Gated Gardens.(Special Report)(Sentosa Cove)(Cover story)

Byline: Sonia Kolesnikov-Jessop

Singapore has basically two kinds of real estate -- luxury, or state-run.

Located just 10 minutes from Singapore's bustling docks, Sentosa Cove is a world apart. The road leading into the city's super-posh residential complex runs past a championship golf course framed in tropical jungle. Four years ago much of the reclaimed land was barren; today a 117-hectare gated community with homes more than $10 million apiece has risen to become one the most select addresses in Asia, replete with waterfront boardwalks, meticulous landscaping and a yacht club. "These people who buy here have a choice to live anywhere in the world," says Jennie Chua, chairman of Sentosa Cove Pte Ltd, "so it's heartening that they've chosen to buy a home here."

Singapore has long been a magnet for expatriates. It's an ideal gateway for business people who travel regionally but want their families to enjoy a clean environment and First World amenities, including top international schools and state-of-the-art hospitals. The city's emergence as a vital Asian financial hub has added to the lure in recent years, attracting hordes of well-heeled bankers and fund managers. Government policies have moved toward recasting the port city, with a population of 4.5 million, previously known for its buttoned-down uniformity as the Monaco of the East. To that end, two new casino resorts are under construction, and the city will stage its debut Formula One Grand Prix next year.

So what's the problem? Admission to the "Singaporean Good Life" doesn't come cheap. Singapore, perhaps more than any other expat hub, has a two-tier housing system. While 1 percent of the population lives in high-end luxury homes, like those at Sentosa Cove, 84 percent of the rest live in public housing as private spaces become more unaffordable. "Public housing in Singapore is just not for the low-income. It's for the middle-income and even the upper-middle-income," says Mah Bow Tan, Singapore's minister for National Development.

The situation won't get better any time soon. Increasingly, the city's competitiveness hinges on the arrival of ever more foreign professionals. Some 30 percent of its population today are foreigners, compared with just 14 percent in 1990. Singapore's declining birthrate means this ratio will increase further. A ...