Singapore now world's most expensive city

[HitandRun]

Yes some of these alternatives are no longer "cheap". Take taxis for example, I was in Hamburg last year and I was late for my train ride so I took a 40 min taxi ride (during morning rush hour) from my hotel to the train station and the fare only came up to 20 euros, or ~32sgd at last year's exchange rate. A 40 min taxi ride in Singapore during rush hour can easily cost you $25 if you include all the surcharges and possibly ERP.

Although I have not been to Hamburg, your data point sounded a bit iffy. So I went to google on taxi fares in Hamburg. I found 2 sites:

Site 1

Site 2

It appears that a 25km fare would easily exceed €50 unless the cab is caught in such a huge jam that it does not move, i.e. effective distance traveled is less than 5km.....

[Clement]

What stands out is ...

World's 10 least expensive cities to live in 2014
122. Riyadh, Saudi Arabia
123. Jeddah, Saudi Arabia

Top Oil producing Nation and RICH is last 10 in cost of living. Interesting indeed. Maybe we should benchmark against them in performance

Problem with ranking like this is to understand the motivations and the limitations. Do we want to be rank with Mumbai, Karachi for the cheapest?

Mashup the data, these cheap countries also very jialak in Doing Business (based on DB ranking 2013-2014), so so when it comes to WEF GCI index.

Venezuela, being among the expensive cities, is also terrible in DB index and WEF. So being expensive can be both good and bad, depends on the situation.

Fully agree. From a supply/demand point of view, our high ranking indicates that Singapore is an attractive place to live, work or invest in. This actually shows the success of our government's policies. Look at the cost of living in NYC compared to Detroit.

The government has done it's part to try to keep our cost of living under control for Singaporeans. We have access to subsidized housing and as indicated by posts above, our public transport fares are affordable. If you look at the prices of most of the necessities in the report, besides alcohol and tobacco, our cost of living is not particularly high compared to the other cities.

[yeokiwi]

My wife just returned from France recently, she took cab in the morning from her hotel to office which costs approx EUR40 each trip. I did a check on Google map, the distance is actually less than 20km and about 17 minutes by car. I seldom take taxi in Singapore as I thought it would be cheaper and sometime even more convenient to travel by public transport. A taxi ride from airport to my home with midnight charges cost me more than $30, well it is costly but I think it is still at affordable level in this expensive city. I used to rent a car also which cost me almost $300 for 2 days in a hatchback, so do you still think taxi in Singapore is expensive? I think otherwise. Having said this, I will still prefer public transport.

Rome airport. 15 km to hotel. around 40-50 Euros before tips.
Japan.. dun even dare to wave for one..haha.

So far, my experience is taxi fares are normally more expensive in most developed countries than Singapore.
Yet to land on one that is cheaper..

[AlphaQuant]

while I was tempted to dismiss the report of sensationalism, I cannot help but notice that there is truth of the rise of 3 components

1) SGD vs USD
2) land cost
3) labor cost

I cannot help but recall the early 2000s when PSA made news by losing Mersk and subsequently Evergreen due to rising costs and perhaps complacency.(PSA subsequently cut costs of boxes by 20-50% and retrenched some 800 workers) The CPF changes also reminds me of 1985 where Singapore engineered its own recession thru a very fast rise in CPF contri rates.

While i think the difference this time round is the introduction of PIC to encourage productivity rise (with limited progress though) and that the CPF rises is in very small increment, I think the G has to look at suggestions by seasoned veterans like Inderjit Singh, esp his reminder of the soaring land costs+rental, and for JTC to consider moves to wrestle back its ability to affect industrial rentals from the REITs (many of which are partly owned by Temasek e.g. Mapletree/Ascendas)

From the view point of a US MNC (which gives biz to a whole array of supporting industries), the triple whammy of a rising SGD (with receivables in USD and payables in SGD and PnL ccy of USD), rising rentals and rising labor can perhaps prove too much before the blokes decide to uproot to other regions. While labor is tight enough for this not to be a worry now, people might not want to come back when tides change, esp if something happens to the much celebrated finance sector.

