Singapore Property Weekly Issue 96

7/29/2019 Singapore Property Weekly Issue 96

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Issue 96Copyright 2011-2012 www.Propwise.sg. All Rights Reserved.
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CONTENTS

p2 How to Measure Your Propertys

Actual Investment Returns

p8 Property Buying Tip #12: Defects

Liability Period

p9 Singapore Property News This Week

p14 Resale Property Transactions

(March 6 March 12)

Welcome to the 96th edition of the

Singapore Property Weekly.

Hope you like it!

Mr. Propwise

FROM THE

EDITOR
mailto:[email protected]://www.propwise.sg/advertise/http://www.propwise.sg/advertise/mailto:[email protected]


3/16

SINGAPORE PROPERTY WEEKLY Issue 96

Page | 2Back to Contents

By Gerald Tay (guest contributor)

I recently came across two investors who

made money in property investing in the

property boom during the last three years (i.e.

from mid-2009 to end 2012), albeit in very

different ways. I have taken the liberty tosimplify and change some numbers as well

as ignore all expenses so that we can

compare apples with apples. Also, I used

residential properties for this article as its

very much a familiar arena to most readers.

Calculating your investment returns

There are many different ways to calculate a

property investment returns but the Internal

Rate of Return (I.R.R) is by far one of the

How to Measure Your Propertys Actual Investment Returns


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most accurate methods of calculating the

cumulative property investment returns over a

specific holding period.

Inexperienced property investors and homeowners who only look at capital gains as a

measure of investment success are always

surprised by the difference between the

earnings that they expected to realise from a

property investment and the actual

investment return.

Capital Gains or Growth do not equal

investment returns due to many variables like

financing, nature of loan amortization and

many other costs involved in the entire

property transaction process.

How IRR Works

Because a dollar in hand today is preferable

to one a year or five years from now, Interna

Rate of Return reveals in mathematical terms

what a real estate investor's initial cash

investment from Day 1 will yield based on

today's dollars, not tomorrow's dollars.

Here are the details of the example we will be

using: Both properties are located within a 5

minute walk to MRT station and are near the

city.

Note: A financial calculator or Excel is needed

for I.R.R calculations (a basic tool for all true

blue investors).

Investor A:

Purchased a newly launched 916 square feet

condo in a mature estate.

Purchase Price (2009): S$930,000

Down-Payment: S$180,000 (20%)

Loan Amount: S$744,000


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Upon completion and T.O.P in 2012, he

received offers for S$1.2 million.

Equity = S$1,200,000 - S$744,000 =

S$456,000Gross Profits = S$1,200,000 - S$930,000 =

S$270,000

I.R.R = 36% per year

Investor B:

Purchased an old 16 year-old 936 square feet

apartment in a growth location.

Purchase Price (2009): S$520,000

Down-Payment: S$104,000 (20%)

Loan Amount: S$416,000

Rental Income (3 years): S$2,400 per month

He received offers for S$800,000 in late

2012.

Equity = S$800,000 - S$416,000 =

S$384,000

Gross Profits = S$800,000 - S$520,000 =

S$280,000I.R.R = 78% per year

Here are some questions to ponder:

1. Who is the smarter or luckier investor in

this case?

2. If you were presented with both investmentoptions, which would you go for and why?

My analysis of the two investments

1. Investor B had similar gross dollar profits

with Investor A (S$280 thousand as

compared with S$270 thousand) but hisactual return on cash invested is two times

greater than investor A!


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2. Investor B has a lower down-payment

(S$104K for B compare to S$180K for A), but

Bs actual return on cash invested is two

times greater than A.

3. The returns are higher for B, in terms of

cash invested now (down-payment), rental

yield now, probably higher returns in future

than As since Bs property is also located in

the growth corridors of Singapore, while As

property is already in a matured estate.4. Similarly, there are higher chances of

rental increments due to a growth location

and possibly a bigger and more stable tenant

base for B, and lower vacancy rates.

5. Investors As property is a new property

bought directly from a developer, while Bs

property is an older re-sale property from an

individual seller. One of the arguments I stand

firm on is that the higher profits that A should

have gotten, have already been discounted

into the developers profit margins and

expensive marketing costs.

