There are almost 60 new condominium launches in Singapore this year, a staggering figure which garnered concerns from many of our clients. A few common concerns include:
1. Increased prices – prices of properties have increased since 10 years ago (The big question: Is $1,800 to $2,000 PSF reasonable?)
2. Fear if properties can still fetch a profit if purchased at such a high price (The big question: Have you compared and done your analysis with surrounding properties?)
Yes! All these concerns are real and they are the “new normal” for the property market. But do you stop property investments simply because of the price increase due to inflation? NO!
Let’s look at it from another angle. 30 years ago, you can get a bowl of noodles for $1. However, the same bowl of noodles now cost $5, and yet here we are, still slurping down bowls of noodles.
Hang on, you might be thinking… why are we comparing apples and oranges? Well, you are right, we shouldn’t. Because unlike the former, property investments actually act as a good hedge against inflation.
Inflation is the general increase in the cost of our day-to-day living over time – Every dollar you have today is worth lesser as days go past. One of the ways to counter inflation is through real estate investment. Imagine real estate as a commodity – As inflation drives up the price of goods and services, the price of this commodity (property) should also increase together. Simply put, as long there is a demand for properties, it will very likely continue to act as a good hedge against inflation.
Now, the question you should be asking yourself is, how can you, in this current climate, STILL accumulate your wealth? It is about how fast you can grow your savings…
- Safely
- Systematically
- Predictably
We are here to share with you how exactly you can do it! The numbers don’t lie.
Part 1: What are you seeking for?
A lot of clients come to us asking, “When is it a good time to buy and when is a good time to sell my property?” Our question to them is, “Do you see property as an attainable means to growing wealth for anyone who wants it?”
If so…. creating a savings plan in property is not about holding on to properties. That is a misconception. We take action with that sum of money – We do something with that money to grow it further.
When you ask, when is the right time to buy/sell, it is like asking when is a good time to save? We all know it is prudent to save. Therefore, the question is not when to save, but how much we can save. Likewise, in property, we all know we need to buy and sell. So the question to focus on is not when to buy and sell but at what price. There is no good or bad time to buy property. Timing is not key. The right entry price is the key.
What is more important is the intent you have – There is a difference between owning a property and using the property to grow your savings.
Once you understand what you really need, the next common question we have is this. Should I buy a resale condo, perhaps freehold or a new launch condo that is leasehold?
Part 2: Understanding the difference
To start, you will need to understand the differences between a resale condo versus a newly launched condo. There is no wrong to buying a new launch vs a resale condo or vice versa. It really depends on what you need or want. But let us look at the chart to see the difference at a glance.
Some food for thought… For example, one can say, I already have a property that I call home. For my next investment, I want to collect immediate rental, so I am going to buy a resale.
That is good if you have calculated how much retirement funds you need and if that one additional property will make do for your retirement. But if you invest in a new launch and sell upon 3-5years to gain capital appreciation, and you do this enough, you may be able to buy 2 more properties to rent in the future. That might just be a wiser choice.
With all that being said, these financial calculations require patience to run through, and it would be better to consult a reliable agent to go through the figures as well.
Law of Multiplication: If you hold on to one property, then you will always only have that one property of wealth, whatever the value of that property may be. The rate of growth will always remain as one. But if you have 2 properties, then your rate of growth will automatically double. When there is doubling of assets, the multiplication of wealth begins.
Part 3: Turning the tides
With the increase in property prices, how can you turn the tides? Here are a few proven case studies in terms of buying new launches.
Case Study 1 – Commonwealth Towers (District 3)
Commonwealth Towers is a prominent skyscraper that offers a 99-year leasehold for its exquisite condos, featuring 844 homes on 43 storeys built just across Queenstown MRT station. It is also strategically placed in the middle of community amenities. The developer, City Developments Ltd, is renowned as Singapore’s largest developers with a broad portfolio of residential properties.
The graph below shows the rising trend from launch to about 5 years owning the property. We see 2 peaks – One upon Temporary Occupation Permit (TOP) and the next peak is at the 5 year mark. Now you can draw the conclusions here yourself.
Here’s a true example – data extracted from SRX analysis.
