The M Hotel in Singapore’s business district once struggled to fill its rooms on weekends as visiting executives tended to leave by Friday. Now it enjoys 90 percent-plus occupancy even on Saturdays and Sundays.

A prime destination mainly for bankers and businessmen, Singapore also has started drawing tourists with a slew of new attractions, the most popular being two casino-complexes built at a cost of over $10 billion that opened earlier this year.

The two casinos and their related attractions represent the new face of a city that wants to transform itself from regional trade and financial centre into a place for both work and play.

“I’m looking out of my window at the new skyline. What has developed over the last five years has been amazing,” Hanspeter Brummer, CEO for Asia at Swiss private bank BSI, said from his office which overlooks the new Marina Bay financial district.

“Singapore is more than just Monte Carlo, which is a bit artificial. Singapore doesn’t just have one industry but a number of industries. People really have good reasons to come here,” said Brummer, a Swiss national who worked in the city-state from 1997 to 2000 and returned in 2006.

Unlike the existing central business district, Marina Bay, built on reclaimed land around the mouth of the Singapore River, comprises not just office skyscrapers but also shops, residences, theatres and the towering $5.5 billion Marina Bay Sands built by U.S. casino giant Las Vegas Sands.

Marina Bay is also home to the world’s biggest ferris wheel, restaurants fronted by Michelin-starred celebrity chefs and the world’s first night-time Formula One circuit.

Over at Sentosa, to the west of the central business district, Genting Singapore’s Resorts World casino and its Universal Studios theme park opened in February. The $4.8 billion complex earned S$503.5 million ($369.9 million) before interest, tax and depreciation in the three months ended June 2010.

Should Resorts World continue to rake in similar amount of money in subsequent quarters, it would surpass all rivals in Las Vegas and Macau in terms of profitability, analysts say.

Las Vegas Sands has not yet reported earnings for the June quarter but CEO Sheldon Adelson has said he expects Marina Bay Sands to generate gross earnings of over $1 billion annually.

TOURISTS AND TAXIS

Although both casinos have yet to complete all their attractions, which include what will be the world’s largest oceanarium, they have already created new business for hoteliers and taxi drivers.

Visitors to the city-state of 5.1 million people rose by over a-fifth to around 6.5 million in the seven months to July from a year ago. Hotel occupancy hit 90 percent in July, up 10.2 percentage points, while room rates rose 20 percent on average from a year earlier.

Taxi drivers say their takings are up by as much as 30 percent, helped by increased business in the wee hours of the morning from casino patrons.

“The integrated resorts are a catalyst to bigger and brighter things. We are seeing more entertainment centres popping up… We are in the incipient stages of what we call a change in the structural demand for such services in Singapore,” said Vincent Yeo, CEO of CDL Hospitality Trusts which owns M Hotel.

“There are still many attractions that are not opened yet,” he added, citing the two casinos’ unfinished projects as well as government initiatives such as new landscaped gardens, a river safari and an area for motorsports.

CDL’s Yeo said the 90 percent occupancy levels will continue for several months until new hotels open, meaning visitors may have difficulty finding rooms from time to time.

PROBLEM GAMBLING

Singapore’s transformation began in 2005 when the government legalised casinos as part of a plan to double visitor arrivals to 17 million by 2015. Singapore attracted 9.7 million visitors last year, and the number could rise to just under 12 million this year if the growth pace continues.

The figures do not include the thousands who cross over from Malaysia daily by land. In the past, many came to work and returned the same day but a growing number are here to gamble as seen from the large number of Malaysian-registered cars in casino carparks.

Tourism currently accounts for about 7 percent of Singapore’s economy but could grow to around 12 percent by 2015 based on government projections on visitor spending, economists’ estimate.

The transformation has detractors though — from Singaporeans unhappy about the large influx of foreigners who have contributed to soaring property prices and crowded roads to those who fear the casinos will bring with them crime and other vices.

