NOW IS THE TIME ?!

Peace be upon us again! – The US election mayhem is over.
Life can continue, however, in line with the new normal, which is still sort of disgusting, unless you manage to find the cloud’s silver lining.
The new normal is, that the markets and many economies are a total mess. International stock values and their actual economies are strangely out of sync.
Take the Dow Jones Industrial Average Index. It looks great. It consists of out-and-out survivors. Failed and small business do not enter the stock market, and yet, they do represent the vast majority of business ventures.

And closer to here in Bali, how to explain that UbudProperty in this challenging year is having more property inquiries than ever and recently achieved the best single sale since opening for business in 2004?
From early this year on most business and shop owners in Bali fell on hard times, as tourism is not happening at all. On the other hand, we see this strange surge of interest into property investment.
Could it be that people feed on their experience that ‘also this is going to pass’, and the saying ‘make hay while the sun shines’?

To avoid wasting your time, I need to tell you now that this month, due to conflicting events on the political stage and the global covid-19 developments, we will not look at details concerning property issues here in Ubud, or Bali. Who really has now the nerve for that?

If you cannot take the time for some moments of chit-chat, just click away now.
No offense taken.

If you are still with me, let’s first wonder why most Indonesian banks are bursting with savings-funds. This often happens towards the end of the financial year when businesses are looking at their result so far. Profit has been accumulated, and is still not distributed to the shareholders. But this year many had to bite into their savings, just to keep going. Still there are oodles of money in the banks, probably from the good years before.
The resulting interest in land or commercial project purchase actually prevents prices from dropping like rocks in the pond. However, most prices for commercial and residential property are moving down. But: Ho lo mo? I remember a Korean guy in Brisbane, who asked me like this to find out when the next bus is coming. He probably meant: ‘how long more?’
Anyway, if there is this incentive to increase your wealth through buying now, why then would also private investors keep the Dollar at zero or little interest in the banking system?

It pays to be wary of the banks anyway. They are not here to make you rich. (unless you hold their shares)
I touched this issue last month already. Do you remember that the very moment we hand our money over to a bank, legally the bank becomes the owner? Coming to think about the possible consequences should be a sobering thought.

Here is a recent example of apparent mis-management by a large Malaysian Bank, which is also operating with many branches in Indonesia. The following advice was posted by legal advisors to the bank’s clients:

‘Seems like maybank is the only bank doing this. (freezing people's account before they are adjudged a bankrupt ) Call them again and ask them for the exact Section Number in Bankruptcy Act. If they cannot give you the section number, send them a Letter of Demand. Next month, ask your employer to pay you by cash. This is your right under ... and so on.

Another odd case:
Everyone knows that Donald Trump, after 20 Jan. 2021, will be open for legal action due to questionable business dealings and taxation matters. There is talk by insiders, that the Deutsche Bank, to who the Trump businesses owe 340 Million Dollars, is considering wiping out this debt, in order to dis-associate themselves a.s.a.p. from the damaging image of Donald Trump still being a client there.
For the Deutsche Bank giving up 340 million USD is merely a drop on a hot stone. But the point is, if the board of Directors can decide wiping out this amount they are trusted with, and doing so without that the clients have any chance of approving or disapproving this action, how can a bank’s customer keep his trust in the system? Imagine, if there would be one day entire countries de-faulting their credit with a Central bank, which is ending up managing your funds. Where is your security? “Sorry Sir, we have momentarily a problem. Can you wait?”

Looking at the roots of all, traditionally trust has been the basis for us handing our money over. Maybe some thought of the money as a physical thing, looking at the 100 Dollar note in the hand and feeling good. Next day, when passing it over the bank counter, we are imagining that now somewhere it is in the system, sort of with our name on it. But you know already, this is not how it happens.

To start with, there is nothing inheritable valuable about the Dollar, Euro, Gold, Silver, or even digital money.
The only reason that these things have value is, because we all have decided that they should. And because we decided that, they do.
Whatever we use as money is basically a collective fiction, like a collective story, we tell each other about value.
Think about this again, when leaving more money in the bank than would be needed, to let’s say, overcome an income-poor period of about 6-12 months, maybe slightly longer, like at present.
All investment giants, and 99% of those mortals among us who handle their money well, advise that funds should be placed in various baskets. One of them is the ever safe option: A property basket. Property, to be bought in particular, when prices are stagnant, or even falling, as right now, based on the Corona-scare.

