construction Authority data that actual construction demand for the first 10 months of the year reached $18.5 billion and that it is likely to carry over into 2008 and 2009.

The latest deal follows a share swap between Koh siblings in January, under which Koh Brothers aims to focus on its construction and property business in Singapore.

Koh Brothers founder and chairman Koh Tiat Meng, and his wife, acquired 6.72 per cent of the company from Mr Koh's brother, Tiak Chye.

In return, they transferred 12.67 per cent of Brothers Holdings to him.

Mr Koh Tiak Chye also stepped down as chief executive officer and managing director of Koh Brothers and resigned as director in the company's subsidiaries and associate companies - except for those related to Construction Consortium.

This is so that he can focus on his commitments in Brothers (Holdings), particularly the company's real estate business in China.

Interest In Property Auctions Picking Up

Source : The Sunday Times, Dec 30, 2007

Record 810 sales closed this year as transparency of process, immediacy of deals attracts buyers

ONE of the more striking consequences of the booming real estate market has been the sharp increase in the amount of property - residential and commercial - going under the hammer.

Auctions, which used to be associated mainly with forced sales of repossessed properties, got the thumbs-up from owners this year.

A record 810 properties were auctioned this year - 210 more than last year - while the value of sales shot from $129.54 million to $264.7 million.

‘The rising market earlier this year actually encouraged more buyers to buy at auctions because it is a transparent process and a confirmed buy,’ said Ms Mok Sze Sze, the head of auctions at Jones Lang LaSalle.

While some buyers can be intimidated by auctions - where they face a room full of potential rivals - they can yield results.

Mr Teo Jing Kok, the Singapore Land Authority’s (SLA’s) deputy director of sales, said: ‘Unlike a tender, the auction process gives individuals who may not be familiar with the real estate market the time and opportunity to adjust their bids.

‘In a tender, an amateur will have only one chance to get his bid correct and it favours those who are more experienced, for example, land developers.’

The SLA held a first-of-its-kind auction of six small residential plots aimed at individuals keen on developing their own landed homes. All six were sold at the auction last month.

The bulk of auction sales this year - 45 per cent - were in the residential sector and included good-class bungalows. Private retail units made up 21 per cent while HDB shops accounted for 17 per cent of the total.

Shophouses, while forming only 5 per cent of auction sales, reflect one of the most significant trends in real estate this year - soaring office rents.

Because rents have escalated due to tight supply, some firms have opted to buy shophouses via an auction in a bid to avoid paying exorbitant rates in prime areas, said Knight Frank’s executive director (auctions), Ms Mary Sai.

A wider variety of homes was put up for auction this year, including penthouses and high-end condominiums such as The Berth by the Cove, Marina Bay Residences and Paterson Residence. However, many failed to sell, with buyers discouraged by the price levels, said Ms Sai.

Auctions can yield bargains for canny bidders. A three-bedroom walk-up apartment in Joo Chiat Place went for $490,000 earlier this month - about $40,000 above the opening bid - but around $10,000 or more less than what such properties usually fetch, said Ms Sai.

But a 2,465 sq ft unit at Watten Estate Condominium sold for $2.4 million in an April auction, compared with the $1.73 million price tag for a similar-sized unit in the estate late last year.

There were a few bidders who were probably betting on the estate’s en-bloc potential and thus drove prices up, added Ms Sai.

Owners taking the auction plunge typically pay a charge of 1 per cent as well as the 7 per cent goods and services tax. There is also an administrative fee that can range from $500 to $1,000 to cover advertisements, printing of the property’s particulars, auction room rental and other costs.

A key benefit owners enjoy from auctions is that ‘they get their money straightaway and there is no need for any negotiation, even on sale terms’, said Ms Sai. But if the real estate sector is quiet, buyers might be thin on the ground and bids may struggle to rise above the reserve.

The cooler market over the past two months has seen few sales done at auctions but more are expected next year, especially from the mass market segment, consultants said.

