singapore property weekly issue 132

8/13/2019 Singapore Property Weekly Issue 132

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Issue 132Copyright 2011-2013 www.Propwise.sg . All Rights Reserved.
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CONTENTS

p2 How an Average Earner Can Become a

Multi-Millionaire Property

Investor [Reader Story]

p7 Singapore Property News This Week

p13 Resale Property Transactions

(November 13 November 19)

Welcome to the 132 th edition of theSingapore Property Weekly .

Hope you like it!

Mr. Propwise

FROM THE

EDITOR
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SINGAPORE PROPERTY WEEKLY Issue 132

Page | 2Back to Contents

By Mr. Propwise

Recently I had a reader of Propwise.sg writein to share her story of how she built up amulti-million dollar property portfolio in the

span of over ten years, despite being just anaverage earner. Id like to share her story,and have also added in some of my ownremarks. I think it is a great illustration of howeven an average employee, with somewisdom and of course a dash of luck, can

build up significant wealth over a period of time. Id like to thank the reader, lets call her KT, for generously sharing her story.

How an Average Earner Can Become a Multi-MillionaireProperty Investor [Reader Story]


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Enter KT:

I stayed in a private property for 18 yearsbefore it went enbloc. I bought it during the

recession of 1986 when prices were low and picked it up for around $320,000. The property was sold for $900,000 in 2005.

Mr. Propwise: A wise investor once said thatyou make money when you buy, not whenyou sell. KT picked up her property during a

recession when prices were low. Of coursethis is easier said than done, as during thelows of the cycle youd be worried about your ob security and whether prices would fallfurther. But as long as you have holdingpower and have built up a cash cushion for

the tough times, there is no better time to buy.

While staying in the private property, I decided that I had to invest in anothe property at the end of December 2002. The

market then was extremely quiet and I remembered the URA price index was about 100. I saw a unit in Normanton Park which I liked so much because it offered a lovely view

of the Kent Ridge forest. I bought it for $385,000 and the property has since beenrented out for about $3,300 per month. Thecurrent market value of the property is about $1.4 million.

Mr. Propwise: The PPI at the end of 2002Q4was 115.1 and had gone up to 215.4 by theend of 2013Q2, or an 87% increase. KTsproperty, on the other hand, has gone up bymore than 260% over the same period. Soother than buying during the right time of the

cycle, what you buy is also important. Basedon her monthly rental, she is enjoying anincredible 10+% rental yield on cost andabout 2.8% yield on current market value.


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By buying a good unit at a low point in thecycle, you maximize your probability of getting a good yield.

After the enbloc sale I decided to buy alanded property with the proceeds from thesale. I saw one in 2005 and bought an inter-terrace house with a land area of 1,800 sq ft and a built in of 2,500 sq ft for about $900,000. I am currently staying in it and the

current market value is about $3,000,000.Mr. Propwise: A few points about KTs moveto buy a landed property. First, she took her proceeds from a successful propertypurchase and rolled that into an even bigger property. Its important to get on the right side

of the property market cycle and make thatfirst good investment. In the future you willthen be able to build on that momentum androll your success into even greater wealth.Second, she made the very smart move to

switch from non-landed to landed during aperiod when landed property was relativelyunderpriced (a situation that has now mostlybeen corrected). This maximized her gain

with a 233% return in just the past 9 years.Third, she got to stay in the landed propertyand continues to enjoy living in it to this day.

Then in January 2007, I was passing by West Coast Road when I noticed a huge crowd at a

show flat at Clementiwoods. I saw a ground floor unit facing a park which I fell in love with. At that time, prices were still reasonable, and I bought a 1,421 square foot unit for $800,000. The unit has been rented out sincegetting its TOP three years ago at $5,000 and

is currently worth about $1.7 million.Mr. Propwise: To use the terminology from theProperty Market Cycle Model Ive developed,the best time to buy property is during theLate Bear and Early Bull phases of the cycle.
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If we look at when KT bought property,2002Q4 was during the Late Bear phasewhile the whole of 2005 and 2007Q1 werestill in the Early Bull phase of the cycle.

Contrast that with the current situation whenwe are currently in the Late Bull phase of thecycle (as of 2013Q2), which has historicallynot been a good time to buy property as thecycle is turning. Also, KT is getting a great7.5% yield on her property based on her purchase price versus the current 3.5%based on market value.

I am no expert but I invest only wheneveryone is not interested in property. I don't look at property nowadays as I think the

prices are crazy. The last three properties I acquired were done during periods whennobody was interested to look at the real estate market. I don't earn a lot but throughmy property purchases I think I have made it.

It shows that in Singapore if you are patient and dare to take calculated risks, you canmake it and become a multi-millionaire!

Mr. Propwise: To quote Warren Buffett: Befearful when others are greedy, and greedywhen others are fearful. This is the essenceof being a contrarian investor , and KT hasclearly demonstrated this in her propertypurchases over the years. The key, as KT put

it, is to take calculated risks at the right time. As for the current market, just ask yourself this simple question are the participants inthe property market today showing more fear or greed?

