Page 1 of 3 123 LastLast
Results 1 to 10 of 22

Thread: Differing views

  1. #1
    Junior

    User Info Menu

    Default Differing views

    Not hard to tell who is probably vested in properties and who probably missed the boat.....


    Residential properties: Waiting for Godot?


    by Ku Swee Yong
    04:45 AM Jul 01, 2011

    Home buyers - especially those buying for owner-occupation rather than investment - have frequently commented: "I want to wait for the next downturn before I purchase my home."

    They have been saying this for the past 12 to 18 months. Till today, they remain adamant about the impending downturn of the property sector. If they are lucky - lucky of the Big Sweep kind - a sharp downturn might come soon. Perhaps a perfect storm of external crises added on to an immense oversupply of completed units?

    Imagine: Greece decides to default on its debt, European lenders stumble because they bought the bulk of the Greek debt and this in turn cripples US financial institutions because they insured European banks against Greece's default. Consequently, Spain, Portugal and Italy are rushed into a financial ICU, global credit re-freezes, affecting even the conservative Asian banks. Global confidence sinks, employment shrinks in Singapore and property prices here fall because the fringe investors feel the jitters.

    If such a scenario really occurs, the lucky potential home buyers who remain cash-rich may get a chance to buy on the cheap, say, perhaps 20 per cent below today's prices - taking us back to levels of about 12 months ago, not 18 months ago.

    But, has it been worth the wait? Let us begin with the basic facts. The Urban Redevelopment Authority's (URA) Private Residential Property Price Index has climbed about 50 per cent in the last 18 months. On a year-on-year basis, the private residential index has shown growth every quarter for the last six quarters.

    Over the period of October 2009 till March this year, the Straits Times Index (STI) rose steadily as the economy expanded strongly. The booming economy created new jobs, increased wages and generated new wealth. Inflation rose faster than the strengthening Singapore dollar could help, hitting a three-year high of 5 per cent per annum due to global commodity shortages, food supply disruptions and roaring Certificate of Entitlement prices. The one key component in the whole equation that slithered downwards was interest rates.

    Savings rates have been below 0.5 per cent per annum for the past two years. For the home buyers who have waited for the market dip since end-2009, not only have their Singapore dollars diminished in value due to inflation, they might have missed out on the 17-per-cent rise in the STI or the 50-per-cent rise in the private residential sector. Those who invested their cash in the Singapore stock market will still be down against those who invested in the private residential sector.

    But here we are talking in general about price growth. We have not included the returns from stock dividends or return on equity for properties financed with loans.

    Particularly for the home buyers who stayed on the sidelines in the last 18 months and who are still not committing, we have also not included the "return on enjoyment". In fact, I would say that staying uninvested and missing out on the returns of enjoying one's own home is probably the biggest loss - loss of satisfaction.

    For those who think that they might have missed the residential property boat, there is no need to fret. The 50-per-cent rise of the URA's Private Residential Price Index was driven by: 1) properties in the outskirts and 2) record prices and volumes achieved at new launches. There are many older apartments of good value in Districts 9 and 10 which have scarcely risen in price.

    In the examples highlighted, Valley Park has seen a 15-per-cent increase in average $psf prices in the last 18 to 20 months. That is well below the overall rise of 50 per cent for all residential properties across the island over the same period. And at a unit price of between S$1,200 to S$1,400 psf, it is my view that these properties above represent exceptional value versus properties in the Outside Central Region (OCR) that transacted at this price range recently.

    There are many more examples of well-built developments in districts 9, 10 and 11 whose prices have increased by less than 20 per cent and are trading well below their newer neighbours: Aspen Heights, Waterfall Gardens, Nassim Jade, Tanglin Park and Sommerville Grandeur, just to name a few. I believe that there exist many good-value homes for those who search hard. As these properties are considered undervalued relative to their neighbours, the downside to the price levels will be limited even if a Greek debt crisis occurs.



    Ku Swee Yong is the founder of real estate agency International Property Advisor, which provides services to high-net-worth individuals. He is the author of Real estate riches: Understanding Singapore's property market in a volatile economy.






    Housing glut or not, worries remain


    by Colin Tan
    04:45 AM Jul 01, 2011
    var fontIndex = 2; var fontSize = new Array('0.63em', '0.69em', '0.75em', '0.88em', '1em', '1.13em');
    The expected surge in the supply of new Housing and Development Board (HDB) flats and private homes over the next few years will not lead to a housing glut in 2013/ 2014, according to a recent Citigroup property report that made news for its contrarian view.

