Issue 241

Copyright 2011-2014 www.Propwise.sg. All Rights Reserved.

CONTENTS
p2

5 Property Investment Pitfalls to Avoid

p7

Singapore Property News This Week

p11

Resale Property Transactions

FROM THE

EDITOR

Welcome to the 241st edition of the

Singapore Property Weekly.

Hope you like it!

Mr. Propwise

(December 16 December 22)

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SINGAPORE PROPERTY WEEKLY Issue 241

5 Property Investment Pitfalls to Avoid

By Tam Ging Wien (guest contributor)
Property investments are capital intensive
and highly leveraged typically property
financing covers up to 80% of a propertys
purchase value, and can reach 90% in some
countries here in Asia. Investors need to save
up a substantial amount before making a
purchase.
A property investment that has gone sour
may take an investor several years to
recover. Besides the loss in capital, the
opportunity cost is also high the investor
would be priced out of any future investment
in years to come.

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SINGAPORE PROPERTY WEEKLY Issue 241

Therefore, learning from the mistakes others
have made is half the battle won!
In this article we will look at five common
property investment pitfalls that trap
investors, and how to avoid them.
Pitfall #1 Investing in Future Value
instead of Undervalued
Why would anyone buy a property at a higher
future price? Beats me.
Yet, numerous investors continue to flock to
swanky showrooms at new launches to buy
units that have not even been constructed
yet. They pay prices way above the
completed project in the surrounding areas.
This is clearly paying for future value.
The odds in new launches are stacked
against the individual buyer. The property
development industry within Asia is usually
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dominated by a few large companies. They

benefit from economies of scale, strong
branding and lots of advertising dollars.
These industry giants are also well connected
and often collaborate in joint venture projects
and time their launches to avoid direct
competition. They also garner strong support
from banks and marketing agents to push
sales.
Purchasing a brand new launch provides zero
cash flow to the investor for several years.
Brand new launches command a premium
simply because they are new. Developers sell
a lifestyle and a dream to home buyers to
justify those premiums.
Pitfall #2 Investing due to Sentiment
instead of Evidence
Are you constantly making your investment
decision by relying on newspaper reports and
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SINGAPORE PROPERTY WEEKLY Issue 241

and quotes from property experts? Do you
frequently attend new property launches and
seek the opinions of developers and sales
agents? Do you buy because you hear your
friends or family members buying? Do you
buy into the notion that property prices always
increase so you can just buy and hold? Do
you think anytime is a good time to buy
property?
If you have said yes to one or more of the
questions above, you may unknowingly be
investing due to sentiment.
Remember, you should never put your trust in
sources of information where the opinions
come with a conflict of interest. Developers,
agents and sales persons will always tell you
that anytime is a good time to buy and
property will always go up if you just hold long
enough.

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Instead, look at the facts and figures.

Governments regularly publish statistics of
home sales, housing starts, developer
inventories, supply and demand data, and
prices indices. Study the micro and macro
economic factors in the region and country
that you intend to invest in. Understand the
property sectors and behaviours.
Property purchases are likely the largest
purchases we will make in our lives.
Therefore are you spending a proportional
amount of time to learn and comprehend your
investment?
Pitfall #3 Investing for Capital Gains
instead of Cash Flow

Like any other market, the property market

operates in cycles. Capital gains and losses
will occur during uptrends and downtrends.

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SINGAPORE PROPERTY WEEKLY Issue 241

A full cycle from Bull to Bear and back to Bull
again can take anywhere from three to ten
years.
Therefore, there is little point in trying to
predict the market direction. Instead, a smart
investor will watch for signs of market stability
and search for properties that are
undervalued and that give a high and
predictable cash flow.
This sustainable cash flow will allow the
investor to stay invested without having to
draw on their monthly salaries. Those with
positive cash flow will even be able to build
up cash reserves passively which can be
used for emergencies or the next investment.

Pitfall #4 Investing in the Trend instead

of Counter-Trend

property prices have been driven down due to

widespread pessimism in the economy and
markets. They take opportunity to bottom fish
and seek properties where sellers are
desperate and willing to sell below market
value. These investors use sustainable cash
flow to tide them through uncertain economic
situations.
When there is widespread optimism that
drives prices to unrealistic and unsustainable
levels, these investors will sell their properties
and reap the rewards. They then wait
patiently for the next cycle and start all over
again.
These investors always buy low and sell high.
They live and breathe the Warren Buffet
mantra, be fearful when others are greedy
and be greedy only when others are fearful.

