singapore property weekly issue 170

8/11/2019 Singapore Property Weekly Issue 170

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Issue 170Copyright 2011-2014 www.Propwise.sg. All Rights Reserved.
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CONTENTS

p2 Understanding, Measuring and Comparing

Rates of Return in Property Investing

p9 Singapore Property News This Week

p14 Resale Property Transactions

(August 6 August 12 )

Welcome to the 170th edition of the

Singapore Property Weekly.

Hope you like it!

Mr. Propwise

FROM THE

EDITOR
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SINGAPORE PROPERTY WEEKLY Issue 170

Page | 2Back to Contents

Understanding Measuring and Comparing Rates of Return inProperty Investing

By Gerald Tay (guest contributor)

Ivereceived feedback, both positive as well

as negative, on my previous articleProperty

Valuation Money Not Math. In that article I

explained how many investors are playingguess work with their investments because

they fail to understand how to get their yields

right. I heavily criticised the current models of

property valuation, which are what experts

sell as wisdomto average investors these

models are outdated, highly controversial andinaccurate.
http://www.propwise.sg/property-valuation-money-not-math/http://www.propwise.sg/property-valuation-money-not-math/http://www.propwise.sg/property-valuation-money-not-math/http://www.propwise.sg/property-valuation-money-not-math/http://www.propwise.sg/property-valuation-money-not-math/http://www.propwise.sg/property-valuation-money-not-math/http://www.propwise.sg/property-valuation-money-not-math/http://www.propwise.sg/property-valuation-money-not-math/http://www.propwise.sg/property-valuation-money-not-math/http://www.propwise.sg/property-valuation-money-not-math/http://www.propwise.sg/property-valuation-money-not-math/http://www.propwise.sg/property-valuation-money-not-math/http://www.propwise.sg/property-valuation-money-not-math/http://www.propwise.sg/property-valuation-money-not-math/http://www.propwise.sg/property-valuation-money-not-math/


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Putting my Net Worth on the Line

I dare put my money where my mouth is my

net worth backs my investment strategy. For

13 years, Ive never lost money in any realestate investments and am financially wealthy

because of it. Heresthe difference between

Successful Investors and theGurus:

Authentic Successful Investors (a.k.a The

Master Investor): Investments contribute a

major part of our net worth - We put ourmoney where our mouth is and itswhat we

love to do.

Self-styled Gurus/Experts/Millionaires

(a.k.a The Losing Investor): Investments

contribute little to his net worth hisinvestment activities are often hazardous to

his wealth (playing guessing games in

Investment Guru Land). He funds his

investments and makes up for his losses

using other sources such as business profits

(running investment seminars), salary (real

estate professionals), company bonus plans,

etc.

In view of the above, it is in fact possible for

you to build your financial wealth through

investments investments that are

sustainable, smart and logical. I do not

possess any special forecasting skills and

neither do I consider myself lucky. All I didwas to value my investments using science,

logic and common sense, rather than play

guessing games in Investment Guru Land.

If you agree with what Imsaying, read on.

What do rates of returns measure? Whyare they important?

Shares, bonds and real estate are the main

asset types available in the capital market.

Volatility exists with all three asset types.


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One difference between these asset types is

that property is unique and the data on

transactions is not computed on a daily basis.

Shares and bonds have constantly updated

prices, therefore making it easy for investors

to accurately assess their performance.

In the real estate market, the situation is not

so simple. Investors are never sure of the

value of a certain property until the point at

which they are about to sell or rent it.Property valuation methods are needed for

estimating the most probable value of a

property on the market.

Yields are important in a number of contexts:

Property valuations can be made by

analysing price and yields

The returns from property should be

compared with other forms of investment,

and with other properties

To evaluate whether property is

overvalued and if a price bubble might beforming

Return on investment or property yield is one

of the most critical components of the entire

property investment process, and thankfully,

working it out involves a fairly straightforward

calculation.

Armed with these, your chances of success

are significantly improved.

There is, however, one key principle

associated with the process of investing in

property that needs to be thoroughlyunderstood, namely property yield, or return

on investment (ROI) / Rate of Return.


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Tip: We dont predict the future, but we do

know that the next five years will not look like

the last five years. That just doesnt happen.

