Lim Hng Kiang: Review of the property sector in Singapore and Asia Opening speech by Mr Lim Hng Kiang, Deputy Chairman of the Monetary Authority of Singapore and Minister for Trade and Industry, at Citigroup Asia Pacific Property Conference 2007, Singapore, 23 April 2007. *  *  *  Thank you Catherine Distinguished guests Ladies and gentlemen A warm welcome to Citigroup’s inaugural Asia Pacific Property Conference. This is an excellent opportunity for developers, investors and financial intermediaries to share ideas and network with other key players in the market. I am certain that this conference will be interesting and fruitful. Strong regional prospects Asia is witnessing robust growth, led by sustained growth of the Chinese and Indian economies and the welcome recovery of Japan – now into its fifth year of expansion. The regional economy is consistently growing at a much faster pace than the rest of the world. Singapore is fortunate to be strategically located to enjoy the positive effects of Asian growth. We are well positioned to serve as a gateway for global investors to access regional opportunities. As the regional economics grow, they present exciting opportunities for direct investment in real estate, as well as through real estate financial investments, whether in office developments, commercial and retail complexes or industrial estates. Prospects in Singapore property sector Singapore is a good example. Demand for all property sectors in Singapore has been rising, underpinned by Singapore’s economic expansion, particularly in the financial, business services and tourism sectors.
At the same time, though, I can be clear about what conditions are needed for normalization to begin. If the improvement in the U.S. labor market continues and the FOMC is “reasonably confident” that inflation will move back to our 2 percent objective over the medium-term, then it would be appropriate to begin to normalize interest rates. Because the conditions necessary for liftoff are well-specified, market participants should be able to think right along with policymakers, adjusting their views about the prospects for normalization in response to the incoming data. This implies that liftoff should not be a big surprise when it finally occurs, which should help mitigate the degree of market turbulence engendered by lift-off. Nevertheless, I think it would be naïve not to expect some impact. After more than six years at the zero lower bound, lift-off will signal a regime shift even though policy would only be slightly less accommodative after lift-off than it is before. I expect that this will have implications for global capital flows, foreign exchange valuation and financial asset prices even if it is mostly anticipated when it occurs. Which leads to the key question I want to address in the remainder of my remarks: What should the Federal Reserve do to minimize the impact? Like other central banks, our monetary policy mandate has a domestic focus. Our monetary policy actions, though, often have global implications that feed back into the U.S. economy and financial markets, and we need to always keep this in mind.