A contrarian investor only invests after the

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SINGAPORE PROPERTY WEEKLY Issue 241

Pitfall #5 Investing without an Entry or
Exit Strategy
As a final pitfall, many investors enter into an
investment with no clear entry, hold and exit
strategy. They have not considered the
question of who their potential tenants are or
who they can sell their properties to. They
have not calculated their recurrent expenses
versus rental yield. They have no clear
investment goals.
For most average investors, we usually only
have one shot in property investment, so
make that bullet count!
By guest contributor Tam Ging Wien, an avid
investor and blogger who spends his time
empowering the masses in financial
education.

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SINGAPORE PROPERTY WEEKLY Issue 241

Singapore Property This Week

Residential

market.

Prices of completed small condos fall by

1.2% month-on-month in Nov

(Source: Business Times)

According to the Singapore Residential Price

Index, prices of completed small condo units
and apartments that are no larger than 506
sq ft have fallen by 1.2% in November from
October. In October, a 0.4% month-on-month
fall in prices was seen in the same category.
Year-to-date, prices of small units islandwide
have fallen by 4.1%. Ong Kah Seng from
RST Research said that owners of smaller
flats may be more willing to let go of their
flats at lower prices as the units may be too
small for their families and the demand for
such units may also be weak in the leasing
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GCB transactions completed in 2015

totals $730 million
In 2015, at least 34 transactions totalling
$730 million were completed in the Good
Class Bungalow (GCB) area. This is up from
the 28 transactions totaling $626 million in
2014. According to the Business Times, this
is the best showing since 2012 when 54
properties in the GCB areas were sold for
$1.17 billion. William Wong from Premier
Group estimated that GCB prices have fallen
by 10 to 15% in 2015 due to weaker
economic sentiments.

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SINGAPORE PROPERTY WEEKLY Issue 241

Not only so, he believes that overall GCB
prices have fallen as there were several
transactions that were below $20 million in
2015. Samuel Eyo from Singapore Christies
International Real Estate also predicts that
prices have fallen about 10% in 2015. He
added that senior homeowners whose
children have moved out may wish to
downsize to a smaller home, thus contributing
to sales in 2015. He predicts that GCB prices
would ease by around 5% in 2016 if interest
rates continue to increase and if the
government does not lift the property cooling
measures.
(Source: Business Times)
Market experts: more see
investments rather than homes

ECs

as

Executive Condominiums (ECs) may be

losing their relevance as more homeowners
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are seeing them as investments rather than

residential units. According to market experts,
demand for ECs have not increased despite
the increase in income ceilings to $14,000
from $12,000. Not only so, some eligible EC
buyers find it more worthwhile to purchase
mass market condos as the price gap
between ECs and those condos narrows.
Furthermore, ECs face competition from
better-quality and well-located BTO HDB
projects. In Q3 of 2015, EC vacancy rates
stood at 10.5% according to URA, which is
higher than from 2012 to Q2 2013 where
vacancy rates were less than 1%. Based on
data from URA, 3,435 EC units were left
unsold at the end of Q3 last year. Combined
with the 3,780 units to be launched this year,
there will be a supply of about 7,000 EC units
in the market.
(Source: Business Times)
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SINGAPORE PROPERTY WEEKLY Issue 241

Two EC sites launched under GLS

about 820 units.

Under
the
Government
Land
Sales
programme, two EC sites were launched one at Yio Chu Kang under the confirmed list
and another at Sumang Walk under the
reserve list. The Yio Chu Kang site is
18,422.9 sq m large and has a permissible
gross floor area of up to 51,584.12 sq m.
According to HDB, the site may generate
about 520 units and its tender will close in
Feb 2016. Market experts predict that there
may be between 5 to 14 bidders with the
winning bid ranging from $260 to $340 psf
ppr. As EC land prices have fallen in 2015,
Ong Teck Hui from JLL believes that bidding
would be cautious. On the other hand, the
Sumang Walk site is about 27,056.4 sq m
and has a maximum permissible gross floor
area of 81,169.2 sq m and is able to yield

(Source: Business Times)

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Minister Wong: too early for government

to lift cooling measures
Minister for National Development, Lawrence
Wong said that the housing market is healthy
and stabilised thus it is still too early to lift
cooling measures. He added that the
government will continue to monitor the
market and adjust its policies accordingly.
According to the Business Times, both public
and private housing prices are stabilising as
the rate of declines is levelling off. Mohd
Ismail from PropNex predicts that HDB prices
may remain flat or drop 1% in 2016 while
private home prices may fall by 3 to 4%.
Minister Wong said that 18,000 HDB flats will
be launched in 2016.