Well, having used the bad word Corona already, I can only agree with you, that there is still so much conflicting information coming down on us, that it is useless to speculate about the near-term future. Some Countries have begun vaccine administration.
Medical experts warn against too early adoption of any vaccine, pointing towards the drama with the first anti-polio treatments, which killed many infants in Africa. So there is no definite timeline towards the end of the new normal, as long as politicians are scared to lose their position, should they not be going to the edge with new regulations and restrictions.

The city of Wuhan in China with 11 Million people is now completely Covid-19 free, making it the safest city in the world. Who could have guessed so a few months ago?
Whereas before Christmas 2020 the western world still gets hit with daily increasing record case numbers. E.g. today, when writing this, 160.000 new cases per day in the US alone.

Is maybe Sweden providing the shining path to follow, as many said this summer? No restrictions there whatsoever and in 2020 Sweden recorded so far the lowest general mortality rate for many years.
However, the initial and amazing success story of the public health response there was recently toned down. Today more than 85,000 people out of 10.3 Million Swedes have contracted the virus and 5800 people have died with it – but the streets in Sweden remain jam-packed and face masks are few and far between.
How to know which way to go? Who’s advice to follow? What to believe into?
Belief actually translates into: Not Knowing. Surely we better do not believe we are anywhere near safe yet.

Because of that, let’s grab a hold at something eternally solid instead, and continue thinking about property as the time-proven safe asset.
Maybe you are on the road towards buying property in Bali to add to your life’s quality. If so, please do not be over-confident in assuming you know enough to pull this successfully off all alone, or together with the all-knowing person from the front office or the taxi driver.
Unfortunately, over-confidence is not countered by under-confidence. We systematically overestimate our knowledge and ability to predict outcomes. What is surprising, experts suffer even more from over-confidence than laypeople do. If an economics professor is asked what the land prices in Ubud will be like in 5 years, he may be as far off the mark than a parking assistant will.

Please do not take offence when I suggest that we all , you and me, tend to be rather over-confident. It is like the danger of losing something, which stimulates us much more than the prospect of making a similar gain. (similar illogic is found in investors who cannot part with their shares when they drop below acquisition price).
Let’s assume you have long dreamed of preparing for retirement near Ubud. Owning a place which even can be rent out when you are on a cruise, or spending the warm season in the Country you grew up in. You favor a rice paddy- plus a river view. Only a handful of such plots are left. Three remain, then two and now just one. The thought may be racing through your head: give in and buy the last plot, although at an inflated price.

The fear of regret can be tricking into thinking this was a one-time opportunity, when in reality the sale of stunning property isn’t going to stop anytime soon and property with a great view will always come on the market.
Therefore, is there a valid reason why not to ask a reputable real estate agent, such as UbudProperty for free advice on a matter of such importance? Note here the emphasis on ‘reputable’!
How do you recognize the difference? There is a clear indicator: true experts realize the limits of what they know and what they do not know. If they find themselves outside the circle of their competence, they honestly say: “I do not know”.

The good agent will also be most likely in an association, which controls that the agent follows their fiduciary duties to the client. They are set up to monitor the market, hunt for good properties, guide you, share their knowledge, prepare all legal documentation for the Notary office, and, of course, eventually hope for a commission, which will be paid by the vendor. Above all, the clients interest will always come first at such a place. Now, where else do you get FREE professional guidance, even long after the transaction was finalized? UbudProperty is the big well-known fish in our small local pond. The combination of long-term experienced staff, the Company’s business ethics and a solid measure of local knowledge will make sure that over-confidence or rushing into a deal are not ruining your chances towards a great purchase. We are known for helping with clear thinking when it comes to choosing and negotiating.

It is likely that you will remember this advice, based on your evolutionary history. One stupid mistake and you were dead. Everything could lead to the rapid departure from the game of life- carelessness on the ancient hunt. An inflamed foot, exclusion from the group and so on. Homo sapiens who were reckless or gung-ho died before they could pass their genes on to the next generation. Those who remained, the cautious, survived. We are their descendants.

Looking forward to welcome you in our office. We are similar.

Warm regards,

Ray for the Team of UbudProperty