The tiny city-state has long been a centre of trans-shipment and regional finance, coupled with strict government control over its people. It has near-zero crime and sparkling clean streets but also flogging, the death penalty, and a ban on chewing gum.

While Singapore appears to have successfully prevented a rise in prostitution and loan sharking, there has been an increase in problem gambling.

According to local TV station Channel NewsAsia, Singapore’s National Council for Problem Gambling has seen almost as many problem gambling cases in the first half of 2010 as it did for the whole of 2009.

JOBS, OPPORTUNITIES

Economists such as Citigroup ’s Kit said Singapore had little choice but to develop tourism, as it needs to create relatively low-skilled hotel, restaurant and retail jobs to replace those lost at factories that move to China and other cheaper places.

“Rebranding Singapore as a global city and tourism hub fits in very well with its natural advantage, which is its strategic location in the centre of Southeast Asia and good transportation links,” said Kit.

“If well managed, services can be a more sustainable source of competitive advantage than manufacturing, which is footloose and very price-sensitive,” he said.

Singapore’s manufacturing sector, which accounts for one quarter of the economy, shed jobs in the second quarter of 2010 despite expanding at a 44.5 percent year-on-year pace. The services industries, in contrast, continued to create jobs despite growing at a much slower pace of 11.2 percent.

The government has warned manufacturing will slow in the second half, although growth for the full year will come in at 13-15 percent, which will make Singapore the world’s fastest-growing economy.

“Manufacturing is going to slow down, but you’ll see stronger contributions from services in the second half as the integrated resorts ramp up,” said Endre Pedersen, who helps manage $16 billion in fixed income assets at MFC Global, the asset management arm of Canadian insurer Manulife.

Pedersen is betting on Singapore dollar-denominated bonds as he sees the local currency rising faster than most other Asian currencies against the dollar.

DTZ, meanwhile, says Singapore commercial property are undervalued by 9-12 percent, given the strong demand for offices and mall space that has arisen as Singapore attracts more banks and tourists. It ranks Singapore as the third most attractive city for investments in retail and number eight for offices on a risk-adjusted basis.

As for stocks, most analysts see few opportunities, noting the share prices of Genting and hoteliers such as CDL have already rallied this year.

Nomura analyst Tony Darwell warns of potential downside arising from slowing visitor growth as the novelty factor of two casinos wear off. CDL’s Yeo argued, however, that casinos are more likely to attract repeat visitations than other attractions.

To Citi ’s Kit, the risks facing Singapore’s shift to services and tourism are more long-term.

“We’ve developed the hardware but we’ve not got the software yet. At the lower level, Singapore still needs to develop a more service-oriented culture,” he said, referring to high turnover of staff at hotels and restaurants.

“To be a global city also requires a more open mindset and willingness to accept alternative views even if they are poorly formed.”

singapore stock market,singapore stock market news

Stock futures surged Wednesday after upbeat signs of growth in China and Australia lessened worries about a global economic slowdown.

Overseas markets rose sharply after reports showed the pace of growth in China’s manufacturing sector rose in August for the first time in four months and Australia economy grew by the fastest pace in three years during the second quarter.

The sharp jump in U.S. stock futures is surprising given the domestic economic reports due out later in the morning. Traders in the U.S. are waiting for the Institute for Supply Management’s monthly manufacturing report and payroll company ADP’s report on private employment.

Often investors don’t make big bets heading into key economic reports, particularly in recent weeks as data has consistently showed growth is slowing. Both the ISM manufacturing and payroll reports are expected to follow that trend.

Stocks have been volatile over the past month because traders are unsure about the direction of the economy. Data continues to point to meager growth, but exactly where the pace of growth settles remains a major question. By sending stocks lower throughout August though, traders were betting that weak growth will eventually be a drag on corporate earnings.

