Red Bull’s Sergio Perez celebrates after winning the Singapore Grand Prix at Marina Bay Street Circuit, Singapore on Oct 2, 2022. (AFP file photo)
Earlier this month, a record 302,000 people attended Singapore’s first Formula 1 car race in three years. Some forked out $900 for a grandstand seat for three days, while others booked hotel suites overlooking the Marina Bay track for as much as $10,000. Nightclub tables were fetching up to $70,000 per evening.
It was a triumphant moment for the Southeast Asian city-state as it reopened after the pandemic, an indication of its popularity at a time when darker economic moods prevail in many parts of the world, not least in its financial hub rival Hong Kong. Money and people are gushing into Singapore, pushing rents and property prices to unprecedented highs, and sending the cost of a modest Toyota to more than $111,000.
Below the surface, things aren’t quite so rosy. As the government mints new long-term visas to attract more high-paid talent, it faces a delicate balancing act to keep its people happy with the cost of living surging.
“Singapore is signalling that we are open for business, and positioning ourselves to be one of the world’s financial epicentres,” said Stefanie Yuen Thio, joint managing partner of TSMP Law Corp., a legal firm. She sees the current boom though as a “bubble” that’s driving up costs for locals. “It’s something the nation needs to manage.”
There is little doubt that Singapore is enjoying a resurgence, even as many parts of the world teeter on the brink of recession. Foreigners are snapping up multi-million dollar condos. Investors from hedge fund titan Ray Dalio to Indian billionaire Mukesh Ambani are setting up offices in the city. The currency is the strongest in Asia this year, and until Monday its stock index was the only developed market gauge with a gain in 2022.
For long-time Hong Kong money manager Value Partners, it’s a matter of “following the money,” as the centre of gravity for Asian finance slowly shifts from Hong Kong to Singapore and Dubai. Value Partners is looking to double its headcount in Singapore after the number of offices running assets for rich families doubled to 700 last year, co-founder Cheah Cheng Hye said. “It would be foolish” not to join the trend, he said.
In the days leading up to the Formula 1 race, several hundred investors attended packed conferences hosted by Forbes magazine, the Milken Institute and a crypto event. Attendees with total net worth of about half a trillion dollars gathered at the Ritz-Carlton for the Forbes Global CEO Conference, where the world’s fourth-richest man Gautam Adani spoke about his coal business in India. Over at the Four Seasons Hotel, the line-up to register for Milken snaked around the second-floor hall.
“The economic mood is more upbeat than in many other parts of the world,” said Yuen Thio.
With China’s economy slowing, and tensions with the US rising over its dealings with Taiwan and Kong Kong, Singapore is increasingly viewed by foreign firms as a key gateway to other parts of Asia.
The Ontario Teachers’ Pension Plan, a Canadian fund that manages $177 billion, is moving into bigger digs next year in the gleaming Frasers Tower as it doubles staff to almost 50. That will soon surpass the headcount of 35 in its Hong Kong office.
Singapore is “clearly a vibrant financial hub with lots of really helpful co-investors and financial advisers,” said the fund’s Chief Executive Officer Jo Taylor, who was in Singapore for the Milken event. “If we are going to be active in Southeast Asia and Australia then naturally the place to be is here.”
Bridgewater Associates, the world’s largest hedge fund that was founded by Dalio, is opening its first Singapore office after being in Beijing for a decade. Ambani, Asia’s second-richest person, is setting up a family office, Bloomberg reported last week.
Lawrence Wong, Singapore’s finance minister and prime minister in waiting, aims to create 20,000 financial-services jobs over five years through 2025, an increase of about 10% over the current workforce.
That influx of people and capital is in contrast to Hong Kong, where the population is shrinking as expatriates and locals leave the city due to stringent Covid controls and a tightening political grip from Beijing. Singapore’s resident population rose 3.4% in June from a year earlier.
Hong Kong Financial Secretary Paul Chan acknowledged the competition with Singapore in a blog post last weekend, laying out a series of data points to show that Hong Kong has much deeper stock, bond and asset management markets than Singapore, and remains a vital bridge to mainland China.
Singapore’s growth is helping it withstand the global slowdown that threatens to push many economies — from the US to the UK — into recession as early as next year. While Singapore isn’t immune to a slump in global trade, its economy is projected to post among the fastest growth in Asia in the third quarter at 3.9%, according to economists’ forecast compiled by Bloomberg. Growth is expected to slow to 2.9% next year as the central bank tightens monetary policy to curb inflation, according to Bloomberg Intelligence.
The rebound is causing growing pains. Singapore is going through its worst foreign manpower crunch in more than a decade. The number of employment passes, coveted by white-collar expats, plunged 17% from pre-pandemic levels to 161,700 in December before recovering in June, according to government data. The decline had been sparked by foreigners returning home during the pandemic, coupled with stricter rules introduced two years ago on bringing staff from abroad. The labor shortage has pushed the city’s jobless rate to just 2.1%, slightly more than half the US level.
To address the problem, the manpower ministry overhauled visa rules in August to allow foreigners earning at least S$30,000 ($20,912) a month ($250,000 a year) to secure a five-year work pass. Exceptional candidates in sports, arts and education who don’t meet the salary criteria are also eligible.
“The Singapore government is getting a lot more supportive in bringing in highly skilled foreign talent,” said Anthony Chow, CEO of digital-lock maker Igloohome Pte., which is set to boost local staff by up to 40% in the next 12 months.
Singapore is also trying to ensure locals have equal opportunities to climb the corporate ladder. That’s a thorny political issue ahead of a general election to be held by 2025, when Prime Minister Lee Hsien Loong, now 70, is expected to pass the baton to Wong.
The introduction of the new visa prompted many questions in parliament about how it would benefit Singaporeans. Not everyone is convinced it’s a level playing field.
“A lot of the higher-level roles seem to be expats,” said 27-year-old Marcus Kong, a consultant who didn’t want his company name used. “Only the lower-level roles” are filled by Singaporean locals.
And while the resurgence may be lifting wages and employment, it’s also driving up prices for everything from homes to cars on the island of 5.6 million people.
Buyers have to fork out some S$100,000 just for the right to buy a vehicle, more than double the rate at the end of 2019. A 2021 Toyota Camry Hybrid was recently “on sale” at the suburban JCube mall for S$159,988, down from the normal price of S$209,988.
Housing prices are rising, driven in part by an influx of China-born buyers scooping up the priciest homes. Sean Shi, one of four co-founders of China’s largest hotpot chain, paid S$50 million for a so-called good class bungalow in a prime area near the Botanic Gardens in September, the Straits Times reported.
After prices jumped 8% in the first nine months — including a sizzling 13% in the third quarter alone — the government took steps to cool the market. Wong added this week the government is reviewing its policies to help first-time home buyers. Even public housing apartments are caught up in the frenzy, posting 27 straight months of price gains. Landlords meanwhile are asking tenants for big rent increases, sometimes as much as double, when they extend leases.
That’s making Singapore an outlier in global real estate, as once red-hot markets in Australia, Sweden and Canada face double-digit price declines, while Hong Kong could see prices drop 30% over the next two years, according to Goldman Sachs Group Inc.
Despite the challenges, some people were pleased when the city was rated Asia’s top financial centre, and third-best in the world, by the Global Financial Centres Index in September.
“There’s a sense of national pride,” said Darren Teo, a 26-year-old health-care worker. “The hope is also that there’s a trickle-down effect to Singaporeans.”