The Herd Instinct

As an agent, I have seen such an acute demonstration of herd instinct in this country. Once I was renting out my client's shop space. It was small, about 400 sq. ft. I received some 45 calls.... all asking about the suitability of the place for bubble tea business.! After the 8th call, I answered all the callers, "You need it for bubble tea business?" "How do you know", asked the person on the other line.
"So boring.... can't you people think of other better business to do?" I told the potential tenants that my client's unit was not suitable as I did not want their business to collapse. Finally, the unit was rented out to a dentist who set up his second branch of practice. His practice is still in operation.

Indeed the bubble tea business did burst after a while. The pioneers of the bubble tea business did very well, and in their tracks were hosts of other copy cats who collapsed like a pack of cards! Next came Papa Roti where queues of people formed to have a go at the tasty and fragrant bread. Soon copy cats sprouted everywhere.... with names like Roti Boy, Mama Roti, etc. Again, the novelty soon wore off. What is next?

When property price was very low, I advised many of my friends and clients to invest. "Now is the time to buy, if you have the cash", but my advice fell on deaf ears. "What if the price went down?" echoed most of their anxious pleas. I remember my pastor had once mentioned that when price is low, we can go for it, because no one knows what is rock bottom. When price is high, and we can make reasonable profit, sell and be contented with the profit... because no one knows what is the peak. Now that price has gone up, everyone is jumping on the bandwagon. It is difficult to understand why people are willing to pay $2,000 to $3,200 per sq. ft. for a 99 year leashold property when good, solid freehold properties at Orchard Road are only going at about $1,200 to $1,500 per sq. ft. (I am not referring to new developments). My clients bought a unit at Grange Heights at $2.28M and now the same unit is calling for $2.8M after 2 months!!

Now, agents are having a stalemate with some of their sales. On the one hand are sellers who think their roofs are suddenly made of gold. On the other hand are buyers who have missed the boat when the price was low, and who regret and will keep regretting as the price is climbing up steadily. For this group of buyers, they will have to wait for the next downturn of properties. However, I will not be surprised if they still repeat the same procedure and forget the lessons they have learnt.

Sigh! When will we ever try to be more creative and analytical instead of always following what others are doing? Is this a reflection of our educational system in the past which had produced rote learners? I am glad the government has realised this and this is why now the government is emphasising more on creativity, business entrepreneurship, etc. Well, at least, better late than never.