Ahead of the opening bell, Dow Jones industrial average futures rose 98, or 1 percent, to 10,104. Standard & Poor’s 500 index futures rose 12.50, or 1.2 percent, to 1,060.80, while Nasdaq 100 index futures rose 24.50, or 1.4 percent, to 1,791.00.

With stock markets rising worldwide, U.S. Treasury prices dropped and interest rates rose. The yield on the 10-year Treasury note, which moves opposite its price, fell to 2.52 percent from 2.47 percent late Tuesday. Its yield is often used as a gauge to set interest rates on mortgages and other consumer loans.

Economists polled by Thomson Reuters forecast the ISM manufacturing index slipped to 53.0 in August from 55.5 a month earlier. Any reading above 50 indicates expansion in the sector.

Regional surveys of manufacturing activity in recent weeks also pointed to slowing growth in the sector, which had been among the strongest during the first half of the year.

Economists expect the ADP report will show private employers added just 19,000 jobs last month after hiring 42,000 new workers in July. The slowdown in hiring during August is further evidence that the jobs market remains weak.

Employers are avoiding making any new hires in large numbers because of the uncertain direction of the economy. They are also worried about the potential impact of government health care and financial regulation reforms as well as possible increases in taxes.

With unemployment still high, people concerned about their jobs have cut back on spending, which has further slowed growth.

The ADP report is often considered a gauge for the government’s monthly employment report, which is due out Friday. The Labor Department’s data also includes government employment so it is a broader reading on the jobs market.

Economists expect the government report to show 100,000 jobs were cut last month, but that was largely due to laying off temporary census workers. Private employers likely added just 41,000 jobs last month.

Overall, the unemployment rate is expected to have climbed to 9.6 percent last month from 9.5 percent in July.

Australia’s S&P/ASX 200 index jumped 2.1 percent on the upbeat growth report. Hong Kong’s Hang Seng index rose 0.4 percent, while Japan’s Nikkei stock average rose 1.2 percent.

European markets followed Asian markets higher. Britain’s FTSE 100 rose 1.5 percent, Germany’s DAX index gained 1.1 percent, and France’s CAC-40 climbed 1.8 percent.

singapore property market,singapore property market news

So what are some of the changes? To summarise, the latest round of anti-speculation measures for private properties are as follows:

Increase the holding period for imposition of Seller’s Stamp Duty (SSD) from the current one year to three years.
Increase the minimum cash payment from 5 percent to 10 percent of the valuation limit and decrease the Loan-to-Value (LTV) limit for housing loans granted by financial institutions regulated by the MAS to these buyers from the current 80 percent to 70 percent for property buyers who already have one or more oustanding house loans at the time of the new housing purchase.

The changes for HDB flats are as follows:

Increase the Minimum Occupation Period (MOP) for non-subsidised flats to 5 years.
Disallow concurrent ownership of both HDB flats and private residential properties within the MOP.

I have only extracted the relevant portions, however if you are interested to read up on the complete list of changes, they can be found at www.mnd.gov.sg and www.hdb.gov.sg.

The Market IS Cyclical

The property market is cyclical by nature. While it is hard to predict the duration of each upswing or downturn, at some point the market will certainly change direction. To illustrate, Figure 1 shows the URA Private Property Price Index (PPPI) from the first quarter of 1975 to the second quarter of 2010 and the areas in red show phases of market contraction. Thus it is quite clear that growth will not carry on indefinitely and the question is not if prices will start to drop but when.

Figure 1: URA Private Property Price Index (PPPI) from Q1 1975 to Q2 2010

With the latest round of anti-speculation measures, we think the real estate market will start to drop. So what does this mean to property buyers?

If I was thinking of buying an investment property, I would sit out until the dust settles. However, if I have ample cash to spare and am looking for a property for my own stay, the next few months may present an opportunity to look for good deals as owners attempt to comply with new monetary and ownership guidelines.

