Home is where Singapore’s new casino is

·4-min read
Artist impression. (Source: Treasure at Tampines)
Artist impression. (Source: Treasure at Tampines)

By Andy Mukherjee

(Bloomberg Opinion) -- The house arrest of pandemic lockdowns seems to have thrown open the gambling switch in our brains.

How else to rationalise the frothy frenzy across asset classes globally, a madness so complete that the bankrupt car rental firm Hertz Global Holdings Inc. is raising up to US$500 million by selling new shares after warning investors of the significant risk that their purchases will be worthless?

A bizarre markets rally is under way amid the worst unemployment scare since the Great Depression. It’s being led by day trading gurus for the coronavirus era, like Barstool Sports’ Dave Portnoy, who’d bought only one stock in his life before the quarantine but thinks Warren Buffett is “washed up.”

The hysteria isn’t limited to the U.S., or shares. Take the latest Singapore residential property data, which showed a 75% jump in new private home sales in May from the previous month. This at a time when new projects couldn’t be brought to the public and all viewing galleries were shut. What was going on here?

Singaporeans weren't leaving home and the city’s two casinos were closed, along with other outlets for spending money and relieving stress. So many went online to buy and sell stocks at a pace not seen since a 2013 crash in penny stocks. But that wasn’t enough, for the asset class that stands head and shoulders above everything else in the imagination of the space-constrained Asian financial center is property. And that’s where people shifted their attention. Or, as broker PropNex Realty CEO Ismail Gafoor says, buyers and investors adapted to digital modes of property marketing.

There’s a danger of reading too much into the Singapore numbers. The overall sales figure of 486 units is the worst May for developers since 2008. And it’s entirely possible that many of the 56 buyers of Treasure at Tampines — the bestselling condo development in the eastern suburbs — had done their on-ground research beforehand. Besides, the Singapore regulator has rules against dodgy tricks — such as very large balconies combined with tiny interiors — that give a certain credibility to what prospective customers see in virtual galleries.

Still, the real surprise is that the buyers paid a median S$1,360 ($979) per square foot, 2% more than when the units were first launched in March 2019. The more expensive Florence Residences, another suburban property that first started sales at the same time, saw a 6% higher median price per square foot across the 54 units that sold in May.

PropNex’s characterization of this unusual month as the “new normal” may be an exaggeration. It’s perhaps a not-so-new abnormal, in which people feel compelled to conclude transactions. In March, when the Covid-19 scare was beginning, I wrote about the Black Death in medieval Europe and how it had brought in a wave of consumption (and consumption taxes) because of a sudden feeling among survivors that life was indeed short. Is something similar going on here?

There weren’t many choices for asset purchases in pre-capitalistic times, but now there are. An apartment scooped off an online gallery in Singapore, or Hertz shares bought on the Robinhood Markets Inc. trading app, seem to be playing the role that Venetian women’s platform heels did back then. In Hong Kong, where there are serious question marks about the city’s future after Beijing imposes a national security law, dozens of would-be buyers wearing face masks stood in rain. All but one of 94 apartments on sale by China Vanke Co. in its Campton project in central Kowloon was sold in just eight hours.

The pandemic came to us in an epoch of extreme inequalities in incomes and wealth. The poor everywhere are anxious about livelihoods. The affluent are nervous about their cramped lifestyles. The middle class, the typical buyer of Treasure at Tampines, shares both concerns, though perhaps not to the same extent. For the sandwiched classes, writing a down payment check and taking a 15-year mortgage are expressions of optimism in hopeless times, and a chance to scratch the gambling itch.

Andy Mukherjee is a Bloomberg Opinion columnist covering industrial companies and financial services. He previously was a columnist for Reuters Breakingviews. He has also worked for the Straits Times, ET NOW and Bloomberg News.

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