Markets change. And our results over the

next five will not replicate the last five. They

never do. Gerald Tay

'Rate of Return' - This is the metric most

used to compare different investments. It is

expressed as a percentage because

investment opportunities come in all sizes.Absolute dollars of profit do not allow for

comparison, but a percentage is 'relative'.

The period of time measured is presumed to

be one year.

The profits from an investment can come

from income received during the holdingperiod, and also capital gains from the

eventual sale. Together, these are called the

"Total Return".

Always use the Total Return to compare

investments. For example:

Property buyers too often look only at the Net

Rental Yield (NRY) and ignore the

potential for capital loss/gain, Net Cash

Flow after mortgage payments and

interest, as well as the Time Value of

Money.

Total Return is based on initial cash outlay or

total capital invested, not purchase price.

A 4% Net Rental Yield (NRY) property is not

equal to 4% Total Return on Investment.

What do these terms mean?

The 'true' Rate of Return is what most

people's understanding of it would be. People

refer to it as the Compound Annual Growth

rate (CAGR), Return on Investment (ROI),

Return on Equity (ROE),


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SINGAPORE PROPERTY WEEKLY I 170


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Critical Financial Ratios to Value Property (Intrinsic Value)

By considering all of the above ratios, we derive the Intrinsic Value of the Property.

SINGAPORE PROPERTY WEEKLY I 170


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The Business of Real Estate

Tip: Property investing is a business and

should be run like a business And i

business is war, war is a business. Gerald

Tay

All successful entrepreneurs understand the

importance of managing their business by

metrics. Metrics is simply a measurement of

the day-to-day results of the business. The

measurements are in the form of cash flow(raw numbers) and ratios. They are often

used as comparisons, either to a previous

period, to targets, industry averages or other

investment asset classes.

For example,

Net Rental Yield (NRY)is used to compare

the performance of property A versus

property B versus property C.

Return on Investment (ROI) is used to

compare the performance of Stock A versus

Property B versus Bond B versus Gold.

Internal Rate of Return (IRR) is used to

compare the Risk/Rewards of different types

of investment classes versus targeted

returns.

We shall cover these in greater detail in the

subsequent articles.

By guest contributor Gerald Tay, who is the

founder and coach at CREI Academy Group

Pte Ltd, an organization dedicated to

empowering retail property investors with

smarter investing philosophy and strategies.

He is a full-time investor with over 13 years of

solid experience in building his wealth

through Property Investment and is financially

wealthy today.

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/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/http://www.crei-academy.com/


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Singapore Property This Week


Residential

Rev is ed U RA g u id el in es l im i ts c lu s ter

h o u s i n g d e v e l o p m e n t

In recent years, residents have raised

concerns about overcrowding in areas such

as Toh Estate and Telok Kurau Estate. With

more developers building homes in theseareas, problems such as traffic and parking

congestions were brought up. To ease

overcrowding concerns in some of these

landed estates, the Urban Redevelopment

Authority (URA) has revised its guidelines for

cluster housing. Under the new ruling, fewerstrata-landed houses will be developed in

upcoming projects as the maximum number

of units for cluster housing has been lowered.

Besides that, developers have to use at least

45 per cent of the land space for the

development of greenery and communalfacilities. This was 15 per cent higher than the

current 30 per cent that developers currently

have set aside for such development.

According to URA, these new guidelines have

taken effect since August 23. Nicholas Mak

from SLP International expects the newguidelines to impact strata-landed housing

developments. However, he believes that only

a small number of good class bungalows will

be affected. Lee Lay Keng from DTZ also

said that developers interest in strata-landed

housing development will be reduced, andhousing prices may be pushed downwards.

Also, under the new rule, only 15 terrace units

may be built per developer said Galven Tan

from CBRE.



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However, Tan believes that as the problem of

overcrowding is eased, the living quality of

the private home units may improve and thus

benefit sales.