Those keen to buy at auctions should arrange for a viewing beforehand and ensure they can slap down an upfront payment of 10 per cent of the sale price if their bid succeeds.

The first auction of the new year will be on Jan 10 when Knight Frank will auction off residential properties and a strip of land behind a row of houses in Balestier.

Colliers International will hold one on Jan 16, followed by DTZ on Jan 17 and Jones Lang LaSalle on Jan 29.

Will Sale Of House Affect Tenancy Agreement?

Source : The Sunday Times, Dec 30, 2007

Q WE RENTED out our house in April last year. We signed a three-year tenancy agreement prepared by the tenant's agent.

As the property's price has gone up a bit, we wish to sell this house. A potential buyer is willing to offer a price but does not wish to take over the existing tenancy agreement as he intends to live there.

After going through the tenancy agreement, I realise that something is amiss.

In the terms and conditions under 'option to renew', it states that the tenant is entitled to a three- year renewal on the same terms and conditions if the tenant makes a written request not less than three months before the expiration of the tenancy and if there is at the time no 'existing breach or non-observance of any of the agreements and stipulations on the part of the tenant herein contained' and 'as long as the landlord remains unchanged'.

In another part of the terms and conditions, it says that 'in the event that the landlord decides to sell the premises, the landlord or his agent will be permitted to arrange viewing of the premises at a reasonable time of the day by prior appointment giving one day's notice. The landlord will have to sell with tenancy to the new purchaser'.

1. Can we break the lease? What is the penalty?

2. If the buyer takes over the tenant, does he have to sign a fresh tenancy agreement? What if he does not agree with the rental or terms and conditions?

A FIRST, the current period of the lease. You cannot break the lease unless there is a breach of any of the covenants. These covenants are usually spelt out in the Tenancy Agreement.

The most common covenant would be the duty for the tenant to pay rent. If he does not pay the rent on time or at all, it is a breach of the covenant which may entitle you to terminate the tenancy agreement. You will need to look closely at the provisions on whether you need to give notice to the tenant and to allow him a grace period to remedy the breach.

Second, the contractual obligation to renew the lease for a further three years at the same price provided (1) the tenant wishes to renew the lease and (2) he was not in breach of any of the covenants (that is, non-payment of rent) at the time he asks to renew the lease.

Insofar as this clause is concerned, it is a contractual term which you have agreed to and on which you cannot now renege.

A breach of the tenancy agreement is a breach of the contract. The loss payable to the tenant would be that which would put him in a position as if the tenancy had never been terminated.

This means that he is entitled to claim from you the additional rent he has to pay in order to get accommodation of the same or similar size and location. In other words, you would be liable to pay him for additional rent incurred for three years plus the remaining period of the current term.

To answer your second query, when a purchaser buys a property with tenancy, it means that he is agreeing to take over as the landlord from the last owner.

In other words, the tenancy will continue but merely with a new landlord. The terms cannot be changed.

In this case, a buyer needs to agree not only to buy the property, but also to the tenancy on the same terms as the current ones.

The clauses in this case are not usual and are not in the interests of the landlord.

Most tenancy agreements tend to be in the landlord's favour and would include for example, a clause to say that whenever the landlord sells the property, the tenancy is deemed to be at an end and that there will be no recourse to the landlord for any loss incurred.

The MarQ与卓锦豪庭Orchard Residences 料为2007楼王

《联合早报》Dec 29, 2007

今年7月,位于巴德申山(Paterson Hill)的The MarQ豪华共管公寓,有一间19楼的单位以3140万元成交,创下历来所有共管公寓交易金额的新高,荣登2007年新加坡“楼王”的宝座。

不过如果以每平方英尺计算,2007年的“楼王”则诞生于乌节弯“地王”的卓锦豪庭(Orchard Residences)。一间位于53层楼的顶层豪宅,在今年10月以每平方英尺5600元成交,刷新本地有史以来的最高住宅尺价。