6. Investor As Day 1 initial cash has zero

returns for 3 years until property completion.

Investor A is waiting for his returns to

materialise 3 years later, while Investor Bs

cash is already working hard for him through

a strong rental cash flow from DAY 1.

My recommendations of which investment

to choose

Choose investment B, if your strategy is to

hold for rental as well as property value gain.

This property will probably give you a good

rental over the years as it appreciates in

value. I would highly recommend this low-risk

strategy to the average investor with limited

cash resources and who seeks safety.


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Choose investment A if your strategy is to buy

and sell. Reinvest the money again in a

similar way but good profits will only come

during a booming economy. And of course, if

you sell high, you buy high too. This strategy

is speculative and only suitable for an

investor with funmoney.

My concluding thoughts

Why plant a seedling if you can plant a

tree today? Investor B is already makingmoney from Day 1. Yes! You can have your

cake and eat it too.

If I were given 10 such opportunities, I

would invest 10 times in the B type of

investment scenario. Better rental yield, better

capital appreciation, better long term

potential, less risk, less dependence on the

economy ( good or bad, I still get rental

income regardless of property value)

For A, maybe unless you want to use it for

your own use or as a gift for loved ones.

Investor A has an easier no-brainer task

SELL, pocket the profit and look for more

deals like this. He thinks making money in

property can be as easy as this and will most

likely try to replicate the same strategy again.

But tomorrow is not today crazy economies

like today dont always happen.

Buying an older re-sale property (InvestorB) can have much higheractual returns than

simply buying an off-the-plan property

(Investor A).

Bs property does require a lot more leg

work and sweat before the sweetness but

thats the whole point of it - FUN! Its fun

that makes it all worthwhile for a true blue

investor who loves and knows investing!

SINGAPORE PROPERTY WEEKLY I 96


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Simply taking Rental Yield alone as a

benchmark for analysing investment

properties is like taking a bow and arrow to a

real gun fight! Understanding and knowing

how to calculate Internal Rate of Return

(I.R.R) in any of your investments is a crucial

skill of an investor. Measuring your property

investments actual returns through I.R.R will

help you become a more savvy and educated

investor in todays more volatile times.

By guest contributor Gerald Tay, CEO of

CREI Academy Group, who exposes widely-

held property investment myths that have

proven highly ineffective in creating wealth,

and prevent a comfortable retirement for the

ordinary investor.

SINGAPORE PROPERTY WEEKLY I 96
http://www.crei-academy.com/http://www.moneymatters.sg/http://www.crei-academy.com/http://www.crei-academy.com/http://www.crei-academy.com/http://www.crei-academy.com/http://www.crei-academy.com/


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(Reference:www.bca.gov.sg)

Many buyers have the impression that the

one year defects liability period for brand new

property starts from the day the Buyer

collects the key when the unit hasreceived its

TOP (Temporary Occupation Period).This isnot correct. It is effective when the propertys

TOP is announced, i.e., it is based on the

date of the Notice for Vacant Possession.

There is a time lag when the buyer receives

the letter from the Solicitor, and there is a

time lag when the buyer finally collects the

keys.However, since the Defects Liability

Period is 12 months from the TOP

announcement, you do have enough time to

address the defects.

If the developer fails to correct and improve

the defects within one monthsnotice in

writing, you are entitled to carry out the work

and recover the costs from the developer by

deducting the rectification costs from the sumheld by your conveyancinglawyer.This is

provided you have notified the developer on

the cost of the repair and given the developer

the opportunity to carry out the works within

14 days of notice.

By Eileen Tan and Ui Wei Teck, property

investors and authors of Enjoying Mid-Life

Without Crisis. This tip and dozens more are

from theirbook.