What about property sellers? If I was set on selling my property, I will not hold out for a higher offer and proceed with the sale when I get my asking price. Although all of us hope to milk our property for all its worth, it may not be realistic to expect significantly higher offer prices in the near term, given the tightened lending conditions and increased property supply.

When will we see the effects?

Presently, there is still some sense of cautious optimism. After all, the property market continued to grow rapidly despite the last two doses of anti-speculation measures. So will the market remain unscathed? I think not.

A good analogy to describe the property market would be an ocean-liner. Unlike a car that can start and stop almost instantaneously, an ocean liner responds much slower due to its massive size and momentum. To stop an ocean-liner, the propellers would have to go in the reverse direction to gradually bring the vessel to a stop.

Similarly, the propellers of the property market are already in the reverse gear. Although the market’s momentum could still carry property prices upwards for a while longer, the effects of the cooling measures will eventually kick in.

On the other hand, even if this round of measures are not able to break the proverbial camel’s back, you can bet that the Singapore government has other straws to do the trick. Ultimately, we should not doubt the government’s will to bring property price appreciation in line with “economic fundamentals”. However, what the magic figure is (for economic fundamentals) is anybody’s guess.

Singapore 25th most expensive city for travellers

Singapore has been ranked as the world’s 25th most expensive city for business travellers from the United Kingdom, up from 44th spot last year, according to the Global Hotel Market Survey.

The leap in Singapore’s ranking is in line with reports from the Ministry of Trade and Industry saying that the average room rates in the country have increased 20 percent this year.

Hong Kong leapt seven places to become the world’s third most expensive city for UK travellers, posting a 13 percent growth in the local currency because of increased demand from the banking and finance sector.

Among the cities surveyed, Hong Kong saw the highest growth, with an 11 percent and 17 percent increase in Q1 and Q2, respectively.

Moscow remained the most expensive city for UK travellers despite a weaker rouble.

Abu Dhabi dropped six places to rank eight this year from second spot last year. It recorded the highest average room rate decline of 25 percent in the local currency.

British buyers lose interest in Southeast Asian properties

Cash-strapped British buyers seem to have lost interest in properties located in Southeast Asia, based on data released by RightMove Overseas, a leading property website in the UK.

The results of the report, which compared search statistics between July 2008 and July 2010, do not bode well for countries in Southeast Asia which have earlier enjoyed great interest from British buyers.

Malaysia and the Philippines were the two biggest losers, recording 67.30 percent and 76.39 percent in search activity, respectively. Meanwhile, Thailand witnessed a 51.07 percent drop in interest, said the report.

“Two years on from when the Credit Crunch first started to really bite, it’s clear that the overseas property market is radically different. Many of the market dynamics that used to be in place have gone, some would argue for good. For example, you’d be hard pushed to find a casual investor looking to make a quick buck by flipping off-plan apartments in out of the way places, availability of mortgage finance is much harder and many businesses have failed to adapt to the new conditions,” said Robin Wilson, head Overseas at Rightmove.

Mr. Wilson, however, noted that British interest for overseas properties has not declined. “People are still dreaming about a life abroad. What’s clear is that whilst only a few countries have really bucked the trend and gained on their 2008 position, there are big gaps in how fast some countries are recovering, if at all.”

“Dubai in the United Arab Emirates has been hit very hard, struggling to regain the peaks it saw at almost 80 per cent fewer searches than 2008. Eastern Europe has also taken a battering with previously hot destinations for investment returns falling out of favour. At the other end of the scale, Germany is the undoubted success story. It’s maybe not as glamorous as France or Italy, but has many of the same benefits and seems to be carving out a niche of its own. On this evidence it’s certainly undervalued and overlooked.”

Thailand ranked 17th in its Top 20 list of most searched nations, making up 0.85 percent of all enquiries. It is the only country in Southeast Asia to be part of the list, though it fell 14 notches in the chart.

That is the question. Well at least one important question.

