STI: Property 'fool' has the last laugh

Mar 7, 2004

Property 'fool' has the last laugh
by Leong Chan Teik

IMAGINE you are rich but you choose to rent a home instead of buying one. You steadfastly hold off from buying, despite pressure from family to do so.

Singapore property prices are way over the top, you maintain. But everybody else is in love with property, and prices are just going up and up.

Your darling wife nags you. Even your very own mother scolds you. That's what Mr Wong Kok Hoi, 48, faced for the greater part of the 1990s.

'My wife was upset with me,' he remembers with a chuckle. 'My mother scolded me for being a fool. I had no peace.'

The corporate achiever and multi-millionaire investor had returned to Singapore in 1990 after four years in Tokyo as vice-president and chief investment officer of Cititrust & Banking Corp.

What he saw there reinforced his stand against chasing a runaway property market - or any asset for that matter.

'Living in Japan, I heard the property story umpteen times but I wasn't convinced,' he says in an interview with The Sunday Times, in which he shared his experience as a bold investor who has dared not to follow the herd.

It struck him as being absurd that the Japanese Emperor's palace was worth more than the whole state of California.

Well, we all know how the Japanese property bubble ended.

In Singapore, Mr Wong was aghast at the rise and rise in property prices, and chose to rent a condominium instead.

Even after he married in 1993, he refused to buy a home.

He paid between $5,500 and $7,000 a month for rental - a princely sum which he could afford as he was president of an investment company.

'I felt the arguments for the continued rise in property prices - such as HDB upgraders, liberalising the use of CPF funds and limited land supply - were only half as convincing as Japan's.'

He adds: 'Imagine the consequences today if Singapore property had crashed from a much higher level, as happened in Japan.' Japanese property prices have declined every year since 1991 when the bubble burst.

And Mr Wong was right to hold off: Singapore prices have fallen every year since their 1997 peak.

Only four years after the Singapore market began its sharp descent did he put down money for a home.

In 2001, he built a 2 1/2-storey home on a 8,400-sq-ft plot of land in the East Coast area. Its market value is $4 million.

He probably paid a bit more for his home than what it would have cost in 1990.

His real payoff, however, is in the many-fold gains that he has made by using the money he didn't sink into a home to invest in stocks - something that is his forte.

Interestingly, he has other property - but in Malaysia.

He owns two shophouses - they are of four-storeys each - in Kluang, Johor, where he was born and raised.

How he came to own them is further indication of the contrarian that he is.

The purchase was made in 1988, about two years after the Pan-El crisis brought down the property market in Malaysia.

Recognising a bargain, Mr Wong, who was then working in Japan, paid RM1 million cash for the shophouses.

At that purchase price, the rent he subsequently collected translated into a 10-per-cent yield a year - a satisfying return. The property value recovered and now is about 80 per cent higher.

'I like to buy cheap,' says Mr Wong, whose mind was focused on recognising value in assets right from the start of his working life. His first job: senior investment officer with the Government of Singapore Investment Corporation for four years.

Selling when everybody is buying requires the same conviction and money sense as buying in a gloomy market.

Mr Wong was a fund manager in Tokyo when a super-bull market was raging there in the second half of the 1980s.

'I thought I was an investment genius until I realised that the market was making even fools look like geniuses.'

He began to worry about the excessive optimism on Japanese stocks that was spreading not only across Japan but to other countries as well.

On a business trip in Switzerland, a taxi driver started to brag to him about his Japanese stocks.

Shortly later, Mr Wong made the momentous decision to unload most of his Japanese stocks. His timing was prescient. Just weeks later, in December 1989, the market crashed.

'That decision to exit was, and is likely to remain, the best investment decision I have ever made,' he says.

'If I had not done so I would certainly have lost all my savings and profits like most other Japanese share investors.'

If you read John Train's Money Masters, a book which identifies traits of successful investors, it won't take long for you to recognise Mr Wong in there.

Typically, says the book, these folks come from a humble family background. It's true in his case: in a small Johor town, his father drove a taxi for a living.

During his school holidays, Mr Wong hauled cement bags at construction sites, or helped his electrician uncle to fix lights.

He was smart enough to clinch a Japanese scholarship for a Bachelor of Commerce degree course in Japan.

'Money was often lacking in my family. I learnt to treasure money early,' he says. That's exactly why he will not overpay for any asset.

These days, a growing number of institutional and individual clients are counting on him to manage their money.

APS Asset Management, which he founded in 1995 and of which he is chairman, manages over US$2.1 billion (S$3.62 billion) of money.