*The exact unit number will not be revealed.
2 bedroom at 753 sqft bought in May 2014 for $1.18M.
2017: Reached Temporary Occupation Permit (TOP)
Aug 2019: Sold for $1.37M
The estimated rental @$3,400 per month across 2 years is = $81,600.
The overall gain – $190,000 + $81,600 = $271,600
Case Study 2 – Principal Gardens (District 3)
Nestled in a quiet enclave along the recreational waterway of Alexandra Canal, residents in Principal Garden get to enjoy uninhibited views that stretch from the low-rise surroundings all the way to the CBD and Orchard Road. Comprising of four 24-storey towers, home to 663 one- to five-bedroom apartments, Principal Garden is delightfully private yet incredibly well connected. The condominium is conveniently located just minutes from Redhill MRT, a short drive to the CTE and AYE, within walking distance of supermarkets, wet markets, hawker centres and schools, and a stone’s throw from Singapore’s core commercial and financial districts.
Here’s another true example – data extracted from SRX analysis.
*The exact unit number will not be revealed.
2 bed at 764sqft bought in Oct 2015 for $1.216M
Sold at $1.425M in May 2019
Whooping $209,000 profit over 4 years
Case Study 3 – ARTRA (under construction)
ARTRA is a prestigious private property development located at Alexandra View, just beside Redhill MRT. Developed by FEC Skyline Pte. Ltd., Artra Condo offers 400 luxurious residential units. There will also be a shopping mall at the 1st floor, with 1 supermarket, 16 shops and an in-house childcare center, for the convenience of residents.
Its wide selection of units sizes and types from 2 + study units to 5 + study with private lift units, proves to be well-suited for family living. Artra Condo also boasts of full condominium facilities, with a tennis court, club lounge, lap pool, sky jacuzzi, sky fitness and various rooftop pavilions. With its excellent location, accessibility and transport. work, play and travel is truly within easy reach.
Launched in 2017, we see a 19% growth even before Temporary Occupation Permit (TOP).
Part 4: First Mover Advantage – Be the Forerunner
If the case studies above still have not swayed your perception, perhaps the first mover advantage will. Investing in an upcoming area may serve as a smart and practical choice, because its value and price will increase alongside the area’s transformation.
An upcoming launch which will benefit from the government’s URA masterplan is Avenue South Residence. During 2018’s National Rally, Prime Minister Lee Hsien Loong announced Singapore’s development plans, one of which is the Greater Southern Waterfront.
“The Greater Southern Waterfront will reinvent the city for many years to come and make a new chapter in Singapore’s city development.”
Prime Minister Lee Hsien Loong,
National Rally, 18 August 2018
According to Minister Lawrence Wong, the footprint of the Greater Southern Waterfront is 2,000ha of prime waterfront land, six times the size of Marina Bay. Plans to redevelop and stitch together the entire waterfront from Pasir Panjang to Marine East are underway.
Avenue South Residence will be the forerunner of all the launches located along the Greater Southern Waterfront, and a huge gamechanger. The 56 storey twin towers offers a total of 1,074 residential units. The public park, 18 sky gardens and sky court offers residents the opportunity to unwind in serenity.
Wondering how much the average price per square foot will increase by after an area’s development? Just check out the market data that followed after Marina Bay and Jurong transformation.
Jurong Transformation:
Marina Bay Transformation:
It’s time to take your investments to the next stage. Beat the tides with us and make a profit even with increasing property prices.
Leave a comment, or drop us a message at +65 9794 8823 / +65 9069 9129 if you want to know more.
Cindy + Geri
Right Property | Right Time | Right Price
Property Consultants At Your Service
Disclaimer:
- This post was written based off Cindy + Geri’s experience and in reference to Kelvin’s Fong – Property Wealth System Book
- All information on this post is provided “as is”, with no guarantee of completeness, accuracy, timeliness or of the results obtained from the use of this information, and without warranty or any kind, express or implied, including, but not limited to warranties of performance, merchantability and fitness for a particular purpose. In no event will Cindy + Geri, or the partners, agents or employees therefore be liable to you or anyone else for any decision made or action taken in reliance on the information in this site, or for any consequential, special or similar damages.