May i know what kind of condition that will make you want to buy a LH99 condo?
Location is one which is very obvious..
what about other? eg. fengshui? overlook sea & nature?
And
2. will LH99 be suitable for a long term investment (> 30yr)?
Property Newbie
May i know what kind of condition that will make you want to buy a LH99 condo?
Location is one which is very obvious..
what about other? eg. fengshui? overlook sea & nature?
And
2. will LH99 be suitable for a long term investment (> 30yr)?
I took the road less traveled by, and that has made all the difference.” - Robert Frost quotes (American poet, 1874-1963)
property soul
See below from my earlier blog posts on this topic. As an investor, I am pro-leasehold but it's fine if you think otherwise.
http://propertysoul.com/2011/07/09/f...sehold-part-i/
http://propertysoul.com/2011/07/10/f...ehold-part-ii/
Freehold or leasehold?
July 9, 2011
This is one of the most common questions people ask when they buy private properties in Singapore.
Singaporeans, especially the older generations, have very strong preference in freehold properties, as compared to leasehold projects.
Their reasons are:
1) The value of freehold properties appreciates in the long-term while prices of leasehold properties drop once they age.
2) There is not much value of a leasehold property once the tenure is almost up.
3) You can’t borrow from the bank to finance an old leasehold property. Your next buyer will have the same problem when you sell it in the future.
4) Buy old freehold properties to wait for en bloc.
I don’t know whether you agree with the above. But I am not someone who likes to follow ‘conventional wisdom’.
As the saying goes, even a dead clock is right twice a day.
Rather than taking any folk’s advice, from my past experience in property investment, you can only find out the truth with two methods:
1) Finding every fact you can on your own; and
2) Seeking multiple perspectives on the same story.
And over the years, I’ve learned the following facts about freehold and leasehold:
1) Property prices rise during boom times and vice versa, regardless of their tenure.
When the market is good, whether the project is freehold or leasehold will be selling like hot cakes. This is especially true in a new launch. The psf price of a newly launched leasehold project can go higher than that of an old freehold project nearby.
Once the property ages, the value of both leasehold and freehold development depreciates if they lack maintenance.
During the bad times of 2002 to 2005, I personally viewed countless freehold projects selling at very depressed prices. They look rundown and all have difficulties finding buyers.
Who said old leasehold properties are 30 to 40% lower than the value of freehold properties in the same area?
I found that only three factors determine the value of properties: economy, location and upkeep of the development.
2) The return of leasehold properties is higher than freehold properties.
If you’re looking for good rental returns, always buy leasehold projects at good locations.
Tenants don’t care whether your flat is 99-year, 999-year or freehold. Their concerns are always location, ambience, resident profile, etc.
Leasehold means cheaper purchase price, lower down payment, less stamp duty, smaller monthly installment, etc. The ROI is thus much higher than freehold properties.
You can buy more properties if they’re leasehold. Or you can use the higher rental return generated by leasehold properties to buy your next purchase earlier.
Personally, I think freehold properties somehow mean: developers bought the land at higher prices from the government, so they also expect you to pay higher psf to cover their cost!
That’s why all the properties I bought are all with 99-year leasehold!
3) It’s more than tenure when it comes to borrowing.
For financing, besides looking at the remaining years of the property, banks also look at the borrower’s income, credit history, past property investment, ability to repay the loan, etc.
Some banks also use a formula to calculate the tenure of the mortgage depending on the borrower’s age. The younger you are, the longer you can repay your housing mortgage.
The exception is commercial properties, especially for short leases (e.g. 30-year leasehold) or properties left with less than 15 years in its tenure.
4) Only the government or developers can decide the fate of freehold and leasehold sites.
We can’t deny the fact that all land in Singapore, regardless of freehold or leasehold, belongs to the government.
The government sets the rules of the game and has the right to change them at any time.
Even if your property is in a freehold site, for defense, redevelopment or whatever valid reason, the Singapore government has absolute right to confiscate the land and compensate you “at market value”.
Developers can also decide on the fate of the tenure. Far East Organization sells Shore Residences on a 103-year lease on a freehold site.