Though she was just an average earner, KT

today owns three properties, two of whichgenerate $8,300 in monthly rental income,plus the landed property which she enjoysstaying in.
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Based on my calculations, over the years shehas made over $4.5 million in capital gainsfrom her properties. She can now lookforward to a very comfortable retirement.

Congratulations KT! And thanks very muchfor generously sharing your story so thatothers may learn from you.

Dear readers, do you have an interestingstory about buying and investing in property?

It doesnt matter whether the outcome wasgood or bad, do share them so that we can alllearn from your experience. If you have one,you can email your story to me [email protected] .
mailto:[email protected]://www.moneymatters.sg/mailto:[email protected]:[email protected]:[email protected]


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Singapore Property This Week


ResidentialRes id en tial leas in g m ark et fav ou rs

tenants

More completions and tighter controls on theoverseas labour workforce are reported to

cause the rental market to hit turbulence. According to a report by Savills Singapore,the residential rental market is turning tofavour tenants, but with strong demand stillexpected over the next half a year. The rentalmarket was optimistic in the Q3 2013 with a

record number of 15,083 rental transactions,which is an 11.6 percent increase from theprevious quarter. This could be attributed tothe 5.1 percent growth in GDP for Singapore

year-on-year, lower unemployment rates, andforeign nationals planning to relocate toSingapore in light of the Fair ConsiderationFramework (FCF).

(Source: Business Times)

URA to c lamp dow n us e o f

SoHo

The Urban Redevelopment Authority (URA) iscurbing the use of the term "small officehome office" (SoHo) for commercial andresidential units by developers. This isbecause people may be led to think that suchunits can be used as homes and officesconcurrently or interchangeably. In fact, SoHois a marketing term which does not refer toany specific use or type of development.

S GA O O 132


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The planning permission for a residentialSoHo unit only gives it clearance to be usedas a home. A separate application must bemade to use it as a home-office with several

restrictions on the kind of business that canbe conducted there. Developers may marketsuch units at a higher price, and it may be toolate for buyers to realize that the units cannotbe freely used as a home and an office,especially now that there are more shoebox

units headed for completion. Developers andtheir marketing agents have been issued acircular which urges them to make it clear toprospective buyers upfront on the approveduse of the development.

(Source: Business Times)Larges t jo in t ro l l -ou t o f B TO and SBF un i t s

The latest launch of 8,952 Housing andDevelopment Board (HDB) flats has rolled out

the largest joint of Build-to-Order (BTO) andSale of Balance Flats (SBF) units that buyerscan choose from. Among the 8,952 units,4,978 are BTO flats in six projects in five non-

mature estates - Bukit Batok, Hougang,Jurong West, Sembawang and Woodlands.This number increases from the 8,262 BTOand SBF flats launched in September 2011.OrangeTee Singapore predicted that thedemand for BTO flats this time could

moderate as they are being released withSBF flats, which promise a shorter waitingperiod and could mop up some of thedemand.


Sin gap ore h om e p ric es fal l fas ter in October

According to the National University of Singapore's Institute of Real Estate Studies,

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the Singapore Residential Price Index fell to159.1 points in October, decreasing 1.2percent from September as the government'sefforts to cool the property market are takingeffect. The index of September itself alreadydeclined 0.9 percent from the previous month.Home sales have also been decreasing in thepast four months following the new rules inJune governing how financial institutionsgrant property loans to buyers. According toMs. Alice Tan, head of consultancy andresearch at Knight Frank LLP Singapore, thelatest statistics show that price quantum isstill the key consideration for manyprospective homebuyers.


S t r o n g d e m a n d f o r t w o a d j a c e n t p l o t s a t

Upper Serangoon View

Despite the decreasing new private home

sales, there has been good response to twoadjacent plots at Upper Serangoon View witheach plot garnering eight bids. The top bid for both sites was from Kingsford Development,at $522.43 psf ppr or $258.8 million for Parcel

A and $201.6 million for Parcel B. Parcel A is

165,125 sq ft wide and is located next to RioVista condo, while Plot B has a land area of 128,644 sq ft. The Urban Redevelopment

Authority (URA) rolled out the two adjacentsites and then closed the tenders for bothsites on the same day the first time URAhas attempted with two adjacent parcels.

SINGAPORE PROPERTY WEEKLY I 132


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Earlier this year, URA also conductedsimultaneous tender closings for threeexecutive condominium (EC) sites - two inPunggol and one near Jurong Country Club.


Commercial

More com pet it ion fo r S ingapore Re it s

As a major Asian hub for real estate

investment trusts (Reits) in over a decade,Singapore is now facing external challengesand domestic constraints. Other markets inthe region are establishing their own Reit andbusiness trust (BT) frameworks, and hencewill compete with Singapore increasingly for

listings. For example, the Philippines andThailand already have regulations for Reits inplace. India is expecting to issue its finalguidelines on Reits early next year. SingaporeReits going overseas may have to compete

against these Reits for assets. In addition,Singapore would have to resolve severaldomestic issues such as development capsand sunset clauses which threaten its tax

advantages. Despite all of these, theregulatory regime in Singapore still remainsattractive and it does not impose anyrestrictions on ownership of foreign assets.Singapore is currently the only market wherepurely offshore assets can be listed.