Many investors get locked into the routine of a strategy without really questioning is it relevant today and in these market circumstances. Yes we can be creatures of habit.

I like leverage – in many forms and investment classes. Although I have no gearing at the moment and this is the lowest rate of gearing I have had as far back as I can remember. There are a number of reasons for this.

I believe you only want to gear when opportunities abound. And right now I can’t say that I see much value in any market whether that is shares or property. Now I realise there is still a case to gear property in some situations but that is beyond the scope of this editorial.

But say for shares I believe one gears at the bottom of the market where there is much scope for increases. And as a market climbs higher so does the risk and this is the time to reduce gearing. In my view it is best to use gearing in an inverse manner to risk. High risk low gearing. Low risk high gearing:

click to enlarge

I would not gear at the moment for the long term. Not so much that we are at a market high but rather that the propensity for gain is not high – but the risk for a fall is still high. We are sort of ‘twixt between’ - sort of no-man’s land. The case is not clear cut. Should we see a decent market retreat then the one might relook at gearing.

There is also the risk of interest rates climbing higher and without getting into the pros and cons of ‘variable or fixing’ such uncertainty is only an added risk. If the prospect of a great return was more likely then we may accept some level of gearing at a higher interest rate.

The only caveat to the above is that I may look at gearing for short term trades. When we use derivatives we are gearing. If we are using money where the family home is security and we are using this for derivatives – as some people do – this is a highly toxic mix!

So there is ‘no hat fits all’ when it comes to gearing. So the above is not a finite answer on the subject but rather some issues one might contemplate in the decision making process.

S’pore’s richest keep getting richer

The latest list of Forbes wealthiest individuals and families in Singapore indicated that the top 40 richest Singaporeans are now worth US$45.7 billion (S$62 billion), up 17 percent from US$39 billion in 2009. The list is made up of popular entrepreneurs, business leaders and philanthropists.

In the number one spot again this year is the family of the country’s richest man and late property tycoon Ng Teng Fong. Mr. Ng, who passed away in February, has a net worth of US$7.8 billion, a slight drop from US$8 billion last year after a stake in HK developer Tsim Sha Tsui Properties fell 18 percent in the past one year..

The Khoo family, who has a minor stake in Orchard Parade Holdings and owns Goodwood Group of Hotels, still stays on in second place with US$5.9 billion.

Wee Cho Yaw, chairman of United Overseas Bank, came in third and has assets worth US$3.6 billion. He was among the two biggest gainers in dollar terms. Mr. Wee regained the third position after adding US$500 million to his wealth. 

According to Forbes Asia magazine, the increase in collective net worth highlights Singapore’s economic resurgence. The country is set for record growth this year after contracting by 1.3 percent last year. The official growth forecast for 2010 was revised upwards in June from 7 to 9 percent to 13 to 15 percent.

Construction costs may rise, say experts

Singapore’s construction costs may climb by as much as 6 percent in 2011 when government rules that restrict foreign workers set in, according to several property experts.

Among the manpower constraints that will start this month include a rise in the foreign worker levy and a reduction of man-year entitlement, restricting the number of foreign workers on a site. A new rule that will limit noise in construction sites will also be implemented in September.

Experts claimed that the changes may drive up overall costs and prolong the duration of projects. Several industry players are also concerned about the rising cost of crude oil and volatility in commodity prices.

“For this year, we think there’ll be an increase in the order of 3 percent. For next year, we expect it to be a little higher, probably in the range of 5 to 6 percent. Construction demand is the key driver in terms of price escalation, tender price escalation,” said Winston Hauw, managing partner of consultancy firm Rider Levett Bucknall.

The latest quarterly Real Estate Sentiment Index indicated that 9 out of 10 respondents, which include market watchers and developers, are concerned about increasing land prices.

Meanwhile, 76 percent are worried about the increase in labour costs and building material.

