that same $200,000 investment, the tragic con-sequence of

leverage working in reverse. The illiquidity of real estate

is another important factor for consideration. Exiting a

real estate in-vestment often requires time and patience,

par-ticularly so in a less favourable environment. The

average investor needs to consider the sheer amount of the

financial investment and the uni-queness of each property

asset. The illiquidity limits the flexibility investors have

when they need to realign their investments in accordance

with changing market conditions or changes in investment

needs.

The long-term nature of real estate in-vesting requires

it to be matched with stable, long-term cash flows.

Assumptions on income growth, interest rate trend and rental

yields are important, and when they do not materialise as

planned (or hoped for), the investment goes awry. In

addition, the size of the upfront capital commitment in real

estate investing makes di-versification within the asset

class difficult to achieve. The real estate investor has

the bulk of his investments locked into a few properties.

Seen from this perspective, real estate investing can be a

high risk venture. The risk does di-minish with a long-term

time horizon, but the rate at which Singaporeans turn over

their real estate investments suggests a shorter term,

high-risk attitude prevails.

Asia's love affair with real estate has been fuelled by

easy money and accommodative government policies. These

conditions are not present today. The era of supernormal

returns from real estate investing is over. Bankers are

licking their wounds from loans gone sour and have turned

wary about lending for real estate investment (as opposed

to home ownership). Having experienced the effects of an

over-zealous appetite for real estate, it is probable that

both of these factors are unlikely to be as potent in the

future. The new Asia requires that the bold assumptions of

old be tempered- stable interest rates, "guaranteed"