In 2005, Singapore Land Authority (SLA) initiated the first case to top up the 99 years’ lease of Eng Cheong Tower at Beach Road. The site area became the first leasehold collective sale completed in Singapore land history.
From now on, it doesn’t matter how many years left on the leasehold of 99-year property. Before any collective sale, all you have to do is to apply for in-principle approval to top up the site’s lease to 99 years. SLA will consider on a case-by-case basis.
And there are many successful examples: Grangeford (now Twin Peaks), Ong Building (now 76 Shenton), HMC building (now Lumiere) …
Mercedes Lover
For rental investment, I will buy a project which is near MRT and amenities where I could best secure tenancy, even when the economy is bad. Projects near MRT are mostly LH99 (with some exceptions), and the prices are lower than FH (assuming around same age). Many will also tell u that tenants wont pay u more just because you are renting them a FH (as opp to a LH), hence higher rental yield.Originally Posted by roly8
May i know what kind of condition that will make you want to buy a LH99 condo?
Location is one which is very obvious..
what about other? eg. fengshui? overlook sea & nature?
And
2. will LH99 be suitable for a long term investment (> 30yr)?
I wont buy a FH just for the sake that its a FH, if its more expensive and not near to MRT/amenities. 15-20yrs down the road, it will just be an old condo with low rental value (since its far from mrt/amenities), and worse, if the plot is densely built up with limited enbloc potential.
For own stay and long term investment, it could be a different story. It may be worth to buy a FH for the capital appreciation (provided the condo is well maintained). I love quoting the example of Cote d'zure (LH) vs The Seaview (FH) at Marine Parade Rd. The former is fetching a signficiantly lower price despite having a better location (nearer to PP and having the real sea view).
But most imptly, buy the house you like best (regardless FH or LH) if for own stay.
Last edited by zeamybro; 06-11-12 at 13:11.
Triple Crown
An article from Colin Tan.
12 October 2009
Leasehold vs Freehold
It has been one of the most discussed, argued over and one issue that is always very quickly put to sword by people who say “Buy Freehold!” without having analyzed changes that has been subtly taking place right under our noses. In any cases,* people buying properties would do well to remember that location is always more important than anything including the question of freehold vs leasehold.
I’ve always felt sorry for people who fail to recognise this and time and time again buy something within their budget that is in a poorer location but is freehold over buying something in a better location that is leasehold for the same budget.
This is something typical of human nature where something that has been passed down from our forefathers through many generations remains indoctrinated in our minds without proper analysis of the relevance in the world today. We must realise that the world has changed and that is true in Singapore as well as anywhere else. During our forefathers’ time, it is a very common thinking to buy a land or a piece of property with the intention of passing it down from generations to generations.
Today, things have changed. Majority of first time home owners in Singapore do not hold on to their properties for more than 10 years. Today, most average Singaporeans would think of moving out the moment they get married, upgrade once the family gets larger, sell once they make money on it etc. There is a lot less of feeling attached to the ‘family home’ as these were not built by our grandfathers or fathers, but by the state or some other developers.
Therefore, if a person intends to buy a brand new property and then sells it within the first 10 years (which most people have a tendency to), then there is a good chance that they will gain more from a leasehold property than a freehold property or vice versa; lose more in a freehold property. Below is an analysis which I hope can convince you.
http://www.colintan.com/colintan-gro...erty-articles/
tweet @condoexchange
bro, those two are not valid comparisons due to the wide gap in their age and finishing updatedness (for lack for better word).
Mercedes Lover
Eh less than 3yrs difference i think not a v huge gap leh ....
The SeaView also reported to have very jialat quality issues but that does not seem to affect its value at all:
http://www.asiaone.com/Business/News...25-301432.html
The Seaview defects: Condo residents sue for $14m
Home owners at The Seaview blame developer for problems that surfaced after moving in
Independent chartered building surveyors found 32 defects in the pool, lift lobbies, residential units and basement carpark. Rotting wooden plank in the pool deck area (above), and water seepage in the basement carpark. -- ST PHOTOS: LIM WUI LIANG
By Amanda Tan
BACKGROUND STORY
Residents in the condo, billed originally as the 'Ardmore Park of the east', claim that problems surfaced from mid-2008, shortly after they moved in. Complaints include shoddy workmanship and bad smells in their units.