    Citigroup's analysis looks at Singapore's housing stock in totality, taking into account both private and public housing, saying they are closely linked. It says a prolonged period of under-building in the 2000s has resulted in the current severe housing shortage. This is likely to provide continued support for mass market prices and demand.

    The team behind the report estimates that the deficit in housing units is in excess of 50,000 currently and this undersupply will likely take several years to clear, just like the oversupply situation in the early 2000s.

    I do not totally disagree with their view. If you examine the facts, there was definitely serious under-building, especially in the public housing sector, the repercussions of which we are feeling now. What you may dispute is the extent of the under-building.

    I am not sure if the team realises it but it was describing all the ingredients coming together for the perfect bull run that we are experiencing now, as opposed to the perfect storm that some are predicting that the market will face in two to three years' time.

    The decade of under-building has led to a strong build-up of pent-up demand. Throw in a loose immigration policy, the strong stimulus provided by the integrated resorts and other infrastructure projects leading to a spectacular 14.5-per-cent gross domestic product growth rate last year, abnormally low interest rates and a liberal foreign ownership policy with respect to property and you have the perfect bull run.

    The run-up has been sufficiently strong to fully negate the effects of four rounds of property market cooling measures. It has yet to be tamed as the market is still running on many legs - one of which is the low-interest-rate environment, which will likely persist in the near future.

    However, even if one holds the view that there will be no property glut in 2013/2014, it does not mean that our worries are over. We cannot preclude that one can quickly build up later.

    It is already evident that there are imbalances in the different housing segments even if there is an overall equilibrium - oversupply in the upper tiers and a shortage in the lower tiers.

    In a rapidly rising market where prices rise faster than household incomes, the imbalances will worsen. If prices do not correct soon to re-align the mismatch, more supply may need to be announced to correct the severe shortage in the lower tiers. This can quickly build up into a glut even if one does not exist now.

    If you subscribe to the view that there will be equilibrium by 2013/ 2014, what it means is that there is a limit to the price downside when the market corrects. Prices will fall until they reach the support level that matches all units with occupiers. In other words, we will have a sharp correction but no crash. But if you feel that there will be a glut between now and 2013, a price correction can be severe as there will simply be more housing units than occupiers.

    Finally, the profile of buyers in the HDB resale market for May showed that private property owners (8 per cent) and permanent residents (20 per cent) still make up a sizeable chunk. Last year, then National Development Minister Mah Bow Tan revealed - before the implementation of the new rules - that 10 per cent of buyers in the resale HDB market were private property owners, while PRs made up 20 per cent.

    The latest numbers seem to suggest that the new rules have been ineffective. On the contrary, I feel the measures have worked. What we are seeing are probably single-property private owners who are downgrading, owing to en-bloc sales or otherwise.

    The indications from agents are that resale volumes have fallen drastically in May. So 8 per cent and 20 per cent on a sharply reduced volume is much smaller in absolute numbers. In fact, most private property owners and PRs who bought in May probably had little choice, unlike citizens who have the option to buy new Build-To-Order flats.



    Colin Tan is head, research and consultancy, at Chesterton Suntec International



  2. #2
    Junior

    User Info Menu

    Default

    Ku Swee Yong says properties that barely increase in value (and therefore undervalued) are Valley Park, Aspen Heights, Waterfall Gardens, Nassim Jade, Tanglin Park and Sommerville Grandeur, just to name a few. We should track the prices of these properties to see if Ku Swee Yong's prediction is accurate or not

  3. #3
    Exalted

    User Info Menu

    Default

    Quote Originally Posted by Wild Falcon
    Ku Swee Yong says properties that barely increase in value (and therefore undervalued) are Valley Park, Aspen Heights, Waterfall Gardens, Nassim Jade, Tanglin Park and Sommerville Grandeur, just to name a few. We should track the prices of these properties to see if Ku Swee Yong's prediction is accurate or not
    Cannot b so many of them undervalued one lor....

