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Will sea change engulf developers?
SINGAPORE'S long-term approach to mitigate global warming and its consequences could offer a silver lining to some businesses here.
Construction and/or civil engineering groups such as Lum Chang, Koh Brothers Eco Engineering, BBR Holdings, Yongnam Holdings and Soilbuild Construction Group can play a major role in some of the longer-term projects outlined in the recent National Day Rally to deal with rising sea levels and other effects of climate change.
One proposed solution entails building polders to protect Singapore's low-lying eastern coastline, for instance. Another is to reclaim a series of islands offshore from Marina East to Changi, then connecting the islands with barrages and creating a freshwater reservoir.
Companies involved in support and downstream services relating to the construction value chain, such as Pan-United Corporation and Tiong Woon Corporation, may also have a shot at taking part in these big engineering/infrastructure projects to shield Singapore from rising sea levels.
However, it could be a different story for groups for which residential property development is a core business. Yes, many of our developers are champions of using environmentally sustainable solutions in their project construction and building maintenance as part of efforts to help contain global warming.
Nevertheless, climate change and rising sea levels potentially pose existential challenges to their business strategies.
Home buyers may ask developers questions such as how many metres above the mean sea level the site of a residential project is. Developers in turn will be looking for land on high grounds.
Waterfront living may lose its allure.
Those who live in Singapore will be heartened to learn of some of the steps the government has in mind to cope with climate change. But will the vivid illustrations of the potential impact of rising sea levels on the island make folks here question their long-held belief that investing in property is a big part of preserving, if not enhancing, one's wealth and to build a retirement nest egg?
Over the past five decades, a confluence of factors have fuelled growth in the city's property prices. These include land scarcity, Singapore's stunning transformation from backwater to a global city, and pro-home ownership policies (including the availability of financing through one's CPF savings) to give citizens a sense of belonging and rootedness to the nation.
Episodes such as the Lehman Minibonds fiasco during the Global Financial Crisis a decade ago, tend to reaffirm the conviction among some retail investors that it would be safer to park one's wealth in something tangible - like property.
But with the very real scenario of rising sea levels, will Singaporeans rethink their mindset about property buying/investing? Perhaps property will start to be seen more as a consumption good, rather than investment.
Will residents become more inclined to rent a property, rather than owning one? Maybe. Maybe not.
Most people here have a deep-seated attachment to property; after all, there is a so-called Asian trait of wanting to acquire property to leave for the next generation.
They feel more secure if they have a home to call their own, where they can settle down with their family - instead of running the risk of being booted out if one's landlord chooses not to renew a lease.
So it's well and good to want to own the roof over one's head. That said, Singaporeans may reconsider the strategy of buying multiple properties and instead actively look at other channels to grow their wealth. This could include investing in, say, gold, new technologies and ways to promote more sustainable living on the planet.
Who knows if foreign property buyers would still flock to our shores in future.
That said, property developers here still have a future - of course, depending on how fast and how much sea levels rise, and whether pre-emptive solutions can be put in place in a timely fashion.
But it may never quite be business as usual for developers - if the idea of property as consumption rather than investment takes root. Greed and fear may no longer be the primary motivations of buying a property as everyone gains a new perspective.