Home owners of The Seaview, an upmarket condo in the east, are seeking $14 million for defects that have allegedly plagued the estate since 2008.
In what is believed to be one of the largest amounts that a developer here is being sued for, the residents of the 546-unit project in Amber Road are suing Mer Vue Developments, a subsidiary of listed Wheelock Properties.
Also named in the suit - filed by the condo's management corporation (MC) - are main contractor Tiong Aik Construction, RSP Architects Planners & Engineers and engineering firm Squire Mech.
Residents in the condo, billed originally as the 'Ardmore Park of the east', claim that problems surfaced from mid-2008, shortly after they moved in.
Complaints include shoddy workmanship and bad smells in their units.
In another incident, the estate's water bill for common areas spiked to about $20,000 a month, from $4,000.
Maintenance staff from the condo and experts hired by the MC found a leak in a pipe supplying water to the swimming pool.
The estate has temporarily installed valves to curb the leak and now uses a hose to top up the pool.
The MC claimed that the developer had asked its contractors to rectify some of the problems but they kept recurring.
In late 2009, the MC engaged independent chartered building surveyors who found at least 32 cases of defects in areas such as lift lobbies, swimming pool, residential units and basement carpark.
Among other things, the MC claimed that waterproofing was not carried out properly in areas such as the basement carpark, causing damage and safety risks.
Residents said it was the same problem on the rooftops which meant that higher-floor residents had to deal with water seepage and stained ceilings and walls.
Inside the units, residents claimed that they had to regularly deal with foul smells and flies.
According to experts hired by the MC, this was because floor traps and pipes in the kitchen were not installed properly, leading to food waste being stuck in the pipes.
Last week, residents were given more details of the case via the condo's newsletter. In it, it was reported that joint inspections of the defects by the developer and MC in 2009 did not help to resolve the issues.
The MC said it decided to file the suit after Wheelock's lawyer wrote to it last year, stating that the firm would no longer listen to complaints of defects.
In its claims, the MC said it was 'reasonable to believe and expect' that Wheelock would construct the development in a 'good workmanlike manner' and that the residents can seek recourse against defects.
Defence statements show that all four parties have denied any responsibility for the defects and claimed that the MC had failed to maintain the property.
Mer Vue Development said it had not carried out the construction and had engaged a reputable contractor.
Wheelock is also behind other luxury projects such as Ardmore Park and The Cosmopolitan.
Tiong Aik Construction argued that the defects arose from wear and tear and were due to the management's own failure to maintain the property.
It said it had hired reasonably competent sub-contractors to carry out the works.
A High Court pre-trial conference is due to be held next month.
tweet @condoexchange
oh!! my bad. was under impression that Cote is much older....
Senior
I am keen on the exceptions. Where are those developments?
Divine
city square?
Mercedes Lover
Bliss@Kovan? Gambir Ridge? And many many at Geylangs .......
Senior
One Leicester? FH landed properties in sennet estate?
Junior
Let me contribute here abit :
Buying for stay : Simple - Something you like and suits your family.
Buying for investment today (notice I use the word today) :
1. Go for laggards
- Every region will have a turn. Give example. Before Thomson Grand, Bishan was a sleepy place (I am referring to past 3 years or so). When Clover was launched, nobody even "wanted it". You only need Thomson Grand to cause a stir, then came Sky Habitat and Bishan is on the radar !!!! So you have to go in early. But really there is no guaranty but the odds are high. Another example is Ascentia Sky will look cheap if you knew there would be land to be sold around it and expect the land price to go up.
You have to do a lot of research. I have posted something on Pasir Panjang on Village Thread stating all the land price won on en-bloc. I only focus on certain areas and do homework based on that area.
2. Go for resale if new launch is super high.
Example : When Vision was launch at 1,200 psf, Blue Horizon was going for 800 psf. Which means, there was upside to Blue Horizon. Likewise when Thomson Grand was launch, Gardens was going for 722 psf. Good price right???? Now gardens is going for 1K psf. So you need to do homework.