2007年新加坡售价最高的十间共管公寓,SC全球的The MarQ占了七间。最“便宜”的一间,成交价也高达2460万元。




至于位于巴德申山顶端的The MarQ,距离乌节路只有5分钟车程。除了堆砌各种名牌家具外,它的主要卖点还包括,所有单位都占据一整层楼,而且拥有一个15公尺长的私人游泳池。每一单位的浴室也附有蒸气与淋浴室,单单主人卧室内的步入式衣橱(walk-in wardrobes)就有30平方英尺,即一般共管公寓的卧室那么大。

邱瑞荣说:“越来越多超级富豪到新加坡来买楼,也是推动新加坡豪宅价格攀上新高峰的原因之一。”一些曾在媒体曝光的名人房地产交易,包括国际巨星成龙买下的百年古迹建筑物——尼路一号、盛传由澳门赌王何鸿燊买下的滨海湾超级顶层豪宅、著名日本基金经理村上世彰买下的乌节路百乐轩(BLVD)顶层豪宅,以及印裔俄罗斯商人古普塔(Sudhir Gupta)的一连串房地产交易。






展望2008年,邱瑞荣相信The MarQ和卓锦豪庭的这两个“楼王”将被超越。



邱瑞荣昨天指出,明年将上市的超级豪华共管公寓,包括了SC全球的The Ardmore地段、杨忠礼(YTL)集团的良园(Westwood Apartments)地段、Hayden Properties的史各士路37号项目、郭氏家族控制的邦典集团(Pontiac)所拥有的彬珠阁(Pin Tjoe Court)地段。这些项目大多没有透露过发展详情,不过,从它们的超高土地价格和发展商的高档背景看来,应该有望角逐2008年代的“楼王”地位。



She Bought Her First House With Casino Tips

Source : The Sunday Times, Dec 30, 2007

From the age of 16, fitness firm CEO realised real estate was where the money was, and has stuck with it since

AT THE age of 30, Shanghai-born Annie Sun was already the owner of a string of properties in Melbourne, where she had been a student.

BORN IN SHANGHAI, EDUCATED IN MELBOURNE, the jetsetting Ms Sun still recalls the heady times she spent as a spa manager at the Crown Casino, where high rollers and big tips were the order of the day. -- ST PHOTO: AZIZ HUSSIN

Her belief that real estate investments offered good returns over time sprang from her observation as a student that many rich people had made their money from property.

The lesson stuck. Now, the chief executive (CEO) of fitness and wellness firm Dynaforce - which distributes high-end gym equipment - has 80 per cent of her investments in property.

In a recent interview with The Sunday Times, Ms Sun, 38, recalled how, even at 16, she had wanted to own property.

'Even then, I decided I needed to be smart and invest well, instead of relying on a monthly salary. I figured I could make more money from investing and collecting properties,' she said.

Armed with a degree in hospitality and health sciences, Ms Sun hobnobbed with international celebrities and high rollers during her stint at Melbourne's Crown Casino complex, where she managed the spa and fitness club. She worked in Hong Kong and Shanghai before coming to Singapore.

She never imagined that she would be a high-flying CEO herself one day, but the opportunity presented itself when there was a mass resignation at the Dynaforce Singapore office two years ago.

As a result of the 2006 crisis, the company's chairman promoted her and put her in charge. She had become a design and spa consultant at one of Dynaforce's units in 2004.

This year, the company generated a turnover of $15 million for the period to Oct 31. It manages 11 gyms in Singapore and has helped conceptualise the gyms in St Regis Residences and at various hotels including the Ritz-Carlton, Mandarin Oriental, Fullerton, Shangri-La and Hyatt.

Ms Sun, who is single, works out in the office gym three times a week and practises power yoga once a week.

Q What are your money habits?

A I save two-thirds of what I earn. Although I enjoy the finer things in life, I have learnt to moderate my needs these days, so I spend much less than when I was younger. I don't carry much cash around, maybe $300 at a time, so I rely on credit cards. Since I eat out most days, I think hotel cards are a great invention.