(Source: Business Times)

S in M i n g a n d S eb a w an g r es i d en t i al s i t es

r e lea s e d f o r t e n d e r

A residential site at Lorong Puntong, near Sin

Ming Avenue and another at Sembawang

Road were released for tender. Both sites are

on the confirmed list for Government Land

Sale. The site at Sin Ming Avenue has a land

area of 10,503 square metres and has a

maximum gross floor area of 22,056 square

meters. This could yield about 280 homes.The Sembawang site for Executive

Condominiums has a maximum gross floor

area of 60,366 square meters and can yield

about 605 homes. Nicholas Mak from SLP

International predicts that there will be 12 to

18 bids for the site at Sin Ming Avenue due to

a limited supply of private residential-zoned

land in Sin Ming. However, Ong Kah Seng

from RST Research predicts that there will

only be 5 bids for that site following low

interest and low winning margins in previous

land tenders that are in the estate. For the

Sembawang site, market analyst predict that

it will attract three to seven bids with a

winning offer of about $300 to $330 per

square feet per plot ratio. Experts believe that

the Sembawang site will face competition

from the many unsold new private homes and

ECs nearby. Hence developers may be less

willing to take this risk and will bid lower.




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Commercial

Developers in t e r es t i n J u r o n g g r o w s

Developers interest in Jurong Lake area is

growing as the government is expected todevelop more leisure elements in the area.

Not only so, market experts believe that the

area will attract more interest if the Kuala

Lumpur-Singapore high-speed rail terminus is

developed in Jurong Gateway. Christine Li

from OrangeTee believes that thegovernments plans to realign Ayer Rajah

Expressway and to develop the old industrial

estate to waterfront housing will boost the

image of the area and increase its appeal.

Desmond Sim from CBRE said that he

believes with this image overhaul, the stigmathat Jurong is merely just an industrial

township will be removed. Jurong Lake

Gardens which is over 70 hectares large will

include a park by 2017. The existing Chinese

and Japanese Gardens will be revitalised.

Also, the new Science Centre which is

located next to Chinese Garden MRT Station

will be completed by 2020. Besides that,

interest in the upcoming sale of residentialsites at Jurong Lake is expected to be high.

However, Sim believes that current cooling

measures may still push bid prices down.


M aj o r i ty o f F ar r er S q u ar e p r o j e c t w i l l b e

o c c u p i e d

At least 85 per cent of Farrer Squares

medical tower has been committed in two

bulk deals. Located at Little India and

developed by RB Capital, the tower has

27,500 square feet and will consist of eight

levels of medical suites, which comprises of

42 strata units. According to Business Times,

Level 5 to 7 was bought over by HSC



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Healthcare for over $44 million, or $3,800 per

square foot of the total strata area of 11,674

square feet. Mary Sai from Knight Frank said

that this price reflects current market value.

Sai said that bulk transactions are preferredfor such medical suites because selling to

individual investors may results in pockets of

vacancies if those investors are unable to

lease out all units. Furthermore, developers

will have less control over the mix of tenants if

units were sold to individual investors. JLL,the marketing consultant for Farrer Square

said that it will launch the remaining six strata

medical suites on the top floors soon.


Zouks t e n an c y e x t e n d e d

Zouk will continue to occupy its current

premise at Jiak Kim Street, after it was

granted a final tenancy extension. The

duration of the extension depends on Zouks

ability to secure alternative premises. To

provide the popular nightspot sufficient time

to relocate, it will have till December 31, 2017

to move out if it is able to find a location byJune 30, 2015. However, if Zouk does not

secure a new location by then, its lease will

expire on Dec 31, 2015. According to a joint

statement by Singapore Land Authority and

Urban Redevelopment Authority, this decision

was made to allow Zouk ample time torelocate and to provide residents certainty on

the plans for the area. Zouk said it will

continue to look for central locations for its

relocation. Previously, Zouk had turned down

an offer to relocate to Old Kallang Airport as it

was considered to be an inaccessible

location.




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En b lo c ma r k e t a t a s t a n d s t i l l

Despite the current standstill in the en block

market, Colliers International believes that

property owners and developers should still

participate in collective sales. According to

Chia Siew Chuin from Colliers, property

owners should be more realistic about en bloc

sales as the market for it has been shrinking.

Chia said that developers were more willing

to offer high prices for en bloc sales in the

past because of higher development potential

and because of the change in land use

zoning for many sites. However, current

cooling measures have dampened

developers interest and hence year-to-date,

there have been no successful en bloc deals.

Nonetheless, according to Business Times,

Tanglin Shopping Centre is in the midst of

getting a requisite consent level to launch a

collective sale. Chia also added that owners

can still consider engaging in an en bloc sale

to dispose of older assets, as they are more

likely to reap a decent profit margin through

such en bloc sales.