Property Buying Tip #12: Defects Liability Period

http://www.bca.gov.sg/http://aktive.com.sg/store/enjoying-mid-life-without-crisis/http://aktive.com.sg/store/enjoying-mid-life-without-crisis/http://aktive.com.sg/store/enjoying-mid-life-without-crisis/http://aktive.com.sg/store/enjoying-mid-life-without-crisis/http://aktive.com.sg/store/enjoying-mid-life-without-crisis/http://aktive.com.sg/store/enjoying-mid-life-without-crisis/http://aktive.com.sg/store/enjoying-mid-life-without-crisis/http://aktive.com.sg/store/enjoying-mid-life-without-crisis/http://aktive.com.sg/store/enjoying-mid-life-without-crisis/http://aktive.com.sg/store/enjoying-mid-life-without-crisis/http://aktive.com.sg/store/enjoying-mid-life-without-crisis/http://aktive.com.sg/store/enjoying-mid-life-without-crisis/http://aktive.com.sg/store/enjoying-mid-life-without-crisis/http://www.bca.gov.sg/http://www.bca.gov.sg/http://www.bca.gov.sg/http://www.bca.gov.sg/http://www.bca.gov.sg/http://www.bca.gov.sg/http://www.bca.gov.sg/


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Singapore Property This Week


Residential

43% of 99-year Urban Vista sold

250 or 43% of the 99-year leasehold 582-unit

Urban Vista condominium project located at

the junction of New Upper Changi Road and

Tanah Merah Kechil Link has sold been at anaverage of $1,350 psf after a 7% discount.

Units sold were mostly one- to three-bedroom

units. There are 135 one-bedroom units, 249

two-bedroom units, 160 three-bedroom units

and 37 four-bedroom units. Prices start from

$588,000, $768,000, $1.1 million and $1.5million for one-bedroom units (average area

of 450 sq ft), two-bedroom units (average of

600 sq ft); three-bedroom units (average of

900 sq ft) and four-bedroom units (average of1,050 sq ft), respectively. The take-up rate

reflect genuine demand though had there not

been the latest round of cooling measures,

the developer could have sold even more

units at a price of more than $1,400 psf.

(Source: Business Times)

99-year DNest sells 500 of 650 released

units

99-year leasehold 912-unit D'Nest at Pasir

Ris Grove near Pasir Ris MRT station and

White Sands shopping mall has sold 500 of

its 650 released units at an average price of

$990 psf or $920 psf after discount. It has

since increased by 2%.



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It consists of one-to-four bedroom units, five-

bedroom dual key units and 10 dual-key

penthouses with five or six bedrooms in 12

blocks of 11- to 13-storey and three

clubhouses sitting on a 444,284 sq ft site.Prices start at $498,000, $680,000, $820,000

and $1.15 million for one-bedroom, two-

bedroom, three-bedroom and four-bedroom

units respectively. More units of each type

have been progressively released in

response to the strong demand. 80% of thebuyers are Singaporeans, with remaining

being foreigners and PRs largely from

Malaysia, China, and Indonesia.


HDB launches 3,898 BTO flats in non-

mature estates

3,900 BTO flats have been launched in four

projects three non-mature towns: Bukit Batok,

Punggol and Sengkang.

SkyPeak @ Bukit Batok located between

Bukit Batok Street 21 and Bukit Batok East

Avenue 6 offers 1,430 units of two-room to

five-room flats with prices starting from

$117,000 to $411,000.

Matilda Portico bounded by Punggol Field

and Punggol Way comprises 470 four-room

and five-room flats with prices starting from

$294,000.

Compassvale Cape located along

Compassvale Crescent near Cheng Lim LRT

station offers 1,400 flats including studio

apartments as well as three-room to five-

room flats. Prices start from $88,000 for a

studio apartment and $189,000 for a three-

room unit.

Compassvale Helm, located between

Compassvale Bow and Buangkok Drive, near

Buangkok MRT Station.



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It has 598 flats comprising studio apartments,

as well as four-room and five-room units.

Prices start at $88,000 for studio apartments,

and $304,000 for a four-room flat.

Most projects are expected to have

application rates of two to three.

Compassvale Helm, however, is expected to

have application rates of three to four given

its proximity to several schools, the MRT

station and other amenities.


Commercial

A rise in property investment in Singapore

expected

Property investment in Singapore is expected

to rise, given the cooling measures in Hong

Kong and China which would divert

investment to Singapore and the pent-up

demand. Singapores strong currency is

another factor that will attract foreign

investors. This may result in a 5-10%

increase in foreign investors.