[tanjm]

Business costs are self-correcting provided there is a free and transparent market for resources.

If costs become so expensive as to deter the marginal businesses, they'll leave and there'll be less demand for property and labor and costs go down. Land and other costs are so high now because Singapore is basically still booming and skilled labor is in short supply. Economics 101.

[chialc88]

I agrees with both JM and alpha.

This is the result of pro-growth government and I see that SGD will continue to strengthen and land/labour cost will continue to go up...

If you read today ST pg A6, we are engineering a transformation in these area:
biomedical sciences, high tech electronics and engineering
digital marketing, media entertainment, animations

And if you watch last night/today's TV news:
IP, International court

SGP government is all out to create a environment for growth.

I fully understand the need for comfort zone and I myself is also taking baby steps to capitalized on the government initiatives too.

Watch me.

Love Compassion


A Life not Reflected is a Life not Worth Living.

[CityFarmer]

I am sharing a view from a property insider, which is relevant to our discussion here. Enjoy...

REITs: Good or bad?

As small and medium-sized enterprises (SMEs) struggle with labour tightening in the push for improved productivity, they are also being squeezed by landlords demanding ever-rising rents.

Many businesses that lease commercial and industrial space, especially those under the real estate investment trust (REIT) structure, are hurting, and I must say, hurting real bad. Over the course of this week, Members of Parliament have called on the Government in the House to rein in industrial and commercial rents to help ease the burden on businesses.

Whenever I listen to the rental woes of SMEs, I am reminded of a report many years ago about a local coffee-shop chain that made it big. When asked by the reporter for the secret of its success, the owner said it just had the foresight of buying its premises in the early days of the business.

Does it mean that great success or failure simply boils down to whether the business owns or leases its premises? If you talk to the affected tenants, the answer is a resounding yes. Even those doing all right feel it could be a matter of time before they are squeezed by rentals. There is very little margin for error: All it takes is one business oversight or a stretch of poor sales.

It does not help that the supply of business space has always been behind the curve. Policymakers have always been quick to highlight the scarcity of land in Singapore. I think this is an excuse: It is not about the quantity but the type, mix and distribution as well. You need to get this right, too, because you can always find places where there are no takers for vacant space.

And when you have a scarce resource, you cannot simply leave it to market forces. In fact, rationing or spacing out the supply is already a form of intervention.

It is also not only about raising productivity by working smart. It is about moving up the value chain whether you are in a sunset or sunrise industry. Businesses that thrive or achieve higher productivity are usually helmed by creative leaders, but how do we nurture creativity when a lot of business ideas and entrepreneurial talent are nipped in the bud by the initial high rental costs?

Aside from the supply of business space, we also need to ask whether the REIT structure is partly responsible for the current woes of SME tenants.

Almost all the literature and so-called independent market reports are on the side of REITs, often extolling the benefits that these professionally-managed collective investment schemes bring.

However, academics and analysts lament the dearth of local data from which truly independent studies can be conducted to put the debate to rest. But nobody is volunteering this data, understandably not from the REITs themselves, but also from government bodies that possess some of these figures. More transparency is needed here.

To be fair, the REIT managers are simply doing their job and doing it well: After all, their rewards and salaries depend on how well they do. But why are the actions of REIT landlords praised in the past but not today? Then, they were lauded for breathing life into ageing commercial properties and livening up the business landscape. Has anything changed? As far as I know, they have been going about doing exactly the same things they were doing in the early days.

However, in life, there always has to be a balance. Too much of a good thing can eventually turn out to be detrimental and this may be so in the case of REITs. I know it is not very scientific and those who are always demanding proof before they act will never be satisfied. Not being able to prove something with data, or because of the lack of it, does not automatically make it an untruth.