Take a look at Sky Mintonia vs Estuary.
3. If you want to buy new, be the early bird (this one is riskier now as you are betting that the land prices will continue to go up).
Example. Waterview - with 3 more plot of land to go. Watervuew brought up the price of Tropica. TreeHouse - with more plot of land to go.
Bottomline, I am quoting examples. You have to do your own due diligence and from there make an intellectual guess if prices will go up or down in the future. In the past, it was so much easier to do this. Now, it is getting tougher. But you need to search harder to find a gem today.
Divine
18 woodsville, 2 mins walk
必ず
Sky Green, Tresalveo, 18 Woodsville.
必ず
Bear in mind when you move into the TOP unit the lease is already 95 or 96 years left.May i know what kind of condition that will make you want to buy a LH99 condo?
Location is one which is very obvious..
what about other? eg. fengshui? overlook sea & nature?
And
2. will LH99 be suitable for a long term investment (> 30yr)?
Lazy Bum
[QUOTE=DC33_2008]I am keen on the exceptions. Where are those developments?[/QUOT
Newton and Novena areas are mostly FH and near amenites and with MRTs.
Junior
gib you 100pointsLet me contribute here abit :
Buying for stay : Simple - Something you like and suits your family.
Buying for investment today (notice I use the word today) :
1. Go for laggards
- Every region will have a turn. Give example. Before Thomson Grand, Bishan was a sleepy place (I am referring to past 3 years or so). When Clover was launched, nobody even "wanted it". You only need Thomson Grand to cause a stir, then came Sky Habitat and Bishan is on the radar !!!! So you have to go in early. But really there is no guaranty but the odds are high. Another example is Ascentia Sky will look cheap if you knew there would be land to be sold around it and expect the land price to go up.
You have to do a lot of research. I have posted something on Pasir Panjang on Village Thread stating all the land price won on en-bloc. I only focus on certain areas and do homework based on that area.
2. Go for resale if new launch is super high.
Example : When Vision was launch at 1,200 psf, Blue Horizon was going for 800 psf. Which means, there was upside to Blue Horizon. Likewise when Thomson Grand was launch, Gardens was going for 722 psf. Good price right???? Now gardens is going for 1K psf. So you need to do homework.
Take a look at Sky Mintonia vs Estuary.
3. If you want to buy new, be the early bird (this one is riskier now as you are betting that the land prices will continue to go up).
Example. Waterview - with 3 more plot of land to go. Watervuew brought up the price of Tropica. TreeHouse - with more plot of land to go.
Bottomline, I am quoting examples. You have to do your own due diligence and from there make an intellectual guess if prices will go up or down in the future. In the past, it was so much easier to do this. Now, it is getting tougher. But you need to search harder to find a gem today.
Junior
In some places where the condos are all 99LH. For example in Dover area, all the condos are 99LH, same for Jurong East central area. CBD will be a good example, I cant imagine prices of Sail Condo will drop due to the fact it is deem as too "old"
Mercedes Lover
Prices will not drop but will also not rise in tandem with the FHs
eg. In the tanjong rhu enclave, FH projects like Waterside is already transacting at 1.4-1.5k psf, whereas LH projects like Costa Rhu has stayed stagnant at around 1-1.1k psf, despite being newer and is regarded as a landmark of sgp.
Last edited by zeamybro; 06-11-12 at 20:19.
Junior
This is very subjective, it depends on where you invest. If you are comparing in an area, you need to compare with a FH but since there isnt a FH to compare in the same location in the first place, the rate of increase depends on the potential in the area. For example if you take Dover ParkView, you can understand why by looking at the psf history, gd rental demand support and the potential in that area
Mercedes Lover
I just edited my post above.
I am comparing Waterside and Costa Rhu in tanjong rhu. The former is transacting at 1.4-1.5k psf whereas the latter is still hovering around 1k psf. Directly next to Costa Rhu (LH with magnificent city and sea view) is Parkshore (FH but without any view) is transacting higher at 1.2-1.3k psf.
Last edited by zeamybro; 06-11-12 at 20:28.