Freehold Lam Soon Industrial Building

back on collective sale market

The 10-storey building consisting of 154

warehouses and light industrial factories sits

on a 230,915 sq ft freehold residential site

with a 1.92 GPR. It can be redeveloped into a

10-storey residential building with 403 1,100

sq ft units. It is located near Bukit Timah Hill,

the Bukit Timah Reserve, and Dairy Farm

Nature Park, and amenities such as The Rail

Mall, Bukit Timah Plaza, and Beauty World as

well as the Bukit Batok and Bukit Gombak

MRT stations and the upcoming Hillview

station.



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The tender will close on April 3 at 2.30 pm.


Enterprise Road industrial building up for

sale

The single-storey factory sitting on a 109,164

sq ft site zoned Business 2 with a 2.5 GPR

at 19 Enterprise Road in Jurong is asking for

$18.5 million. It comprises of warehouses,

offices, and production areas in a 62,500 sq ft

built-up area and has a floor loading capacity

is 25kN psm. In addition, there is a nine-

metre ceiling height and an overhead crane in

the production and warehousing area. The

site with 25 years remaining in its lease is

located within an established industrial estate,

and near the Boon Lay and Joo Koon MRT

stations, the AYE and the PIE. It is likely to

see much demand given a general increase

in demand for industrial properties and a lack

of available large industrial plots in the area.

The tender closes on April 30 at 3pm.


Prime Orchard Road space rents increasein Q1

The average rents for prim Orchard Road

space saw a 2% increase to $32.20 psf in Q1

2013 and is expected to remain stable for the

rest of the year even as supply increases by

328,000 sq ft. This is a result of various asset

enhancement initiatives in shopping malls in

the area, as well as the limited supply of such

prime space. Of the increase in supply,

172,000 sq ft of space will come from from

Orchardgateway, with another 156,000 sq ft

of space from asset enhancement exercise at

The Heeren. Meanwhile, rents for prime

suburban space remained unchanged at

average of $29.75 psf in Q1.



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There is an upcoming supply of almost 1.6

million sq ft of space in 2013 from the Bedok

Mall, and JEM and Westgate in Jurong.


Hotels investment sales fall in 2012

As a result of differential price expectations of

buyers and sellers and the bullish outlook for

the hotel industry, there were lesser hotel real

estate deals in 2012, leading to a fall in

investment deals from $1.58 billion in 2011 to$1.45 billion last year. At least $800 million

worth of deals is also expected in the next

two to three years. Meanwhile, the average

room rate rose from $247 in 2011 to $261 in

2012 while the average occupancy rate

remained at 86%. Revenue per availableroom also increased to $226 from $214.

Around 5,020 rooms are expected to be

completed by 2013, which may lead to a fall

in room rates and occupancy rates (slight fall

but remaining above 80%). The supply is

expected to increase to 53,000 by 2015 with

another potential 5,000 hotel rooms by 2017.


Bright Chambers at Middle Rd up for

collective sale

Nine-storey eight-unit Bright Chambers, a

commercial building located at 108 Middle

Road, has been put up for collective sale by

tender with an asking price of $45-50 million.It consists of eight units with a total strata

area of 34,972 sq ft sitting on a 5,263 sq ft

plot zoned for commercial use with a 7.94

GPR. The 99-year leasehold site with a

remaining term of 60 years can be accessed

via Middle Road, Victoria Street and ManilaStreet, and is near Bugis MRT station. The

tender will close on April 18 at 3pm.




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Non-Landed Residential Resale Property Transactions for the Week of Mar 6 Mar 12

Postal

DistrictProject Name

Area

(sqft)

Transacted

Price ($)

