On 4 August 1998 in the Asian Wall Street Journal, the former Indonesian president, BJ Habibie, said he did not think of Singapore as a friend. He then apparently pointed to a map and said, “It’s OK with me, but there are 211 million people in Indonesia. All the green is Indonesia. And that red dot is Singapore.”
Although the disparaging remark initially sparked outrage, Singaporeans soon channelled their anger into pride. Both politicians and ordinary citizens began to use the term as a means of expressing the nation’s success despite its physical limitations.
I visited that little red dot last week, shortly after the city-state released its new ‘Draft Master Plan’, which discusses the future uses of Singapore’s land.
From the vantage point of the newly opened restaurant on the 32nd floor at the Westin, I could literally see how the plan would unfold. The restaurant has spectacular views of vast tracts of empty land. And, over time, this land will be transformed into gold.
The Draft Master Plan 2013
Town planning in Singapore goes back to Sir Stamford Raffles in the 1820s. Raffles’ plan had a grid layout for the road network and a clear segregation of residential communities by ethnic group (European, Chinese, Indian, Malay and Arab).
A separate area called Commercial Square was designated for commercial activities, while another area was allocated for government functions.
Since independence in 1965, the Singaporeans have fine-tuned the concept, and every five years a new Draft Master Plan is issued.
The latest instalment – the Draft Master Plan 2013 – aims to make ‘Singapore a better home for our people’. It encompasses the following main points: (a) providing a quality living environment with a variety of housing options, (b) bringing quality jobs closer to home and growing the financial and business hub in the city, (c) expanding green and recreational spaces for all, (d) building an endearing home, (e) enhancing transport connectivity and accessibility, and (f) enlivening public spaces.
In practice it means Singapore will become a great place to live and work. The planners will reclaim land for new developments, build 500,000 new homes, and decentralise administration.
Among all the details, I like the idea that mixed-use residential developments will be fenceless. That means they will have through-block linkages, courtyards and open spaces interspersed with amenities like childcare centres, nurseries, galleries, clinics and playgrounds. The project will therefore create a warm, close-knit community.
This is a revolutionary concept, because the current fad in Asia is gated communities. But the word community is, in fact, a misnomer. Instead, parts of the region resemble Latin America, where fences and security guards make it easier to separate rich and poor.
Another practical example is improved connectivity. The rail network will double from the current 178km to around 360km by 2030. And the cycle routes will grow from 230km to over 700km island-wide.
Cycle paths for recreational and short commuting purposes will be integrated into the cycling network. It seems that Boris Johnson, our London mayor, has fans in Singapore.
Why the Draft Master Plan is so important
The new plan is important for two simple reasons.
First, it’s important, because Singapore is gearing up to become a creative-driven powerhouse on a par with world cities like London, New York and Berlin.
How do those cities stay great? The answer, according to Chris Kennedy in his book The Evolution of Great World Cities: Urban Wealth and Economic Growth, is to undertake large major structural changes.
This includes everything from major upgrades in infrastructure and new housing patterns, to big shifts in consumption. These changes allow cities to recover from severe economic crises and resume rapid expansion.
For instance, after the Great Fire in 1666, London amended its building code and widened its streets. This paved the way for its commercial dominance.
Another example is the US, which gradually developed entirely new systems of infrastructure – from canals and railroads roads to water and sewer systems and federal highways. These structural improvements played an essential part in unlocking growth.
The second reason it’s important is that Singapore is a major trendsetter in Asia.
After the Asian financial crisis in 1997/98, Singapore hired management consultants to untangle the unproductive web between government-linked companies and the state. The result was a major restructuring programme whereby each company/department was forced to become economically viable (‘profit centres’).
Singapore was also among the first Asian countries to adopt active sovereign wealth funds. Additionally, Singapore was one of the first Asian countries to identify new growth engines in the domestic service industry by building up world-class capacity and expertise in private banking and casinos.
It was also the first to launch a Reit (Real Estate Investment Trust) more than a decade ago. Singapore has more than 34 listed Reits and property trusts. They allow companies to turn their property assets into cash for new, higher yielding investments.
How to play this
Singapore is likely to become more creative and innovative. And it is strategically located at the entry point of the Malacca Strait, which is the main route for all Asia-Pacific trade.
This is without a doubt an enticing prospect. Though with the caveat of a long gestation period.
UOB KayHian favours deep value and diversified property developers listed in Singapore such as CapitaLand, Ho Bee and OUE.
I would add Johor Bahru, the southern tip of Malaysia, adjacent to Singapore.
Johor Bahru and the Iskandar Project can play an important complementary role due to lower land cost, cheaper labour and strong government support.
UEM Sunrise (MK: UEMS) is my favourite candidate. It has taken a beating recently as a result of anti-speculation measures by the Malaysian government. This is prudent because it will allow more public infrastructure to be built to facilitate growth.
Today Guangzhou RF (HK: 2777), a major Chinese property developer listed in Hong Kong, paid $1.4bn for 116 acres of land in Johor Bahru from a royal family, making its maiden investment abroad.
The aim is to build commercial and residential properties. This new deal is a manifestation of China’s renewed interest in Asean, featured in a recent report.
Mark Twain once remarked that “History doesn’t repeat, but it does rhyme”.
Guangzhou, known historically as Canton, is the largest city and capital of Guangdong province. That city received a massive inflow of monies from Hong Kong that translated into skyrocketing asset prices.