2006 has been an exciting year for all of us in the real estate business. We witnessed a dramatic surge in many segments of the property market borne out of solid economic fundamentals and Singapore's various restructuring and rejuvenation efforts.

The economy clocked in a superb 7.7 per cent growth last year. The robust economy powered the strongest job expansion ever, with 173,300 new jobs created. Unemployment came down to 2.6 per cent.

The tourism sector enjoyed a bumper crop of a record 9.7 million tourists, who came from all over the world, including more than one million from China alone.   

Led by vigorous sales and ascending prices of luxury developments, private home prices rose 10 per cent last year. This is the fastest annual rate of increase in seven years. The broad-based URA private residential property price index is now 30 per cent above the Asian Financial Crisis trough in late 1998, but still 28 per cent below the mid-1990s peak.

Concrete endeavours by the government to re-make Singapore into a Global City of Opportunities, exciting for both business and leisure with a first class living environment, have captured the imagination of the market. High profile projects like the new super-malls in Orchard Road, integrated resorts and the Marina Bay Financial Centre have heightened foreign awareness of Singapore as an efficient, safe and green city with a high quality of life, and an ideal hub for working and investing in Asia.

This has led to a transformation of the property market and the internationalisation of Singapore real estate. Foreign buyers, both institutional investors as well as individuals, have bought into the Singapore real estate growth story, discernibly driving the growth in the high-end segment.

It is now evident that two dynamic forces are propelling investment and consumption, and these are: Wealth and Income. In our property market, these twin drivers operate at two polarities and fuel distinct buying behaviour.

In the new global economy, we see growth in wealth as well as growth in income. The global economy has grown in the last two years at rates not seen since World War Two, fired up by a commodities boom with a whiff of inflation. Strong stock markets around the world have also contributed to a surge in wealth. The world has more wealthy people than ever before, with a rising number of multi-millionaires from emerging markets and not just developed countries.

Since 2000, global per capita GDP has been growing at an amazing 3.2 per cent per year. This compares with the last episode of long and steady economic growth in the 1950s to early 1970s, when per capita GDP grew by about 2.9 per cent per year. As pointed out by The Economist magazine, the first decade of the 21st century could see the fastest growth in the world’s per capita income not just in the last two hundred years, but in all of human history.

A critical factor behind this extraordinary development is the rise of China and India, and, in the wings, Russia. These emerging markets are playing a much bigger role in driving growth and trade globally. New middle-class consumers in emerging markets will drive global demand in the coming years in ways never seen before. About one billion consumers in emerging markets will join the ranks of the middle class in the next two decades, enthusiastically driving global demand for goods and services with their aspirations and their purses.

This bodes well for vendors of goods and services and product developers like ourselves. The two polarities of the market present opportunities for us to conceive and develop products that cater to the wealthy as well as those with good incomes. In the past, we concentrated our efforts on the mass market serving entry level private home buyers as well as buyers of mid market condominiums and landed homes. Today, this very wealthy segment of the market has grown too significantly to ignore. We must, therefore, augment our organisational machinery, in terms of our product development and sales and marketing capabilities, to address this.

At the other pole, income-driven demand also looks more promising. Sustained robust economic growth and a strong job market will translate to rising incomes. There will be more purchasing power to support the domestic segment of the property market – the mass-market, entry-level and mid-market condominiums and landed properties which have remained subdued thus far.  In the next few years, we expect the middle market to play catch up with the international market in terms of transaction activity with some price upswing.      

At Far East Organization, I am heartened to see progress being made on many fronts in our business in 2006.   

On the back of a buoyant market, but more importantly, with a great sense of ownership and belief in the operations, our hospitality portfolio of hotels and serviced residences charged ahead to outperform their financial targets. We witnessed leadership in action through clear communication of our business objectives and determination in implementing the right business model. Through their success, our colleagues in the hospitality operations have demonstrated what Henry Ford meant when he said, “He who believes that he can succeed, and he who believes that he cannot succeed, are both right.”