The index is jointly developed by the Department of Real Estate at NUS and the Real Estate Developer’s Association of Singapore (Redas). Redas hopes the index will become a forward indicator for the sector and an authoritative quarterly index, said Steven Choo, chief executive of Redas.

“It will provide the market with an idea of how the real estate development players perceive the market, so it will benefit the investors and guide them in their decisions,” he said.

Mr. Choo added that the index could influence policy directions, as well as provide insight to developers on industry trends.

Rule #1: Latour and Lafite-Rothschild Are Not the Only Worthy Wines

Relative to all wine that exists, only an exceedingly limited number of wines are considered investment-worthy.

And that universe largely spins around the very top end of the Bordeaux market.

Atop the list are the five Premier Cru (first growth wines) that always have big demand globally: Lafite Rothschild, Margaux, Latour, Haut-Brion and Mouton Rothschild. Chateau d’Yquem is the first growth Sauterne.

For historical reasons I won’t bore you with, several of the most-sought-after, most-expensive, most-collectible Bordeaux are not on the official first-growth list, which dates to 1855. That includes names like Petrus, Ausone and Cheval Blanc. They command big dollars, big respect, and tend to be some of the best investments over time because of the huge demand among oenophiles.

But that doesn’t mean investors must shop only at the top of the pile. Just as Wall Street has Blue Chips and then a bunch of other worthy investments, so, too, does wine.

Many second- through fifth-growth wines make excellent investments. And the reason is practicality.

Restaurant-goers can’t always afford a bottle of Latour or Ausone, but many do afford bottles of Léoville-Las Cases, Calon-Ségur, Troplong Mondot and Lynch-Bages. For investors, those names and others offer excellent profit opportunity.

The 2000 vintage of Ducru-Beaucaillou, a popular second-growth chateau from one the few top-notch vintages of the past 10 years, has generated a 9% annual gain since its release early last decade. Had you grabbed cases of this wine at the height of the global financial panic, you’d be sitting on rebound returns of about 35% annually since November 2008.

Lynch-Bages, perhaps the most-popular fifth growth, has seen a similar trajectory, as has second-growth Pichon-Lalande and many others.

Outside of Bordeaux, numerous Burgundies are investment-worthy. Particularly, prized names such as Domaine Romanée-Conti, or just DRC.

Also worthy are some Italian Super Tuscans (Sassicaia, Gaja, Solaia); Champagnes (certain Dom Perignons, Krugs, Louis Roederers); Spanish reds (Alvaro Palacios L’ermita, Dominio de Pingus) and vintage ports from Portugal (Fonseca, Quinta do Noval Nacional).

California has a selection of über-elite “cult” cabernets and pinot noirs that soar in value. But most are mailing-list wines — meaning, you can only buy them if you’re on the wineries’ mailing list.

And getting on the mailing list is often a years-long process … and even then you’re typically only allowed to buy between three and six bottles because production is so small and demand so high.

This limits profit opportunities in California cult wines because the wine market wants liquidity, no pun intended.

Rule #2: Buy Great Vintages over Good Vintages

In any given year, some producer in Bordeaux or Burgundy or wherever will produce a stunning wine that earns major plaudits.

But that’s not good enough as an investor.

Consumers of fine wine know little about the 2008 Bordeaux vintage or the Napa Valley cabernets circa 2003 and ‘04. Those vintages were pretty good. But they weren’t great.

Wine lovers know a lot, however, about the 2003 and 2005 Bordeaux, and the 2007 Napa cabs. Burgundy lovers know a great deal about the 2005 vintage, and Champagne fans can rattle off all sorts of information about 1997.

All were classic vintages, some of the greatest in recent history.

As an investor, you want to put your money on the vintages investors and the media know and write about.

That’s where the demand exists.

It’s also where the quality exists. The chateaux in Bordeaux across the board produced amazing wines in 2005, giving investors a greater selection of wines to invest in at all price levels from about $75 a bottle on up past the four-figure mark.