    Market usually 90% correct....so how to have so many undervalued condos

    goto wait long long till ltv revert bck to 80 or 90%

  4. #4
    Senior

    User Info Menu

    Default

    A 24xxsf unit at nassim jade is selling for 5.5mil with gross rental yield of only 2%, how can that be undervalued? Rental speaks volumes about what the place should be worth imo. I think if anyone compares transacted prices of condos in the same area, yes, there are bound to be condos that seem undervalued (eg. If you compare the marq/scotts square/orchard residences and paterson residences/linc), but I prefer to look at rental yield as a gauge to what a property is worth. No point saying that you bought a property in orchard that is worth $5 mil when people are only prepared to pay a a measly 2%.
    Quote Originally Posted by Wild Falcon
    Ku Swee Yong says properties that barely increase in value (and therefore undervalued) are Valley Park, Aspen Heights, Waterfall Gardens, Nassim Jade, Tanglin Park and Sommerville Grandeur, just to name a few. We should track the prices of these properties to see if Ku Swee Yong's prediction is accurate or not

  5. #5
    Newbie

    User Info Menu

    Default

    Quote Originally Posted by Wild Falcon
    Ku Swee Yong says properties that barely increase in value (and therefore undervalued) are Valley Park, Aspen Heights, Waterfall Gardens, Nassim Jade, Tanglin Park and Sommerville Grandeur, just to name a few. We should track the prices of these properties to see if Ku Swee Yong's prediction is accurate or not
    whats so great about sommerville? looks old but asking so high!

  6. #6
    Junior

    User Info Menu

    Default

    Quote Originally Posted by Regulators
    A 24xxsf unit at nassim jade is selling for 5.5mil with gross rental yield of only 2%, how can that be undervalued? Rental speaks volumes about what the place should be worth imo. I think if anyone compares transacted prices of condos in the same area, yes, there are bound to be condos that seem undervalued (eg. If you compare the marq/scotts square/orchard residences and paterson residences/linc), but I prefer to look at rental yield as a gauge to what a property is worth. No point saying that you bought a property in orchard that is worth $5 mil when people are only prepared to pay a a measly 2%.
    Not wanting to go into CCR vs OCR....

    This theory applies in development that pple actually rent only n then it will mostly limits to rental premiums that pple actually pay. At 20k a month rental for example, wouldnt that someone just buy it himself rather than rent?

    pple pay 5-10m in orchard not for the boosting rights to claim their property can rent the highest yield. Just visited a management office in a orchard development and they told me Indonesian buy the condo there for vacation visits to Singapore when they come for checkups.

    A agent at the same condo told me told me a interesting story. He was marketing a unit there and a seller agent came with a teenager ard 14-15 years old and when the agent ask where the buyer, the seller agent point to the boy n say "there". You know what? agent got the cheque the next day.

    At different price points pple buy for different reason. No point saying you bought a property in orchard? Not everyone buys on rental yield. But if depending on rental to pay off the big quantum loan, yup i agree, avoid orchard at all cost.

  7. #7
    Junior

    User Info Menu

    Default

    Quote Originally Posted by cl0ver
    whats so great about sommerville? looks old but asking so high!
    but then there is the argument that FH properties is good, can hold value damn well? Based on your comment, its confirmed once property ages, pple will still prefer new LH.

    15xxpsf FH D10 15 years developement vs 1100 Boon Lay LH99 development new development. Most pple buy Jurong development 26% cheaper.

    1050 psf FH 30 years Pandan Valley(along holland road) , 11xx psf LH99 forestque(in next to nothing development). More pple buy this next to nothing development.

    So its a myth that FH 20% premium is better. After 30 years FH still lose to new Damn bloody expensive ulu development.

    Moral of story, buy LH 99 years , rent out 4% yield, after 10 years get rid of it buy another LH better than hold on to FH forever.

  8. #8
    Junior

    User Info Menu

    Default

    BTW regulator, rental yield calculation is a must in most situation and i agree with your method for building cash flow investment strategies.

  9. #9
    Senior

    User Info Menu

    Default

    I am not uber rich and can only afford a few properties so I need to be prudent and select properties in reasonably good locations with good yields. If I am as rich as oprah or larry page, then I probably wouldn't give a shit about rental yield and would just buy real estate in all the prime locations around the world just to park my money
    Quote Originally Posted by DaytonaSS
    BTW regulator, rental yield calculation is a must in most situation and i agree with your method for building cash flow investment strategies.

  10. #10
    Go for Smallest Unit

    User Info Menu

    Default

    Free hold....

    For hoarding...

Page 1 of 3 123 LastLast

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •