Singapore Property Weekly Issue 190

8/10/2019 Singapore Property Weekly Issue 190

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Issue 190Copyright 2011-2014 www.Propwise.sg. All Rights Reserved.
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CONTENTS

p2 When is the Right Time to Enter the

Property Market?

p13 Singapore Property News This Week

p18 Resale Property Transactions

(December 24 December 30 )

Welcome to the 190th edition of the

Singapore Property Weekly.

Hope you like it!

Mr. Propwise

FROM THE

EDITOR
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3/19

SINGAPORE PROPERTY WEEKLY Issue 190

Page | 2Back to Contents

By Gerald Tay (guest contributor)

This the key question on everyones mind

today: Whenis it a good time to re-enter the

property market as prices continue on their

downwardspiral?

This aims to provide an overview of theSingapore Private Residential Property

Market and allow investors, buyers and

sellers to:

1. Form their own view of when to buy and

sell

2. Understand the historical property market

trends

3. Manage risks rather than predict an

unknown future

When is the Right Time to Enter the Property Market?


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4. Make better property investment

decisions

I am a property investor, not a property

consultant, analysis or expert. Like manysavvy investors, I dont predict the unknown

future, rather I manage my risks with current

and available information.

The charts and tables are based on public

information collected and collated from

various sources, including:

Urban Redevelopment Authority, URA

Monetary Authority of Singapore, MAS

Singapore Statistics, Singstat

PropertyMarketInsights.com, PMI

SingaporePropertyCycle.com.sg

Notes for readers:

The charts show market trends of the

Singapore private property residential

market over a 38 year period (from 1975to 2013)

Over a 38-year period, the compounded

annual inflation rate was close to 2%.

The Real Returns on an investment

measures not how much you can buy

with the money you get out of the

investment,but howmuch more you can

buy with the money you haveafter taking

consumer price inflation into

consideration.

It would be meaningless if our propertyprices hardly beat the increase in inflation

and stayed the same after long years of

mortgage payments and other costs.
http://propertymarketinsights.com/http://propertymarketinsights.com/http://propertymarketinsights.com/http://propertymarketinsights.com/


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Firstly, a quick look at historical market

trends.

Singapore Private Residential Property

Price Index (1975 2014)

Note the period from1983 to 1996. This

section forms a shelf that dropped off

precipitously. It corresponded with

Singapore joining the ranks of the worlds

richest nations with rapid industrialisation

and high economic growth rates in excess

of 7%.

Note how the sheer climb for each peak

became shorter over the maturing years.Property Market Cycle - A Pattern of Bulls

and Bears

Note an obvious pattern of bulls and

bears from 1996 to 2014.


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Note a bowl-shaped curve from 2000 to

2008. For some Generation X property

buyers like myself (born 1965 to 1976),

we owe our first real estate wealth to this

period of the property cycle.

I started my research on the Singapore

Property Market in 2001(Early Bear) and

bought my first property in 2003(Late

Bear)

Investors Tip of the Day:

As according to PropertyMarketInsights.com

were in the Early Bear period currently, I

strongly urge ordinary investors who are

serious to enter/re-enter the property market

to kick-start their property and financial

education today, rather than wait till the Early

or LateBull stages of the Property Market

Cycle to do so.

When it does, youllbe in a stronger position

to capitalise on opportunities than those who

are less prepared (remember the fable of

TheAnt and the Grasshopper).

Private Residential Property Price Index

(1975 2013)

Property Returns at Different Buy-Periods

Peak to Peak

Even though periods from year 2000 to

2013 gives a positive realreturn of 1% or

less, abuyersrisk/returns trade-offs are
http://propertymarketinsights.com/http://propertymarketinsights.com/http://propertymarketinsights.com/http://propertymarketinsights.com/


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unjustifiableif they are buying at or close

to the market peak. Taking on such

substantial risks in property is poorly

rewarded.

Real property growth has evidently

declined with each new peak over the last

38 years, dropping drastically from

14.18% in the early growth years to an

insignificant 0.68% in a maturing market.

Unfortunately, well expect most buyerswho enter at or close to the peak of

2013Q3 to face negative Real Returns on

their property values for a very long time.

The property market recovered extremely

quickly after the 2009 Global Financial

Crisis.

A Warning for Buyers

For most of the lucky buyers who bought

during the peak period of 2007/8, they were

rescued from becoming porkchops.Tons of

printed money were injected by world

governments into the worldwide financial

system immediately after the crisis.

We may just run out of financial rescue

options in the years ahead. And you dontget

lucky twice!

Bottom to Peak

For the last 38 years entering from close

to or at the bottom of the market,

SINGAPORE PROPERTY WEEKLY I 190


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a buyers Real Returns have diminished

from high double-digit grow thin the early

years to single-digit today. In the future,

this growth rate may further decline to low

single-digits due to mature economic andmarket conditions.

In the future, I conservatively estimate a

range of 3% to 5% in Real Return seven if

buyers do enter at or close to the bottom

of the market. And likely negative Real

Returns for buyers who enter at or closeto the peak of the market.

The next time you hear someone says the

property market has historically registered

double-digit price growth, refer him/her to

these trends and question which period

he/she is referring to, and also ask, From

thebottom?orFromthe Peak?

Wisdom for Investors

To be conservative, I always project my

properties to give 0% to 3%Real Return

seven if I bought them low. Rental Yield is my

main investment consideration, but if property

price does grow beyond my conservative

figures, Illsimply take the extra capital gainsas bonus.

However, going in and out of market is simply

foolish,even though you may realise capital

profits. If the worldsgreatest investor Warren

Buffet does not, why should you?

Peak to Bottom

SINGAPORE PROPERTY WEEKLY I 190


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Other than 2000Q2 to 2004Q1, a period

which was just recovering from Asian

financial crisis and subsequently hit by

dot-com burst and SARS crisis, the rest of

the periods registered an annualizeddouble-digits percentage decline in

property prices from peak to bottom.

Many buyers who entered at or close to

the peak experienced gruesome losses in

these unfortunate periods.

The latest market crisis of 2008Q2 to

2009Q2 registered the largest price

decline since 1983.

Buyers Kopi Topic-of-the-Day

Many people believe that prudent financial

regulations and government measures will

provide better stability to the property market.

But the Global Financial Crisis of 2009

experienced a steeper and larger price

decline than during the 1997 Asian Financial

Crisis within a very short period of just four

quarters.

In coming years, if another crisis hits our

shores, compounded with an over-supply

situation, are we currently expecting the worst

in property prices?

Is property really a good Mid to Long

Term investment and hedge againstinflation?

From the two tables below, the answer greatly

depends on whether a buyer enters at or

close to the bottom or peak of the market.

Both tables show Real Returns of buyers whoenter a peak property market and holds on to

the next peak, which takes between 5 to 17

years.



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Mid-Term Holding (Less than 10 years)

Long-Term Holdings (10 years and above)

Property can be a negative hedge against

inflation even after holding for the mid-to-

long term if a buyer enters at or close to

the market peak.

From 1996 onwards, only two out of five

periods result in property acting as a

positive hedge against inflation even after

a mid-to-long term holding period.

A buyer who bought into the peak market

of 1996, held a depreciating property withnegative Real Returns in 2013, even after

17 years.

All other periods showed poor or negative

Real Returns for buyers who enter at or

close to the peak of the market, except for

the 13-year period from 1983Q4 to

1996Q2, and 38-year period 1975Q1 to

2013Q3.



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We see tremendous property price growth

which corresponds with Singaporesearly

rapid growth years, especially period

1975to 1996.

Frequently Asked Questions

What are the significant red-flags to

indicate when the property market is

peaking?

Buyers buying at inflated or record-

breaking prices:

Owner-occupiers being scared of prices

rising beyond their affordability so they

buy a property for more than what it is

worth.

Owner Occupiers buying lower price

quantum units at high PSFs due to

perceived affordability.

Speculators bank on prices rising at the

same rate as in the past.

Properties have negative cash flows and

low rental yields

Net Rental Yields are below the inflationrate.

Low interest rates and higher consumer

price inflation.

Professional investors stay out of the

market. Owner-occupiers and speculativeinvestors remain core buyers.

Property cooling measures are

implemented to curb further property price

increases.

What are the significanthints to indicatewhen the property market is bottoming?

Owner-occupiers are unwilling to buy and

force prices down further.



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After significant double-digit price

declines.

Low but positive yields even as property

prices fall further (rent is static but price is

volatile)

Removal of property cooling measures.

Peaking interest rates and low consumer

price inflation.

Property has a bad name and buyingproperty is now considered a stupid thing

to do.

The lower end of the market plummets

due to lack of interest.

Repossessions are higher than theyveever been.

Professional investors, like vultures,

watch property prices on a daily basis to

see when the price falls to a level that will

put money in their pocket.

Professional investors start bidding wars

(some are cheeky and do not care if they

offer 20% below what seller is asking!)

When is it time to enter/re-enter the

property market?

Cooling measures will stay on for a long time.

So sit tight and wait patiently for further

correction. Historically, expect a 20% fall in

prices before well see the bottom of the

market.

Saybye-bye to the high growth years

Its2015. Todayssmart phones are the size

of our palms and getting smaller. In the

1980s, mobile phones were the size of one-

litre water bottles, and not smart!

Technology evolves quickly and so do the

markets.



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It certainly does not take an expert economist

to know the high growth years of ourparents

generation are gone.

Imno expertand neither do I try to be one.

All I did was to use logic to value my

investments, rather than follow the crowd and

listen to experts whose investments

contribute little their net worth.

If you believe a projected 6.9 million future

population and addition of MRT lines will fuelgeneral property price growth till 2030, you

are short sighted. Buyers who buy area-

specific opportunities at close to or at the

bottom of the market will profit. Buyers who

buy at future pricesin over-hyped areas will

see poor returns.

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 financiallywealthy today.

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

D e c e m b e r 2 0 1 4 H D B r e s a l e p r i c e s l o w e s t

i n t h e p a s t 4 1 m o n t h s

The HDB resale prices in December 2014 are

the lowest in 41 months. HDB resale prices

had fallen 0.4 percent in December from the

previous month while resale volume also fell

by 4.1 percent to 1,295 units. Market experts

believe that stricter mortgage servicing ratio

limits had affected demand for resale HDB

flats. According to the Business Times, four-

room and five-room flats had led the fall in

HDB resale prices, falling by 0.7 percent and

0.3 percent respectively. Ong Kah Seng from

RSTResearch believes that supply for HDB

resale flats increased as more owners had

wanted to upgrade to private homes or

executive condos. Nicholas Mak from SLP

International added that an increase in build-

to-order flats had also affected demand for

HDB resale flats. Nonetheless, HDB resale

volumes in December increased by 28

percent year-on-year.

(Source: Business Times)

$ 20 m i l l i o n a l l o c at e d t o u p g r a d i n g p r o j e c t s

in 9 p r ivat e est at es

The Ministry of National Development (MND)

will be allocating $20 million to upgrade 9private estates. Under the Estate Upgrading

Programme (EUP), upgrading works will be

made to improve the living environment of

older estates.



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Clover Estate, Lentor Estate, Thomson Faber

Island Gardens, Toh Tuck Estate, Meng

Suan/ Springleaf Estate, Happy Gardens,

Sea Breeze Garden, Toh Estate and Jalan

Merbok, Jalan Layang-Layang, JalanKakatua, Jalan Selating, Jalan Rajawali and

Shamah Terrace Estate are among the 9

private estates that would undergo upgrading.

More than 4,800 households will be impacted

by this cycle of EUP and the EUP project is

expected to be completed in three to fouryears.


Si ng ap or e i m po ses o n e o f t he h ig h es t

p r o p e r t y t a x e s o n f o r e i g n i n v e s t o r s

According to a report by Knight Frank,

Singapore imposes one of the highest

property taxes on foreign investors. Market

experts believe that investors may be

attracted to countries such as South Korea,

Thailand, Malaysia and Cambodia, as they

have more relaxed tax regimes. Nicholas Holt

from Knight Frank said that taxes have been

imposed to cap growth in the propertymarket. Particularly in Singapore, cooling

measures were implemented to keep prices

in check. These measures include the

imposition of higher taxes for foreigners. For

example, foreign investors are subjected to

an additional 15 percent buyersstamp duty.According to the Business Times, property

prices had fallen by 4 percent in 2014,

following the implementation of the cooling

measures.


D uxt on f lat changed hands f or $918, 000

A five-room unit at the Pinnacle@Duxton has

changed hands for $918,000.



16/19

S G O O ssue 90


The 106 sqm flat is located on the fifth floor of

the housing development. This is the second

Duxton unit that was sold, following the end of

a 5-year occupation period for home owners

at the Duxton. According to the Straits Times,a four-room flat on a higher level had

previously fetched a price of $900,000.


Commercial

In d u s t r i a l b u i l d i n g a t G ey l a n g o n s a l e

A light industrial building that is located at

Lorong 23 Geylang has been put up for sale.

According to Colliers International, the 60-

year-leasehold building has an indicative

price of $115 million and it will receive itstemporary occupation permit (TOP) by the

end of Q1 this year. However, the building is

not permitted to be strata-subdivided for sale

in the first 10 years upon receiving its TOP.

