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Six reasons why property is not an antifragile investment

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By Property Soul
nassim-talebIt was exciting to see Nassim Nicholas Taleb presenting “Antifragility: Gaining From Volatility, Stress And Disorder” in the open space outside National Library last Wednesday. Like a loyal fan longing to meet her idol, it made my day when I managed to get his autograph at the end of the session. (P.S. I hope that I can cheer my readers up the same way when I autograph my book.)
Taleb answered every question from the audience with a series of metaphors. One must have a comparable high level of imagination to follow his arguments.
I thoroughly enjoy reading his book, Antifragile: Things That Gain From Disorder. I agree with the author on almost every point he tries to drive home. Above all, I can easily apply his concepts in property investment which is, to a high extent, an antifragile game.
1. What kills make others stronger. 

“Those who perish contribute to the overall safety of others.”

Every plane crash improves aviation systems and brings passengers closer to safety. The 2004 Indian Ocean tsunami prompted the building of more sophisticated warning systems. The Fukushima Daiichi nuclear disaster in 2011 resulted in the closure of nuclear power plants in countries all over the world.
The 1997 Asian financial crisis was a painful lesson that forced many Asian countries to build a safer banking system. The 2008 U.S. subprime crisis was a wake-up call for other governments to review high-risk lending practices and home mortgages in their own country.

“It is often the mistakes of others that benefit the rest of us – and, sadly, not them.”

In other words, someone has to fail for others to succeed.
2. What does not kill me kills others. 

“What did not kill me did not make me stronger, but spared me because I am stronger than others; but it killed others and the average population is now stronger because the weak are gone.”

The eight rounds of cooling measures might ‘spare’ you because you have a high credit score or you are buying for the first time. But these restrictions ‘kill’ others because, on top of the high stamp duties and low loan-to-value, they may fail the Total Debt Servicing Ratio (TDSR) and can’t borrow from banks.
These are buyers who sacrifice for the government’s determination ‘to ensure a stable and sustainable property market’. But after ‘the weak are gone’, the housing mortgage market ‘is now stronger’. If the property market is harmed by any negative market factor, Singapore will have less non-performing loans and negative equities.

“Someone paid a price for the system to improve.”

3. The more you have, the more fragile you are.

“Success brings an asymmetry: you now have a lot more to lose then to gain.”

Unlike an ordinary folk who can’t afford to buy any private property, when you have a big stake in properties, you are upset every time there is a new round of cooling measures. Similarly, if you are a highly-leveraged multiple property owner, you are more hard hit when the market tanks. You are hence fragile.
Markets go through the stages from recovery to boom, and from an inflating bubble to a total collapse. Wealthier countries are prone to make more severe mistakes and to fail more miserably because of higher unpredictability and fragility.

“When you become rich, the pain of losing your fortune exceeds the emotional gain of getting additional wealth, so you start living under continuous emotional threat.”

4. We can’t put all false predictors in jail.

“I find it profoundly unethical to talk without doing, without exposure to harm, without having one’s skin in the game, without having something at risk.”

We all like to listen to the so-called experts making predictions about the property market – the media love it; the audience love it. These ‘experts’ and their predictions are fragile because they are exposed to prediction errors. Honestly, who can tell what is going to happen in the future?
Below are the media predictions and the reality of the property market in the 2000s and 1990s, extracted from No B.S. Guide to Property Investment.
predictions
But they don’t have to pay a price for their mistakes. In fact, in our history no one has ever been convicted by law because their projection figures or forecast trends are far from reality. No one has ever paid a price for a prediction error.
We can’t stop people from asking for predictions. We can’t stop experts from making false predictions. But we can at least request the predictors to eat their own cooking and have their skin in the game.

“Never ask anyone for their opinion, forecast, or recommendation. Just ask them what they have – or don’t have – in their portfolio.”

5. It’s an unfair winner-take-all game.

“Almost everything contemporary has winner-take-all-effects.”

The privileged in our world all know how to play the antifragile game:

  • Keep the good and ditch the bad; cut the downside and keep the upside.
  • Ensure that they have more to gain then to lose.
  • Steal the options from others with all the upside and no downside to themselves.