As such, restaurants in 2014 will be clamoring to buy 2005s across the spectrum. But they will consider very few 2004 offerings. They know customers will see “2005” on the menu and will quickly recall what a great vintage that was, and want that wine.

As I mentioned last week, I encourage new wine investors to start their effort with cases of highly rated 2005 Bordeaux, available for between $2,000 and $4,000 a case … names like Ducru-Beaucaillou, Pape Clement, Pavie-Macquin and others.

Based on the historical performance of wines of this caliber, I would expect these cases to fetch between $6,000 at the low end and upward of $12,000 to $16,000 at the high end by the time 2015 rolls around.

That would mark annualized returns of 12% to 15% for the decade from 2005 to 2015, but returns of 20% or more for investors buying now.

The returns won’t come in a static, straight line. Wine prices bounce around … and I would use any meaningful bounces to the downside to grab a few cases here and there at attractive prices.

Rule #3: Where You Buy is as Important as What You Buy

Even if your local mini-mart, through some magic, ends up with a case of Chateau Le Pin, the ultimate Bordeaux cult wine, the resale value at auction will be marred by the “provenance,” or the wine’s history. (More on that in a moment.)

Auction houses and collectors want to see that your wine comes from reputable dealers or, preferably, from the winery directly.

That way they know the wine is authentic. Specifically, they want you to prove the wine’s provenance.

With Bordeaux, you’ll be buying from wine merchants, since the chateaux don’t generally deal directly with consumers.

California’s most collectable/investment-worthy wineries work on a direct-to-consumer model, though you can also find some of the more-sought-after cult wines in high-end wine shops online or in major American cities. Sorry, but the average wine retailer or, worse, grocery store is generally not the place you want to be buying wine for investment purposes.

Rule #4: Keep Meticulous Records and Store Wines Properly

This goes hand-in-hand with provenance and buying from reputable sources.

You absolutely must keep good records on your wine purchases, and you absolutely must keep wine properly stored.

Wine is a living creature. It evolves over time. Indeed, high-end Bordeaux, Burgundy and California cabernet makers build their wines to age. You can drink them early, sure. And they’ll be darn good.

But the best a fine wine can be won’t appear for many years.

Yet you can’t just stick your bottles in a cheap wooden wine-rack on top of the refrigerator or in a bedroom closet and go about your day.

Hot wine matures too rapidly and spoils. And the relatively dry conditions in a typical home cause corks to dry and shrink. That lets oxygen seep into the bottle, oxidizing the wine, or making it “skunky.”

Skunky is bad. No one will buy that wine.

And buyers know when a collector has improperly stored wine. Because a shrunken cork allows some wine to evaporate out of the bottle, the missing wine is obvious when a bottle is held up to a light.

Optimal conditions: A custom-built cellar or a pre-made wine cabinet that keeps bottles around 55° to 58° with a relative humidity of 60% to 75%.

You can buy an environmentally controlled wine cabinet for a couple thousand dollars that will hold 100 or so bottles, though much bigger units also exist. A custom-made, closet-sized cellar starts at about $5,000 if you have someone build it … and can run many thousands more, depending on your wants.

Or, in bigger cities you will increasingly find wine-storage facilities that make a market in maintaining proper cellar conditions for investors/collectors. Google “wine storage” and your city and you’ll likely come up with a few. Heck, I even have one here in South Louisiana, attached to a self-storage center.

As for records, keep receipts on every bottle you buy from wineries or dealers. They are proof of provenance. This is your way of showing a buyer or an auction house where your bottles originated.

That goes a long way in alleviating concerns that a wine is a forgery, which is a big concern with wine collecting/investing.

Plus, it offers greater assurances that the wine has been properly cared for.

Perfect provenance: Proof that you are the wine’s only owner and that the bottles came from the winery directly or through a respected merchant who bought them directly from the winery (generally the case for Bordeaux).