The 67,944 sq ft site consists of seven stories

and its total provisional strata floor area is

about 237,000 sq ft. Tan Boon Leong from

Collier International believes that the building

will appeal to institutional investors because ithas a longer tenure as compared to most

sites offered under the government land sales

programme. Furthermore, the site is expected

to appeal to tenants who are ineligible for JTC

sites as it is not under the purview of JTC,

said Tan.


C o l l i e r s : R e t a i l r e n t s e x p e c t e d t o s t a b i l i s e

in 2015

Colliers International predicts that rental

growth will remain flat this year. According to

Colliers, rental growth for prime ground floor

retail space in Orchard Road will fluctuate

between -1 percent and 1 percent in 2015.



17/19


Similarly, retail rents in other areas such as in

the suburban regions, are expected to

fluctuate by just 2 percent. Nonetheless,

Colliers predicts that there will be a moderate

increase in rents of retail spaces located inniche and diverse areas such as in the

heartlands. According to the Business Times,

the average monthly gross rent of prime retail

space in Orchard Road had fallen by 0.8

percent to $36.17 psf in Q4 last year. Yet, the

average monthly gross rent of prime retailspace in regional centres had increased by

1.1 percent to $33.83 psf in Q4 last year.

Market experts believe that labour shortages

and higher operating costs have weighed on

tenantsabilities to afford a higher rent. Due

to a reduction in retail activities in OrchardRoad, the rental premium that prime retail

space in Orchard Road had commanded over

similar spaces in the regional centres have

fallen from 9 percent to 6.9 percent, said

Colliers.


Q 3 2 014 o c c u p an c y c o s ts i n cr ea ses b y 14.6% year-on-year

According to CBRE, the rate of growth in

prime office occupancy costs in Q3 2014 had

increased to US$112.91 psf per year in

Singapore. This was a 14.6 percent year-on-

year increase in occupancy cost. CBRE

added that this increase in cost is likely to be

due to higher monthly rents in prime

locations. Moray Armstrong from CBRE said

that as new supply for office spaces is

expected to shrink by H2 of 2016, office rental

growth is expected to surge. Globally, prime

office occupancy costs had also increased by

2.5 percent year-on-year in Q3 2014.



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The Asia-Pacific region saw a 2.8 percent

increase in occupancy costs while America

experienced a 4.1 percent increase in costs.

Richard Barkham from CBRE predicts that

this trend will persist this year.


6 s h o p h o u s e s a t P e c k S e a h S t r ee t s o l d f o r

$42.8 mil l ion

A row of six shophouses at Peck Seah Street

have sold for $42.8 million or $2,155 psf. The

total gross floor area of the six shophouses is

$19,860 sq ft and the shophouses have lease

tenures of about 78 years left. Under the

Chinatown (Tanjong Pagar) Conservation

Area, inURAsMaster Plan 2014, the site had

been zoned for commercial use. According to

Sammi Lim from CBRE, the site was sold for

a price that was in line with the market value.

However, other market experts have said that

the site had been priced highly, because they

believe that such a site should have

commanded a price below $2,000 psf.


http://www.moneymatters.sg/


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Non-Landed Residential Resale Property Transactions for the Week of Dec 24 Dec 30

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

DistrictProject Name

Area

(sqft)

Transacted

Price ($)

Price

($ psf)Tenure

1 THE SAIL @ MARINA BAY 678 1,188,000 1,752 993 QUEENS 1,195 1,480,000 1,239 99

9 VISIONCREST 1,206 2,290,000 1,900 FH

10 THE TOMLINSON 2,368 5,000,000 2,111 FH

11 NEWTON SUITES 1,238 2,350,000 1,898 FH

11 HILLCREST PARK 1,152 1,518,000 1,318 FH

12 THE ARTE 1,625 2,130,000 1,310 FH

15 THE ESTA 1,130 1,670,000 1,478 FH

15 THE GRANDIFLORA 1,033 1,118,000 1,082 FH

16 OPTIMA @ TANAH MERAH 1,302 1,660,000 1,275 9916 BREEZE BY THE EAST 2,045 2,230,000 1,090 FH

16 THE BAYSHORE 1,238 1,150,000 929 99

18 EASTPOINT GREEN 958 808,000 8 43 99

19 KOVAN MELODY 1,410 1,496,000 1,061 99

20 CLOVER BY THE PARK 1,292 1,570,000 1,215 99

21 HILLVIEW GREEN 1,905 1,830,000 961 999

22 PARC OASIS 1,076 1,000,000 929 99

22 THE MAYFAIR 1,163 895,000 770 99

27 YISHUN EMERALD 1,184 900,000 760 99
http://propertymarketinsights.com/

Singapore Property Weekly Issue 190

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