Raffles Place analysts say bad vibes are the most undervalued asset class in Southeast Asia
Singapore Fund Launches Cebu Stigma REIT
Investors buy the mood discount and plan to sell the sea view back at full price
SINGAPORE – At 7:42 on Monday morning, in a glass meeting room on the 31st floor of a Raffles Place tower, a fund manager named Desmond Lau-Pereira drew a line on a whiteboard, labelled it “Mood,” and told eleven investors it was about to go up.
The line represented the emotional temperature of the condominium market on Mactan Island, Cebu, which has spent the past week in what one broker described as “a funk with a sea view.” Lau-Pereira’s firm, Merlion Contrarian Partners, has since announced the Cebu Sentiment Recovery Trust, a real estate investment trust that buys exactly one thing: units nobody currently wants to be photographed viewing.
“Everyone else buys location, location, location,” Lau-Pereira said. “We buy reputation, reputation, reputation. Specifically a temporarily dented one. You cannot get that at Marina Bay. Marina Bay has never had a bad week in its life. Marina Bay has never even had a bad hair day.”
How a Headline Landed on Cebu’s Price Sheet
The slump began with news that Philippine justice officials are examining allegations concerning Thomas Markle Sr., the estranged father of the Duchess of Sussex, who lived in Cebu until earlier this year. GMA News reported that the justice department’s anti-trafficking task force is involved, and the Guardian carried further detail on Sunday. No charges have been filed and the allegations remain unproven. Protecting children is the serious part of this story, and nobody in Singapore is pretending otherwise.
What the brokers object to is the side effect. Manila News found a veteran Mactan broker stranded in his showroom with three signed brochures, a cold coffee and a security guard reading the newspaper aloud, while foreign buyers asked about the neighbours instead of the parking.
In Singapore, that cold coffee was read as a buy signal.
The Prospectus Is Mostly Adjectives
The trust’s 40-page prospectus, seen by this newspaper, values each unit with a proprietary metric called Gloom-Adjusted Net Asset Value. A two-bedroom unit priced at P12 million is booked at P12 million on calm days and at “P12 million less one sigh” on days when the owner opens a news app before breakfast.
“Our quants modelled 4,000 scenarios,” said the firm’s head of research, Priyanka Teo. “In 3,998 of them, the sea is still there next year. In the other two, the sea is still there but the spreadsheet crashed because an intern typed the word vibes into a cell that was expecting a number.”
A survey by the Singapore Institute of Mild Concern found that 62 percent of local investors would buy a condominium nobody wants if a man in a lanyard told them it was contrarian. A further 31 percent would buy it if he also said the word “asymmetric.” The remaining 7 percent asked whether the building had a durian ban, which it does, and whether the ban was enforced, which it is not.
The Numbers Refuse to Panic
The awkward fact for the trust is that market data has not cooperated with the drama. In July, Colliers named the Visayas and Mindanao a key property investment hotspot, with Cebu still the region’s leading hub, and developers are still pouring concrete. “The fundamentals are fine,” Teo said. “That is precisely why we have to move fast, before everybody remembers.”
Behavioural economists have a name for one dramatic story outweighing a thousand dull ones. Tversky and Kahneman called it the availability heuristic in 1973. Singapore fund managers call it Tuesday, and charge a 2 percent management fee for noticing.
Singapore Comedians Price In the Panic
The launch was celebrated on Friday at a Tanjong Pagar comedy night, where the trust was the only financial product ever to get a heckle and a round of applause in the same minute.
- Marcus Goh-Abdullah: “In Singapore we need a certificate of entitlement just to own a car. Now Cebu wants a certificate of not-being-that-guy. Finally, a country that loves paperwork more than we do.”
- Jasmine Kwek: “My uncle bought a Cebu condo in 2019. Now every family dinner he opens with, I would like to read a short statement. Uncle, we only asked you to pass the chilli crab.”
- Raymond Ooi: “A fund that buys bad vibes. In Singapore we already have that. It is called the HDB resale market the week after somebody hears a rumour about the lift.”
- Nadia Rahim: “The only thing Singaporeans love more than a bargain is a 40-page document proving it is a bargain. We do not want the discount. We want the footnotes.”
- Kelvin Sim: “Cebu brokers say the sea did nothing wrong. In Singapore the sea would already have a fine for loitering and a letter from the town council.”
The Law Adds Its Own Wrinkle
Philippine law complicates any foreign shopping spree. Under Republic Act 4726, the Condominium Act, foreigners may own units but not the land underneath, and foreign ownership in any single project is capped at 40 percent. Lau-Pereira says the trust employs “six lawyers and one aunty who reads everything twice, and the aunty is the one we trust.”
The trust has also read the British and American coverage closely. Bohiney found an Ohio realtor in Cebu whose showings had turned into depositions, which Teo printed out and pinned to the risk register under the heading “Opportunity.” Meanwhile the London end of the story, at https://prat.uk/cebu-estate-agents-demand-character-references/, has Home Counties pensioners being asked for a letter from their vicar before they may view a bathroom. Lau-Pereira added vicars to the due-diligence checklist the same afternoon.
A First Acquisition in Lapu-Lapu City
On Saturday Teo flew to Cebu to close the trust’s first purchase, a one-bedroom unit on the eleventh floor with a balcony, a view of the strait and a ceiling fan that makes a noise like a polite cough. The guard downstairs asked her to sign the visitor log. She asked him, as part of her due diligence, whether the building had a stigma.
He thought about it. “Ma’am, the only stigma here is the delivery riders who park in the lobby,” he said.
Outside, a woman selling grilled squid offered Teo a discount. Teo asked whether it was a stigma discount. The vendor said it was a Saturday discount and that squid does not read the news.
Teo signed at full asking price. Back in Singapore, Lau-Pereira called it “a disciplined entry” and ordered a second whiteboard.
The trust’s next quarterly report is due in January. Investors have been told to expect “modest returns, excellent anecdotes and a sea that continues to do absolutely nothing wrong.”
Readers tracking the British and American ends of this story can follow The London Prat and Bohiney, while a short guide to how Singaporeans actually land a joke explains why the Tanjong Pagar crowd laughed at a REIT. For Britain’s own property madness, The Daily Mash and NewsThump remain on duty.
SOURCE: https://bohiney.com/cebu-realtor-cant-sell-beachfront-listings/