Price

($ psf)Tenure

2 SPOTTISWOODE PARK 1,270 965,000 760 99

3 ALESSANDREA 1,098 1,460,000 1,330 FH

3 ALESSANDREA 1,098 1,430,000 1,302 FH

4 MARINA COLLECTION 2,185 6,336,500 2,900 99

4 REFLECTIONS AT KEPPEL BAY 807 1,614,000 1,999 99

4 CARIBBEAN AT KEPPEL BAY 1,313 2 ,050,000 1,561 99

4 CARIBBEAN AT KEPPEL BAY 1,485 2 ,300,000 1,548 99

5 PARC IMPERIAL 1,044 1,350,000 1,293 FH

5 MURANO 1,055 1,350,000 1,280 FH

5 DOVER PARKVIEW 936 1,105,000 1,180 99

5 DOVER PARKVIEW 1,249 1,385,000 1,109 99

5 VISTA PARK 753 750,000 995 99

8 RACE COURSE 138 420 638,000 1,520 FH

9 ORCHARD SCOTTS 2,282 6,500,000 2,848 99

9 WATERFORD RESIDENCE 1,055 1,800,000 1,706 999

9 URBANA 1,044 1,750,000 1,676 FH

10 BALMORAL 8 1,905 3,520,000 1,848 FH

10 MILL POINT 1,012 1,765,000 1,744 999

10 THE MARBELLA 1,475 2,430,000 1,648 FH

10 THE TESSARINA 1,313 2,100,000 1,599 FH

10 THE TESSARINA 980 1,520,000 1,552 FH

10 CHATEAU LE FAME 1,163 1,800,000 1,548 FH

11 NEWTON SUITES 797 1,660,000 2,084 FH

11 RESIDENCES @ EVELYN 1,033 1,920,000 1,858 FH

Postal


Area

(sqft)

Transacted

Price ($)

Price

($ psf)Tenure

11 AMARYLLIS VILLE 1,259 1,970,000 1,564 99

11 AMARYLLIS VILLE 1,259 1,890,000 1,501 99

11 ADAM PARK CONDOMINIUM 1,087 1 ,500,000 1,380 FH

11 THE PARK VALE 1,927 2,347,200 1,218 999

12 MOONSTONE VIEW 1,076 1,120,000 1,041 FH

14 SUNFLOWER VIEW 1,012 988,000 976 FH

14 GEYLANG HERITAGE 1,076 1,020,000 948 FH

14 DELIGHT COURT 1,324 1,000,000 755 FH

15 THE VIEW @ MEYER 1,690 2,700,000 1,598 FH

15 VERSILIA ON HAIG 1,130 1,460,000 1,292 FH

15 EQUATORIAL APARTMENTS 2,411 3,100,000 1 ,286 FH

15 HAIG COURT 1,550 1,910,000 1,232 FH

15 WATER PLACE 1,216 1,475,000 1,213 99

15 DUNMAN VIEW 1,335 1,470,000 1,101 99

15 CASUARINA COVE 1,173 1,238,500 1,056 99

16 CASA MERAH 1,378 1,680,000 1,219 99

16 COSTA DEL SOL 1,561 1,808,000 1,158 99

16 CASAFINA 1,238 1,200,000 969 99

16 CASAFINA 1,281 1,220,000 952 99

16 TANAH MERAH MANSION 872 823,000 944 FH

16 CASCADALE 1,507 1,288,000 855 FH

17 FERRARIA PARK CONDOMINIUM 1,195 1,200,000 1,004 FH

17 DAHLIA PARK CONDOMINIUM 1,292 1,200,000 929 FH

18 SAVANNAH CONDOPARK 1,453 1,390,000 957 99



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S G O O ssue 96


NOTE: This data only covers non-landed residential resale propertytransactions with caveats lodged with the Singapore LandAuthority. Typically, caveats are lodged at least 2-3 weeks after apurchaser signs an OTP, hence the lagged nature of the data.

Postal


Area

(sqft)

Transacted

Price ($)

Price

($ psf)Tenure

18 CHANGI RISE CONDOMINIUM 1,130 990,000 876 99

19 KOVAN ESQUIRE 1,012 1,088,000 1,075 FH

20 GOLDENHILL PARK CONDOMINIUM 2,702 3,500,000 1,295 FH

21 THE CASCADIA 1,044 1,980,000 1,896 FH

21 THE CASCADIA 1,216 2,168,000 1,782 FH

21 GARDENVISTA 829 1,070,000 1,291 99

21 FREESIA WOODS 2,562 2,300,000 898 FH

23 HILLVIEW HEIGHTS 980 988,000 1,009 FH

26 THE CALROSE 1,141 1,460,000 1,280 FH

26 SEASONS PARK 1,292 1,130,000 875 99

26 SEASONS PARK 1,249 1,088,000 871 99

27 YISHUN SAPPHIRE 1,163 930,000 800 99

27 YISHUN SAPPHIRE 1,152 880,000 764 99
http://propertymarketinsights.com/

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Singapore Property Weekly Issue 96