(Souce: Business Times)

http://propertymarketinsights.com/


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

Postal

DistrictProject Name

Area

(sqft)

Transacted

Price ($)

Price

($ psf)Tenure

1 MARINA BAY RESIDENCES 732 1,450,000 1,981 991 MARINA BAY RESIDENCES 1,130 2,200,000 1,947 99

3 LANDMARK TOWER 1,033 980,000 948 99

4 THE COAST AT SENTOSA COVE 2,024 3,845,600 1,900 99

4 THE OCEANFRONT @ SENTOSA COVE 1,711 2,700,000 1,578 99

4 REFLECTIONS AT KEPPEL BAY 840 1,230,000 1,465 99

5 THE PARC CONDOMINIUM 1,421 1,880,000 1,323 FH

5 THE PARC CONDOMINIUM 980 1,270,000 1,297 FH

5 BOTANNIA 2,637 2,400,000 910 956

5 CLEMENTIWOODS CONDOMINIUM 1,658 1,500,000 905 99

8 OXFORD SUITES 893 1,200,000 1,343 FH

9 ESPADA 689 1,606,000 2,331 FH

9 MARTIN PLACE RESIDENCES 1,044 2,300,000 2,203 FH

9 VIDA 861 1,700,000 1,974 FH

9 RIVERSHIRE 1,227 2,030,000 1,654 FH

10 ONE TREE HILL RESIDENCE 1,001 1,900,000 1,898 FH

10 VERDURE 1,421 2,680,000 1,886 FH

10 DUCHESS CREST 1,711 2,200,000 1,285 9911 PARK INFINIA AT WEE NAM 850 1,700,000 1,999 FH

11 NEWTON ONE 1,808 3,250,000 1,797 FH

12 AIRSTREAM 409 615,000 1,504 FH

12 DE PARADISO 904 1,150,000 1,272 FH

Postal


Area

(sqft)

Transacted

Price ($)

Price

($ psf)Tenure

12 THE RICHMOND 1,238 1,355,000 1,095 FH

12 SUNVILLE 1,163 1,215,000 1,045 FH

12 THE MORNINGTON 1,216 1,250,000 1,028 FH

14 CENTRAL GROVE 1,023 1,050,000 1,027 99

15 THE SEA VIEW 1,410 2,200,000 1,560 FH

15 WATER PLACE 1,453 1,800,000 1,239 99

15 THE MAKENA 1,636 1,910,000 1,167 FH

15 HOMEY GARDENS 1,033 1,120,000 1,084 FH

15 CRESCENDO PARK 1,345 1,450,000 1,078 FH

15 EAST VIEW 18 1,173 1,080,000 920 FH

15 EAST BAY GARDENS 1,711 1,400,000 818 99

16 EAST MEADOWS 1,195 1,180,000 988 99

16 EASTWOOD GREEN 1,302 1,030,000 791 99

18 NV RESIDENCES 904 970,000 1,073 99

18 CHANGI RISE CONDOMINIUM 1,130 965,000 854 99

18 MELVILLE PARK 958 780,000 814 99

18 MELVILLE PARK 1,044 758,000 726 99

19 KOVAN RESIDENCES 947 1,260,000 1,330 9919 GRAND REGALIA 1,206 1,000,000 829 FH

19 SIMON PLAZA 1,679 1,371,000 816 FH

19 RIO VISTA 1,604 1,250,000 779 99

20 GRANDEUR 8 1,453 1,394,880 960 99



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S G O O ssue 0


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 a purchasersigns an OTP, hence the lagged nature of the data.

Postal


Area

(sqft)

Transacted

Price ($)

Price

($ psf)Tenure

23 PARK NATURA 1,378 1,510,000 1,096 FH

23 MI CASA 1,324 1,280,000 967 99

23 HAZEL PARK CONDOMINIUM 1,378 1,328,000 964 99923 HILLVIEW PARK 904 830,000 918 FH

23 MAYSPRINGS 915 748,000 818 99

26 MEADOWS @ PEIRCE 2,583 2,460,000 952 FH

27 YISHUN SAPPHIRE 1,539 1,070,000 695 99

28 SELETAR SPRINGS CONDOMINIUM 1,335 950,000 712 99
http://www.moneymatters.sg/

singapore property weekly issue 170

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