Real Estate - an alternative investment
Asia's all enduring preoccupation with real estate is undergoing a reality check as a conse-quence of the economic crisis. Private residen-tial property prices in Singapore， have collapsed by over 45% from its peak in for example， 1996. The shock and dismay of die-hard real estate believers is not surprising. For many， however， the rationale that underpinned that real estate investment is showing surprising flaws. Arguments such as "land is finite" persuade in boom years， but are now denounced by some as intellectual garbage. The long-term prospects of real estate investment， while not entirely mis-placed， are subject to investment cycles， interest rates and changes in government policies， like all other forms of investments. Putting all of one's investment eggs in the property basket， as many Asians have been inclined to do in recent years， is unlikely to hatch a balanced invest-ment strategy. This article examines the possi-bilities. Real estate investments are very long term in nature and possess two important characte-ristics that are often less than understood: leverage and illiquidity. These factors accen-tuate the capital gains on real estate in boom times and magnify the loss on the downturn. If one were to invest $200，000 (borrowing $500，000) to purchase a $700，000 property for example， a simple 10% rise in property price a year would translate into about a 21% return on the original investment， net of interest expense assumed at 5.5% p.a.. With that same interest assumption， a 10% fall in property price how-ever would translate into a loss of about 48% on that same $200，000 investment， the tragic con-sequence of leverage working in reverse. The illiquidity of real estate is another important factor for consideration. Exiting a real estate in-vestment often requires time and patience， par-ticularly so in a less favourable environment. The average investor needs to consider the sheer amount of the financial investment and the uni-queness of each property asset. The illiquidity limits the flexibility investors have when they need to realign their investments in accordance with changing market conditions or changes in investment needs.
The long-term nature of real estate in-vesting requires it to be matched with stable， long-term cash flows. Assumptions on income growth， interest rate trend and rental yields are important， and when they do not materialise as planned (or hoped for)， the investment goes awry. In addition， the size of the upfront capital commitment in real estate investing makes di-versification within the asset class difficult to achieve. The real estate investor has the bulk of his investments locked into a few properties. Seen from this perspective， real estate investing can be a high risk venture. The risk does di-minish with a long-term time horizon， but the rate at which Singaporeans turn over their real estate investments suggests a shorter term， high-risk attitude prevails.
Asia's love affair with real estate has been fuelled by easy money and accommodative government policies. Theseconditions are not present today. The era of supernormal returns from real estate investing is over. Bankers are licking their wounds from loans gone sour and have turned wary about lending for real estate investment (as opposed to home ownership). Having experienced the effects of an over-zealous appetite for real estate， it is probable that both of these factors are unlikely to be as potent in the future. The new Asia requires that the bold assumptions of old be tempered- stable interest rates， "guaranteed" employment， "guranteed tenants"， etc. Price appreciation will be more gradual hereon and more in keeping with inflation. Other investment options need to be considered and matched with one's age， obli-gations and financial aspirations. (The author is Equity Manager of Rothschild Asset Management.)
退燒后的亞洲房地產
亞洲人對房地產投資情有獨鐘，不過經過一場經濟危機的沖擊， 人們對房地產持久性的信念正面臨考驗。
舉例來說，新加坡的私人住宅價格，從高峰期算起已經退跌了超 過45%。死硬的房地產“信徒”，對此感到震驚、沮喪并不奇怪。對 很多人來說，過去支持房地產投資的理性基礎，也正現露出破綻。像 “土地有限”的論點，在市場大好時很有說服力，但現在被很多人看 成是“學理垃圾”。房地產投資具有長期前景，這個說法也不完全錯 ，但它和其他投資形式一樣，逃不過周期、利率和政府政策改變的影 響。因此投資時，如果像亞洲人過去幾年那樣，把所有的蛋都放在房 地產籃子里，就不可能制訂出平衡的投資策略。
房地產投資是長期的，它有兩個往往被忽略掉的重要特質：高額 借貸和套現困難。因為這些特質，投資者在市場猛漲時，能撈取可觀 的資本收益;但遇到衰退期，“燒傷程度”也同樣會加重。
舉例來說，一個人如果出資20萬，再借貸50萬元購買一個售價70 萬元的房地產，只要房地產價格在一年之中上漲10%，他從20萬元投 資中所取得的回報就有約21%之多，這是扣掉利息成本(假設年利率 為5.5%)后算出的。以相同利率計算，價格如果跌10%，20萬元投資 的虧損就大約是48%，這是高額借貸的痛苦結局。
投資房地產，很重要的另一點考慮是套現不容易。從房地產投資 中退出是需要時間和耐性的，在不利環境下尤其如此。由于是大手筆 投資，每一個房地產項目也都具有獨特性，普通投資者因此不能掉以 輕心。一旦市場環境起了變化或投資需要改變，而必須重組投資來配 合時，套現如果困難，伸縮的余地就受到限制。
房地產屬于長線投資，它要求投資者有穩定、長期的現金周轉能 力。因此對諸如收入增長、利率走勢和租金回報等，都先得做一些假 設，而一旦情況和所計劃的有出入(或事與愿違)，投資的棋就走錯 了。
另外，由于得先墊出一大筆資金，也就很難做到分散投資。少數 幾個房地產就能把投資者的大部分資金套牢，從這個角度看，房地產 投資可說是高風險的。這種風險，會隨著時間的推移而淡化。但從新 加坡人的房地產買賣頻率來看，一般人的進場態度，都屬于短線和具 冒險性。
過去，亞洲人是在簡易貸款以及政府鼓勵性政策的推波助瀾下， 對房地產產生迷戀的。今天情況不同了。從房地產投資中謀取暴利的 日子已經不再。銀行因收不回貸款而元氣大傷，對借錢給人投資房地 產(比較買樓自住)的事，現在是心有余悸。
經歷過狂熱后，這些因素在未來日子里，不可能繼續發揮同樣效 應。在新亞洲，一些舊有的大膽假設——像穩定的利率、鐵飯碗、“ 包有”的租戶等都必須稍作調整。從今以后價格的漲勢將變得平緩些 ，也會趨向和通脹同步。其他投資渠道必須加以考慮，以配合一個人 的年齡、承擔和財務期望。
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