Directors at Sotheby’s auction house have told me that without the proper paperwork – without provenance – a case of wine can lose 20% to 30% of its true value.

Rule #5: High Ratings are a Must! … Though Exceptions Exist

Rightly or wrongly, ratings issued by widely followed wine critics affect the perception of a wine’s value.

That’s because ratings have become the great equalizer and a de facto standard by which investors/collectors trade wines.

No two palates are the same. I might think the 2001 Chateau d’Yquem I mentioned last week is the greatest liquid I’ve ever tasted.

Someone else will say it’s cough syrup unworthy of the price.

But because the wine market puts its faith in the palates of a tiny lot of critics, buyers know what to expect from a 95-point wine … or an 80-point wine. That provides a measure of comparability that lets wine trade like a standardized commodity.

Las Vegas Sands tops estimates as Asia outperforms

Adjusted EPS 17 cents vs estimate 9 cents

* Revenue up nearly 51 pct

* To amend $5 billion US credit facility

* Shares up 2.3 percent

By Deena Beasley

LOS ANGELES, July 28 - Las Vegas Sands Corp <LVS.N>, the casino operator run by billionaire Sheldon Adelson, posted a better-than-expected quarterly profit on Wednesday, aided by strong performances at its new Singapore resort and in Macau.

Sands, whose shares rose 2.3 percent in morning trading, earned 17 cents a share in the second quarter after adjusting for one-time items. Analysts on average expected 9 cents a share, according to Thomson Reuters I/B/E/S.

Net revenue rose nearly 51 percent to $1.59 billion.

“They had a monster quarter,” said Sanford Bernstein analyst Janet Brashear, adding that much of the outperformance was driven by better-than-expected profit margins.

Gambling revenue in Macau, the world’s largest gambling center and the only place in China where gambling is legal, has soared this year, most recently rising 65 percent year-over-year in June.

Sands said second-quarter net revenue at its three Macau properties rose 41 percent from a year earlier to $1.03 billion, while adjusted earnings before interest, taxes, depreciation and amortization increased 74 percent to $307 million.

Singapore’s Marina Bay Sands generated $94 million in EBITDA in its first 65 days of operation. The $5.7 billion casino resort began operating in April.

In Las Vegas, where a glut of hotel rooms has led to rate discounting, EBITDA fell to $66 million in the second quarter from $78 million a year earlier.

“With property performance better than our expectations in Macau and Singapore, and with the Las Vegas Strip weaker than expected, we believe Asia will be the key driver of the story, and the report is bullish for the shares,” Jefferies and Co analyst David Katz said in a research note.

HIGH HOPES

Chairman and Chief Executive Officer Adelson said during a conference call that he still expects the Singapore resort to bring in $1 billion in EBITDA next year, due in part to a broader-than-expected customer base.

“There are so many people that are coming from different countries in Asia … We have a group of Koreans flying in every week,” he said. “I think that the outer reaches of our marketing radius is wider than what we thought before.”

The company has lined up financing for development of two sites in a section of Macau known as the Cotai Strip, but construction has not yet started due to government requirements for the hiring of local workers.

Company officials said they are confident the Macau government will not let the project continue to stall, but they reported no tangible progress on a construction start date.

Chief Financial Officer Kenneth Kay said highly-leveraged Sands plans to launch later this week an “amend and extend” transaction for its $5 billion U.S. credit facility.

“The transaction contemplates a paydown of our term loans and a reduction of a revolving credit facility commitment in exchange for the extension of maturities and other modifications to the credit agreement intended to increase the company’s financial flexibility,” he said.

After payment of preferred stock dividends, Sands had a second-quarter net loss of $4.7 million, or 1 cent a share, compared with a net loss of $222.2 million, or 34 cents a share, a year earlier.

In addition to Singapore’s Marina Bay Sands, Sands owns the Palazzo and Venetian resorts on the Las Vegas Strip, three casinos in Macau and a casino in Pennsylvania.