The problem with REITs may not be so much with the structure itself, but their dominance of the business space landscape. Some describe the present market as akin to an oligopoly. How do we change this to make it more competitive? Do we limit each REIT to only a few properties to introduce more competition?

Nobody has the answers now but it is a problem we need to resolve urgently. If not, because the shares of local REITs are listed and easily tradeable, all of the benefits — especially if REIT managers have been very successful in raising value for unitholders — could eventually land in foreign hands.

Then we will become renters in our own country and have the life sucked out of us.

ABOUT THE AUTHOR:

Colin Tan is Director, Research & Consultancy at Suntec Real Estate Consultants

Ref: http://www.todayonline.com/business/reit...epage=true

[flinger]

This is a great summation.

"Nobody has the answers now but it is a problem we need to resolve urgently. If not, because the shares of local REITs are listed and easily tradeable, all of the benefits — especially if REIT managers have been very successful in raising value for unitholders — could eventually land in foreign hands.

Then we will become renters in our own country and have the life sucked out of us."

[specuvestor]

Business costs are self-correcting provided there is a free and transparent market for resources.

If costs become so expensive as to deter the marginal businesses, they'll leave and there'll be less demand for property and labor and costs go down. Land and other costs are so high now because Singapore is basically still booming and skilled labor is in short supply. Economics 101.

Since I am always skeptical of 101, here's my 2 cents

The demand and supply has to be flexible ie supply can be unlimited to lower prices. Obviously with lag time and limited land resource that is not true. Even in big countries, the city itself has "limited" land. Otherwise there shouldn't be pricing difference between say financial centre and suburbs. Location, location, location is limited.

Demand can also be artificially high due to hot money. In an open international economy local entrepenuers will be squeezed by foreign MNCs simply because the base is different hence not level playing field. There is certain logic to protectionism UP TO A POINT. If pure capitalism, then karaokes and MNCs would be dominating all the outlets. Take a pinch of salt listening to academics, adjusted with your real life observation.

Policy making is more than 101 theory. It is multi-faceted and have to consider a whole range of socio-economical, not to mention political and psychological, implications OVER THE LONG RUN. You don't just build a warehouse and tear it down overnight to make way for more profitable residential.

The main issue with Singapore is asset inflation due to the obsession with GDP growth by importing wealth and people. Our focus should be changing to productivity growth on a sustainable basis. Growth by perspiration is passe; it should have been growth by inspiration

[Temperament]

Business costs are self-correcting provided there is a free and transparent market for resources.

If costs become so expensive as to deter the marginal businesses, they'll leave and there'll be less demand for property and labor and costs go down. Land and other costs are so high now because Singapore is basically still booming and skilled labor is in short supply. Economics 101.

Since I am always skeptical of 101, here's my 2 cents

The demand and supply has to be flexible ie supply can be unlimited to lower prices. Obviously with lag time and limited land resource that is not true. Even in big countries, the city itself has "limited" land. Otherwise there shouldn't be pricing difference between say financial centre and suburbs. Location, location, location is limited.

Demand can also be artificially high due to hot money. In an open international economy local entrepenuers will be squeezed by foreign MNCs simply because the base is different hence not level playing field. There is certain logic to protectionism UP TO A POINT. If pure capitalism, then karaokes and MNCs would be dominating all the outlets. Take a pinch of salt listening to academics, adjusted with your real life observation.

Policy making is more than 101 theory. It is multi-faceted and have to consider a whole range of socio-economical, not to mention political and psychological, implications OVER THE LONG RUN. You don't just build a warehouse and tear it down overnight to make way for more profitable residential.

The main issue with Singapore is asset inflation due to the obsession with GDP growth by importing wealth and people. Our focus should be changing to productivity growth on a sustainable basis. Growth by perspiration is passe; it should have been growth by inspiration

Well put.
Even illiterates(aka layman, man in the street, etc) like me can understand.