20/07/2022
A similar coincidence occurred in 2007 when the subprime mortgage crisis occurred in the United States uncompleted property which is equivalent to new launch in Singapore context has fed the market boom over the years developer earns tons of revenue but also huge debt that comes with it.
Unsurprisingly, China Evergrande group leading the pack defaulted on their bonds and construction has also come to a halt with the main contractor and sub-contractor stop working. Some has also decided not to pay their loan as they cannot afford without the payment from the developers.
Authorities has also been reacting to the situation by urging the bank to increase lending to builders to help in completing the projects and longer grace period to homeowner for payment
The woe on the real estate spreading to the financial sectors has grown fear among investors high yield bonds are inching towards record lows during march loan which is the safest source of income for bank is greatly impact by the current boycott of payments with this trend blue chips stocks from bank or property sectors might no longer be as “blue chips” as they use to be.
Investor in property and bonds do need have a deeper thought before investing everything that you have. Diversification has always been the best tool on risk reduction.
Do feel free to contact me and we can have a coffee on alternative to minimize your chances of losing while having a healthy return.