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SINGAPORE PROPERTY WEEKLY Issue 241

This is 20% more than in 2015.
(Source: Business Times)

Commercial
H1 2016 Industrial land supply the lowest
in 8 years

mortgage lenders. Mak added that as

industrial land supply was reduced and by
there are no B1 sites on the confirmed list,
there is more time for the market to absorb
the oversupply of industrial land space.
(Source: Business Times)

6 industrial land site have been released in

H1 this year, the lowest in 8 years. Under the
H1 sale this year, 4.04 ha of industrial land
was released, this was reduced from the 6.12
ha released in H2 last year. B1 spaces for
light industrial use was also not released in
the government land sale programme for H1
this year under the confirmed list. Market
experts believe that this reflects that there is
an oversupply in land for B1 uses. Nicholas
Mak from SLP International noticed that all 6
plots have 20-year lease terms, which may
not appeal to industrial property market and

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SINGAPORE PROPERTY WEEKLY Issue 241

Non-Landed Residential Resale Property Transactions for the Week of Dec 16 Dec 22
Postal
District
3
4
4
4
5
8
9
9
9
9
10
10
12
12
14
14
14
15
15
15
15
16
16
16
16

Project Name
QUEENS
THE COAST AT SENTOSA COVE
THE INTERLACE
THE INTERLACE
ONE-NORTH RESIDENCES
CITYLIGHTS
RICHMOND PARK
THE BOTANIC ON LLOYD
CASA CAIRNHILL
8 @ MOUNT SOPHIA
ARDMORE THREE
CUSCADEN RESIDENCES
PRESTIGE HEIGHTS
BALESTIER POINT
MERA EAST
GROSVENOR VIEW
CAMELLIA LODGE
SILVERSEA
38 I SUITES
TIERRA VUE
MANDARIN GARDEN CONDOMINIUM
BEDOK RESIDENCES
COSTA DEL SOL
AQUARIUS BY THE PARK
BEDOK COURT

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Area
(sqft)
1,184
2,024
1,873
4,478
1,324
1,938
1,259
2,594
1,636
1,033
1,776
1,442
344
883
1,141
1,249
1,249
1,528
506
947
3,068
549
1,561
1,227
2,411

Transacted
Price ($)
1,400,000
3,300,000
2,238,000
3,524,100
1,800,000
3,180,000
2,880,000
4,750,000
2,780,000
1,580,000
5,442,550
2,800,000
550,000
880,000
1,250,000
1,260,000
1,000,000
2,600,000
815,000
1,280,000
2,925,000
840,000
1,900,000
1,080,000
1,550,000

Price
Tenure
($ psf)
1,182
99
1,631
99
1,195
99
787
99
1,360
99
1,641
99
2,287
FH
1,831
FH
1,699
FH
1,529 103
3,064
FH
1,941
FH
1,597
FH
997
FH
1,096
FH
1,009
FH
801
FH
1,701
99
1,611
FH
1,351
FH
953
99
1,530
99
1,217
99
880
99
643
99

Postal
District
17
17
19
19
19
20
20
21
21
21
21
23
23
26
26
26
27
28

Project Name
FERRARIA PARK CONDOMINIUM
ESTELLA GARDENS
KENSINGTON PARK CONDOMINIUM
THE QUARTZ
KOVAN GRANDEUR
SKY HABITAT
RAFFLESIA CONDOMINIUM
THE CASCADIA
MAPLEWOODS
KISMIS VIEW
KISMIS VIEW
HILLVIEW PARK
HILLVIEW REGENCY
MEADOWS @ PEIRCE
BULLION PARK
BULLION PARK
THE MILTONIA RESIDENCES
SELETAR SPRINGS CONDOMINIUM

Area
(sqft)
1,302
936
1,249
1,195
915
1,464
915
1,507
1,507
1,432
2,433
1,324
1,152
915
807
1,238
2,034
2,067

Transacted
Price ($)
1,210,000
803,000
1,380,000
1,168,000
700,000
2,480,400
1,080,000
2,280,000
2,200,000
1,080,000
1,600,000
1,310,000
940,000
1,118,000
820,000
1,065,000
1,880,000
1,420,000

Price
Tenure
($ psf)
929
FH
857
FH
1,105 999
978
99
765
99
1,694
99
1,180
99
1,513
FH
1,460
FH
754
99
658
99
989
FH
816
99
1,222
FH
1,016
FH
860
FH
924
99
687
99

NOTE: This data only covers non-landed residential resale property

transactions with caveats lodged with the Singapore Land Authority.
Typically, caveats are lodged at least 2-3 weeks after a purchaser
signs an OTP, hence the lagged nature of the data.

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