Singapore Re i ts b r ing m ore p rob lems

Real estate investment trusts (Reits) may bea hit with investors, yet they also bring moreproblems. S-Reits have been blamed for causing rents and inflation to spike, especiallyfor retail and industrial properties. Bigger Reitplayers are also criticised for crowding outsmaller developers.



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Corporate governance watchers areconcerned that managers may buy low-quality assets or overpay just to increase itsportfolio size and collect higher fees. The

quality of foreign assets listed in Singaporealso raises questions, especially if they comefrom a jurisdiction with its own Reit regime.However, other industry players believed thatReits are not to be blamed for everything. For example, rents and prices have risen, butReits were not the sole factor and thatcorrelation does not equate to causation.Increasing rental rates may be due to thestrong economic expansion Singapore hasenjoyed, with demand still chasing supply.


JTC launches four indus t r i a l s i t e s fo r sa le

by pu b l ic t ender

JTC Corporation launched four industrial siteszoned for Business-2 development inWoodlands Industrial Park E9 and TuasSouth for sale by public tender on Nov 29.The plot in Woodlands has a lease of 30years, maximum permissible gross plot ratioof 2.5, and a land area of about 197,992.3 sq

ft with gross floor area (GFA) of about494,980.6 sq ft. Mr. Ong Kah Seng, director at R'ST Research, expected the site to garner a top bid of about $110-$130 psf ppr and tobe well received, especially that thegovernment has recently planned to develop

Woodlands into a work-live-play regionalcentre.




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Tw o n ew m al ls to o p en i n J u ro ng an d

Bedok

CapitaMalls Asia will open two new shoppingmalls in Jurong and Bedok. The Westgateshopping mall in Jurong East will be openednext Monday. The seven-storey mall will havea net lettable area of 410,000 sq ft, roughlythe size of Raffles City's retail area.


http://propertymarketinsights.com/


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Non-Landed Residential Resale Property Transactions for the Week of Nov 13 Nov 19

NOTE: This data only covers non-landed residential resale propertytransactions with caveats lodged with the Singapore Land

Authority. Typically, caveats are lodged at least 2-3 weeks after apurchaser signs an OTP, hence the lagged nature of the data.

PostalDistrict

Project NameArea(sqft)

TransactedPrice ($)

Price($ psf)

Tenure

3 QUEENS 1,195 1,668,000 1,396 993 QUEENS 1,195 1,610,000 1,348 994 THE COAST AT SENTOSA COVE 2,820 5,388,000 1,911 995 ONE-NORTH RESIDENCES 1,119 1,400,000 1,251 995 CARABELLE 2,077 2,485,000 1,196 9568 CITY SQUARE RESIDENCES 840 1,450,000 1,727 FH8 CITIGATE RESIDENCE 506 750,000 1,482 FH9 HILLTOPS 1,270 4,100,000 3,228 FH9 VISIONCREST 915 1,758,000 1,921 FH9 ORCHARD SCOTTS 1,873 2,900,000 1,548 99

10 THE MONTANA 947 1,856,120 1,960 FH10 BALMORAL HILLS 1,841 3,590,000 1,950 FH10 PINETREE CONDOMINIUM 1,206 1,880,000 1,559 FH10 SPANISH VILLAGE 786 1,200,000 1,527 FH10 ORCHARD BEL AIR 3,229 4,260,000 1,319 9910 QUINTERRA 1,787 2,338,000 1,308 9911 DUNEARN GARDENS 1,249 2,220,000 1,778 FH12 CASA FORTUNA 506 865,000 1,710 FH12 TREVISTA 689 1,026,888 1,491 99

12 VETRO 614 755,000 1,231 99912 OLEANDER TOWERS 1,141 1,300,000 1,139 9912 SCENIC HEIGHTS 1,259 1,390,000 1,104 FH12 THE ABERDEEN 1,302 1,380,000 1,060 FH14 CRYSTAL MANSIONS 1,259 925,000 734 FH

PostalDistrict

Project NameArea(sqft)

TransactedPrice ($)

Price($ psf)

Tenure

15 ONE FORT 1,227 1,768,000 1,441 FH15 D' CASTILIA 614 828,000 1,350 FH15 D' CASTILIA 624 830,000 1,329 FH15 COTE D'AZUR 904 1,130,000 1,250 9915 MARINE MEADOWS 1,690 2,100,000 1,243 FH17 BLUWATERS 2 1,615 1,315,000 814 94619 EVERGREEN PARK 1,249 940,000 753 9921 MAPLEWOODS 1,862 2,650,000 1,423 FH21 HILLVIEW GREEN 1,711 1,690,000 987 99921 FREESIA WOODS 2,530 2,300,000 909 FH22 CASPIAN 1,238 1,330,000 1,074 9922 PARC OASIS 1,076 986,000 916 9923 HAZEL PARK CONDOMINIUM 1,324 1,468,000 1,109 99923 DAIRY FARM ESTATE 1,948 2,030,000 1 ,042 FH23 HILLTOP GROVE 1,238 1,080,000 872 9923 NORTHVALE 1,302 935,000 718 99

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