Senior executives in banks and fund managers may have made terrible mistakes and lost more than they ever made. But they are still paid billions in compensations and commissions. The bankers and fund managers take all the upside, leaving the downside to customers and taxpayers.
New condominium projects are sold at record-high prices during new launches. Government sold the land, developers made their profits, and agents earned their commissions. When the market slows down, home buyers are left alone to face the music of falling prices, market oversupply, interest rate risk, etc. while they have no option but to continue paying the same record-high selling price in phases to the developers.
6. Beware of the agencies.
The marketers of overseas properties or investment opportunities can speak highly of the projects that they are marketing to potential buyers, though they themselves are not related, or not even familiar, with the owners and their businesses. They take the upside and make their commission. But when problems surface, they can’t do anything. Buyers are left to deal with all the downside.
Taleb calls this the ‘agency problem’:

“The manager of a business is not the true owner, so he follows a strategy that cosmetically seems to be sound, but in a hidden way benefits him and makes him antifragile at the expense (fragility) of the true owners or society. When he is right, he collects large benefits; when he is wrong, others pay the price.”

This article was first published at propertysoul.com

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Ng Eng Hen: Dust clouds likely caused armoured vehicle collision during Exercise Wallaby

Dust clouds limiting visibility likely contributed to the collision between two Hunter vehicles during Exercise Wallaby, Defence Minister Ng Eng Hen explained in his parliamentary reply. 12 servicemen sustained mild injuries, but safety measures prevented more serious outcomes. A formal investigation is ongoing to ensure further safety improvements.

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SINGAPORE: Low visibility caused by dust clouds was identified as the likely cause of the collision between two Hunter armoured fighting vehicles (AFVs) during Exercise Wallaby last month, Defence Minister Ng Eng Hen said in a written parliamentary response on Tuesday (15 October).

The incident, which occurred in Queensland, Australia, on 24 September 2024, resulted in mild injuries to 12 servicemen.

Dr Ng’s statement was in response to a parliamentary question from Mr Dennis Tan, Workers’ Party Member of Parliament for Hougang SMC.

Mr Tan asked for details on the accident, specifically its cause and whether any lessons could be applied to enhance training and operational safety within the Singapore Armed Forces (SAF).

The collision took place during a night-time movement of Hunter AFVs at the Shoalwater Bay Training Area.

The vehicles were returning to base when one rear-ended another. Dr Ng explained that the dust clouds generated by the AFVs’ movement significantly impaired visibility, might likely contributing to the accident.

The 12 affected servicemen sustained mild injuries and were promptly taken to the nearest medical facility.

None of the injuries required hospitalisation, and all 12 servicemen were able to rejoin their units for training the next day.

According to the minister, adherence to safety protocols—such as wearing seat belts and protective gear—played a crucial role in limiting the injuries to mild ones.

Following the incident, a safety pause was immediately implemented, with all drivers being reminded to maintain proper safety distances, especially when visibility was compromised.

Troops were also reminded to adhere strictly to safety protocols, including the proper use of safety equipment, Dr Ng added.

The safety lessons from the incident were shared not only with the affected units but also with other participating groups in the exercise, as well as units back in Singapore, through dedicated safety briefings.

Mr Tan also asked about the broader implications of the incident. In his response, Dr Ng said that a formal investigation had been launched in accordance with SAF’s safety incident protocol.

The investigation aims to assess the circumstances more thoroughly and identify any further measures that could be taken to enhance safety.

Dr Ng shared that recommendations arising from the investigation will be implemented where necessary.

Exercise Wallaby is SAF’s largest unilateral overseas exercise, and the 2024 edition began on 8 September, running until 3 November.

The exercise involves approximately 6,200 personnel, including 500 operationally ready national servicemen.

The exercise has been conducted at Shoalwater Bay Training Area in Queensland since 1990, and it is a key part of SAF’s overseas training program.

The Hunter AFV, one of the vehicles involved in the collision, is a state-of-the-art platform jointly developed by the Defence Science and Technology Agency, the Singapore Army, and ST Engineering.