Because they believed that the targets set were the requisite levels that would bring sustained growth for the business, and because they believed in and seized the operating model to recast their machinery, they have unlocked the value of their operations.

While we celebrate the successes of one part of our Organization, we must recognise that it is not enough to have success in a sporadic and chequered manner. To be a strongly competitive business organisation, we must have success in each and every part of our operations.

In 2006, although our business showed improvements across all fronts, in truth, we were not able to meet our targets in property sales and in the leasing of our portfolio of residential, retail and industrial assets. In the coming months, to ensure that we are well placed to ride the rising tide we will need to recast those parts of our operations that do not measure up and make improvements with more speed and more haste.

We have to operate with a different modality now that we are in a new property cycle. The property market in Singapore has finally emerged from the dark ages of the last seven years. Moving forward, we must now cast the defensiveness of the past aside and ask ourselves: How can we move faster? How can we do more business and get higher prices and revenues? How can we compete with the best in the world?

With Singapore emerging as a vibrant international city, new players from other marketplaces with high standards and deep expertise are descending and converging onto our shores, flush with cash and hungry for projects. They have raised the bar in prices and quality and changed the nature of the game, so to speak.

We need the right frame of mind and resolve to compete in this new league. There must be a cohesion and coherence right through our people who have to have the attitude that we must make our budgets and deliver the right numbers.

I am glad to observe that our people’s behaviour through the adversity of the past few years and in the transitional period in the last year speaks well for Far East Organization. You do us proud when you realise that you are not just employees of Far East Organization but you are Far East Organization itself. I have seen real effort from all of you in 2006. There is clearly much more camaraderie, much more openness and sharing. The many platforms and workshops last year to communicate and share the business numbers have certainly borne fruit even if it is not a full harvest as yet.

All across our entire portfolio of property sales, retail properties, hotels, serviced residences, corporate leasing, and business space, as well as in our food and beverage business at Yeo Hiap Seng, I am seeing commitment and action in wanting to lift our levels of performance. And, indeed, this is necessary, as the stakes have become much higher now with the heat in the market and soaring replacement costs. For if we do not sell at the right prices, when we go back into the market, we are actually topping up more equity. We would be doing what is uneconomic, i.e. selling low and buying high, which all of you realise is not tenable for any business.

As we soldier on in our mission to emerge Far East Organization as The Developer of Choice, the question we must ask ourselves is: How can Far East Organization make a difference in a marketplace where customer choices abound?

Here, I would like to seed the idea of a simple brand value, which I hope will guide and envelop our behaviour in our customer process hereon. It is really a self-reflection - of how easy are we to deal with?

In this world of great convenience and touch-key transactions, we must acknowledge that being easy to deal with is a competitive advantage for an enterprise. Our customers have choices. We hope they will choose Far East Organization because we are an easy enterprise to do business with.  The easier we are to deal with, the more customers we will have, the more demand for our products be they homes, hotel rooms, serviced residences or soft drinks.

We must embed this “Easy to Deal With” behavioural trait into the Organization’s DNA so that it becomes a natural way of doing things in our daily interactions internally and externally. Indeed, we must make it easy for our customers, suppliers and business partners to do business with us. And, furthermore, we must also make it easy for our colleagues to deal with us to ensure there are no kinks in the customer process.

As we advance into 2007, let us take a leaf from Walt Disney, which is one of the world’s leading companies in leisure and entertainment. At Walt Disney, cynics need not apply because its culture stresses creativity, optimism and decency.

Here at Far East Organization, we must do likewise and break down the barriers of cynicism and disbelief, if we are to thrive in the new marketplace that has emerged. We have every reason to be optimistic about the future of Singapore, about the future of Far East Organization and our business. We must find creative ways to support our customers, business partners and service providers, and include them as part of our efforts to nurture a thriving business ecosystem. Let us continue to be guided by our core values - Business excellence, Unity, Integrity, Loyalty and Diligence – to conduct our business ethically in our endeavour to build a successful, enduring enterprise.