During my Crown Casino days, money came easily. The high rollers gave generous tips when they came to the spa. I quickly saved up enough money to buy my first house by the sea in Melbourne.

Those were heady days. There was no financial planning. It was almost a given that if I showed up for work, there would be big tips and money coming in.

Q What financial planning have you done?

A I'm not a risk taker. Currently, about 80 per cent of my investments are in property and the balance is in a stock portfolio managed out of Melbourne. It is invested mainly in the Australian stock market and includes telecoms shares. I seldom monitor it.

I know I need to be more proactive in my financial planning, but I have been too busy to think about it. My bankers have been hounding me and I think next year will be a good time to sit down with them to work out a better plan. That will be my New Year resolution.

Q What about insurance planning?

A I have an investment-linked plan with AMP back in Australia. I'm insured for about $1 million. Apart from that, I have medical and travel insurance. My annual premiums top A$5,000 (S$6,340).

Q What are your property investments?

A At present, I have four properties, three in Melbourne and one in Singapore. One of my Melbourne properties is being rented out. This is a one-bedroom apartment in the prestigious St Kilda residential area. I bought it for A$380,000 in the late 1990s, for tax planning purposes.

Q Moneywise, what were your growing-up years like?

A I was never short of money. I always got what I wanted as I was the only child. My father's family owned a textile factory in Shanghai. My mother came from a wealthy family. When money is handed to you easily, you don't see its value.

My perception of money changed when I was alone in Australia before my family migrated there. I learnt how to live independently and had to take financial responsibility for myself. I learnt to budget and worked as a part-time waitress.

The experience taught me to believe in hard work. It is through making my own money that I enjoy real financial freedom.

Q What has been a bad investment?

A At Crown Casino, I saved up so much money that I was itching to try something new. The entrepreneur in me kept trying to emerge. The opportunity came when a relative in Shanghai asked me to join him in setting up a wine bar and fusion restaurant along the Shanghai Bund.

It was 1999 and Shanghai was starting to boom big time, so I thought the timing was perfect. I packed my bags and sold my beach house in Melbourne and moved to Shanghai. I bought that two-storey beach house in 1994 for A$300,000 and sold it for almost A$800,000.

After six months of fighting red tape and being cheated by my main contractor, who was also a distant relative, I threw in the towel and returned to Melbourne - A$400,000 poorer but much wiser. I learnt not to trust people easily and to read the circumstances and the business environment much better.

Q Your best investment to date?

A My best investment came when I was invited to become a shareholder in Dynaforce. It is an investment that I can take active control of to produce results for my team and myself. I have a 30 per cent shareholding currently and there are plans to list Dynaforce at a later stage.

Another good investment was my first apartment in Singapore, at 8 @ Mount Sophia, which I bought for $800,000 in 2004 and sold for $1.5 million this year. It is 1,100 sq ft in size.

Q What retirement plans do you have?

A I want to retire within 10 years, with $50 million in hand, so I can do more charity work and learn other things that I did not have the time or the opportunity to do before. I would be interested in charities that involve children and might even set up one if I can't find a suitable one to contribute my resources to.

I plan to spend time in Melbourne, Singapore, Thailand, Bali and Shanghai.

Q And your home now is... ?

A I invested the profits from the sale of my apartment this year into a 1,400 sq ft, 99-year leasehold apartment, also around Mt Sophia. It cost $1 million.

Q And your car is... ?

A A dark-grey Porsche Boxster.

More value for money

'I decided I needed to be smart and invest well, instead of relying on a monthly salary. I figured I could make more money from investing and collecting properties.'

MS SUN, on how she decided back in her student days to build her fortune

High returns secured

'A good investment was my first apartment in Singapore, at 8 @ Mount Sophia, which I bought for $800,000 in 2004 and sold for $1.5 million this year. It is 1,100 sq ft in size.'

MS SUN, listing just one of the properties she has made big bucks on