It replaced the SAF’s aging fleet of Ultra M113 AFVs in 2019, which had been in service since the 1970s. The Hunter is equipped with advanced features, including a 30mm cannon, a 76mm smoke grenade launcher, and an automatic target detection and

tracking system designed to enhance operational effectiveness. It is also capable of traveling at increased speeds and covering longer distances, making it a versatile asset for the SAF.

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Government to “carefully consider” Lee Hsien Yang’s demolition application for 38 Oxley Road

The Singapore Government will “carefully consider” Mr Lee Hsien Yang (LHY)’s application to demolish the house at 38 Oxley Road. LHY announced his intent on Tuesday morning following the recent death of his sister, Dr Lee Wei Ling, reaffirming his commitment to honour his parents’ wish for the house’s demolition.

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The Singapore Government has indicated that it will “carefully consider” Mr Lee Hsien Yang’s (LHY) application to demolish the family home at 38 Oxley Road.

LHY, the youngest son of Singapore’s founding Prime Minister, the late Lee Kuan Yew (LKY), announced his intention to apply for the demolition in a Facebook post on 15 October 2024, following the death of his sister, Dr Lee Wei Ling, on 9 October.

The announcement marks a significant development in the ongoing saga over the fate of the historically significant property, which has been at the heart of a family dispute since LKY’s passing in 2015.

In his will, executed in December 2013, LKY expressed his desire for the house to be demolished “immediately after” Dr Lee moved out of the property. Dr Lee, a prominent neurologist, had been the last remaining resident of the house.

LHY reaffirmed his commitment to carrying out his father’s wishes, stating, “After my sister’s passing, I am the only living executor of my father’s estate. It is my duty to carry out his wishes to the fullest extent of the law.”

He added that he would seek to build a small private dwelling on the site, which would be “held within the family in perpetuity”.

LHY also referenced his brother, Senior Minister Lee Hsien Loong’s (LHL) remarks in Parliament in 2015, when he was Prime Minister, stating that upon Dr Lee’s passing, the decision to demolish the house would rest with the “Government of the day.”

In response to media queries regarding LHY’s announcement, a spokesperson for the Ministry of National Development (MND) acknowledged the intended application and emphasised that the Government would “carefully consider issues related to the property in due course”.

The spokesperson also highlighted that any decision would need to balance LKY’s wishes, public interest, and the historical value of the house.

The house at 38 Oxley Road, where key decisions about Singapore’s path to independence were made, has been a focal point of public and political discussion.

The future of the house became contentious in 2017 when LHY and Dr Lee publicly accused their elder brother, LHL, of trying to preserve the house against their father’s wishes for political reasons.

LHL denied the accusations, issuing a Ministerial Statement in Parliament, where he also raised concerns over the preparation of their father’s final will. He clarified that he had recused himself from all decisions regarding the property and affirmed that any government action would be impartial.

In 2018, a “secret” ministerial committee, which was formed in 2016 to study the future of 38 Oxley Road, proposed three options: preserving the property and designating it as a national monument, partially demolishing the house while retaining the historically significant basement dining room, or allowing complete demolition for redevelopment. LHL accepted the committee’s conclusions but stated that no immediate decision was necessary, as Dr Lee was still living in the house.

In a statement conveyed by LHY on behalf of Dr Lee after her passing, she reiterated her strong support for her father’s wish to demolish the house. “My father, Lee Kuan Yew, and my mother, Kwa Geok Choo, had an unwavering and deeply felt wish for their house at 38 Oxley Road to be demolished upon the last parent’s death,” the statement read.

She added, “He had also appealed directly to the people of Singapore. Please honour my father by honouring his wish for his home to be demolished.”

Despite selling the house to LHY at market value in 2015, LHL’s stance regarding the house’s preservation became a public issue, especially after the family disclosed that the Government had raised concerns about reinstating the demolition clause in the 2013 will. The ministerial committee had reviewed the matter, but a final decision was deferred until now.

The fate of 38 Oxley Road remains to be seen, but the Government’s decision will likely have lasting implications for the legacy of the Lee family and the conservation of Singapore’s historical landmarks.

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