Junior
Bro, relativity is the fastest way to "make money". Dover went up because of one north and Rochester and the "one north story".
The peak at balmeg when up because of horizon residence.
I actually did a lot of home work on relativity between new condos to be launched based on land prices and also when the condo is launched.
Bro, mark my words, gardens at bishan is sleepy now, it has an mrt just outside. All the land around it has been bot at crazy prices. When it is launched, the new condo, in that area, see the price of gardens shoot thru the roof.
Btw, I already sold gardens..... No longer vested.
Junior
Aiyo, I went to take a look at park shore during launched. About to buy, itchy backside, asked agent, what is in front. Bloody hell, tell me got condo to block my view. I fainted. Finally did not buy. I Somemore got inside story telling me the transformation of this place. Young punk then.
Junior
In my opinion, based on your examples you illustrated. I would group Waterside towards the Fort Rd/Meyer Rd side which is supported with higher psf in the surrounding since both are easily >1km apart. It is just like Scott Rd and Newton, beside each other but psf wise it is alot different.
Costa Rhu and Parkshore are relatively the same age and one being LH n the other a FH, Parkshore which is 15-20% higher for a FH property vs a LH in the same area is well within the current trend. As for 99LH, I would prefer be situated in a area where it isnt surrounded by any FH [i.e Bouna Vista area] so there will not be any point of comparison between FH/LH
Mercedes Lover
Wah do you consider yourself heng or suay then? I think Parkshore quite well maintained la.. recently they just repainted the buildings.Aiyo, I went to take a look at park shore during launched. About to buy, itchy backside, asked agent, what is in front. Bloody hell, tell me got condo to block my view. I fainted. Finally did not buy. I Somemore got inside story telling me the transformation of this place. Young punk then.
Frankly speaking, the air in the Tanjong Rhu enclave is really fresh and clean (not referring to the units facing expressway). I realised my unit at Tanjong Rhu collects very little dust, whereas another unit near Parkway Parade becomes v dusty, over the same period of time (both with windows shut). But the latter has many constructions nearby la... still, it means the air not as fresh compared with the former.
Junior
Does this method of relativity applies when we are comparing apples and oranges which are growing in the same plantation?Let me contribute here abit :
Buying for stay : Simple - Something you like and suits your family.
Bottomline, I am quoting examples. You have to do your own due diligence and from there make an intellectual guess if prices will go up or down in the future. In the past, it was so much easier to do this. Now, it is getting tougher. But you need to search harder to find a gem today.
Example, new landed built-in psf is $850, land psf is $1300. new Condo built-in psf is $1300. In the same vicinity.. example...(no research done), tanah merah where ECO is sited and the landed around it.
Junior
Yup agreed on that but of course the sure-win formula is Mr B's no 50% no dropBro, relativity is the fastest way to "make money". Dover went up because of one north and Rochester and the "one north story".
The peak at balmeg when up because of horizon residence.
I actually did a lot of home work on relativity between new condos to be launched based on land prices and also when the condo is launched.
Bro, mark my words, gardens at bishan is sleepy now, it has an mrt just outside. All the land around it has been bot at crazy prices. When it is launched, the new condo, in that area, see the price of gardens shoot thru the roof.
Btw, I already sold gardens..... No longer vested.
Mercedes Lover
dtrax - thanks for enlightening me =) I was just blindly comparing the current prices of these projects and have failed to take into account of their launch prices then =)
But can u explain to me why you would prefer to choose an area without any FH? Whats the demerit of having FH/LH comparison?
Junior
Well that's just my opinion based on prices on the surrounding projects I have seen using the examples you illustrated. I feel that the fort/meyer side condos are on a different price level as compared to the extreme side of tanjong rhu
Mercedes Lover
Oh ok, noted. Then do you mind explaining further to me why you would prefer to choose an area without any FH? Whats the demerit of having FH/LH comparison?Well that's just my opinion based on prices on the surrounding projects I have seen using the examples you illustrated. I feel that the fort/meyer side condos are on a different price level as compared to the extreme side of tanjong rhu
Posting Permissions
Reply With Quote