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Thread: Mass-market shoebox rents dip 3.5% in 3Q2015

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    Default Mass-market shoebox rents dip 3.5% in 3Q2015

    http://www.theedgeproperty.com.sg/co...-dip-35-3q2015

    Mass-market shoebox rents dip 3.5% in 3Q2015


    By Lin Zhiqin / The Edge Property | October 17, 2015 10:00 AM MYT
    Preliminary estimates indicate that rents for shoebox units dipped 1.9% quarter-on-quarter in 3Q2015. Mass-market shoebox units led the decline as monthly rents fell 3.5%or $73 from $2,089 in 2Q2015, to $2,016 in 3Q2015. Ona brighter note, shoebox rents in the city fringe stayed unchanged from the last quarter at $2,380 per month. In the high-end segment, monthly shoebox rents fell 2.1% or $59 from$2,815 in 2Q2015, to $2,756 in 3Q2015 (see Table 1).



    Table 1: Mass-market shoebox units lead rental decline



    Source: URA, The Edge Property



    Shoebox units in the mass market continue to face strong competition from HDB flats for tenants. For the same rents, tenants could get a three-room HDB unit with two bedrooms and share their rental expenses with a flatmate. Based on HDB subletting contracts, the island-wide monthly rents for HDB flats averaged $1,958 for three-room units and $2,297 for four room ones in 3Q2015.

    On the other hand, shoebox units in the high-end and city fringe segments are more attractive, particularly to tenants who work in the CBD as they can save on commuting costs and time. At the same time, they offer value alternatives to bigger units.

    The analysis was based on a basket of properties tracked by The Edge Property. The figures differ slightly from those in our previous article owing to changes in the basket. Shoebox units are defined as private non-landed homes that are up to550 sq ft in size in this article. “High-end segment” refers to the Core Central Region (CCR), while the city fringe and mass market refer to the Rest of Central Region (RCR) and Outside Central Region (OCR), respectively.

    Between 3Q2013’s peak and today, shoebox rents have fallen around 18% or $500 from $2,905 to $2,371 per month. Segment- wise, monthly rents for shoebox units have fallen20% in the high-end submarket, 14% in the city fringe and 22% in the mass market.

    In comparison, rents for non-shoebox units have been more resilient. The URA rental index for private non-landed homes fell 7.2% in the high-end segment, 3.1% in the city fringe and 6.7% in the mass market between the last peak and 2Q2015.

    The soft rental market continues to dent the profitability of shoebox transactions. Based on URA caveat data, 8% of residential shoebox units (15 of 185 transactions) were sold at a loss in the secondary market. In comparison, only 3% (eight of 307 transactions) of shoebox units were sold at a loss in 2013 and 7% (14 of 215 transactions) in 2014 (see chart).

    http://www.theedgeproperty.com.sg/co...-dip-35-3q2015

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    This one we did a calculations last year. The absolute lowest point for rent on par with HDB is $1,500. Adding in the facilities should be $1,600 to 1,800.

    If can't sustain at this rental, then OCR shoebox landlords better exit.

    Personally, I do see their relevance as stepping stones to transit to private, but I could be wrong as well. Best of luck!
    The three laws of Kelonguni:

    Where there is kelong, there is guni.
    No kelong no guni.
    More kelong = more guni.

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    Think out of the box.

    Property should not be look at purely rental yield, capital appreciation only.

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    Quote Originally Posted by Arcachon View Post
    Think out of the box.

    Property should not be look at purely rental yield, capital appreciation only.
    True. But also must have the ability to weather the down time.

    Those figures are for worst case projections. Any lower, I doubt anyone wants to rent out. Just keep vacant, but must also be able to afford it.
    The three laws of Kelonguni:

    Where there is kelong, there is guni.
    No kelong no guni.
    More kelong = more guni.

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    If you have spare cash and need to pay Income Tax buying property as a form of saving and reduce your Tax.

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    Quote Originally Posted by Arcachon View Post
    If you have spare cash and need to pay Income Tax buying property as a form of saving and reduce your Tax.
    Only if rented out. If you stay in it, cannot use to reduce income tax as far as I know.
    The three laws of Kelonguni:

    Where there is kelong, there is guni.
    No kelong no guni.
    More kelong = more guni.

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    Quote Originally Posted by Kelonguni View Post
    Only if rented out. If you stay in it, cannot use to reduce income tax as far as I know.
    Then it become a saving plan.

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    Quote Originally Posted by Arcachon View Post
    Then it become a saving plan.
    Fully agree

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    When one has made plans for the worst, any storm can be weathered easily. It's time for shoeboxes to demonstrate the viability of the untested market.
    The three laws of Kelonguni:

    Where there is kelong, there is guni.
    No kelong no guni.
    More kelong = more guni.

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    1995 - put 65,000 in the Bank what do you get now.

    If you loan 65,000 from HDB to buy 3 room HDB what do you get now.

    Rent out or Not, what do you get now.

    Do the Math and you will know why got 8 Control measure to stop you from buying more.

    When property price drop, don't buy wait for it to drop more.

    When property price go up, don't buy wait for it to drop.

    Put money in the Bank the best, depreciate with time.

    Anyone with money in the Bank that appreciate with time please advise.
    Last edited by Arcachon; 22-10-15 at 14:08.

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    My money never sits in the bank for too long. My wife's does.

    I regularly help her channel to investments, properties etc.

    Now our accounts are quite empty again...

    Quote Originally Posted by Arcachon View Post
    1995 - put 65,000 in the Bank what do you get now.

    If you loan 65,000 from HDB to buy 3 room HDB what do you get now.

    Rent out or Not, what do you get now.

    Do the Math and you will know why got 8 Control measure to stop you from buying more.

    When property price drop, don't buy wait for it to drop more.

    When property price go up, don't buy wait for it to drop.

    Put money in the Bank the best, depreciate with time.

    Anyone with money in the Bank that appreciate with time please advise.
    The three laws of Kelonguni:

    Where there is kelong, there is guni.
    No kelong no guni.
    More kelong = more guni.

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    Quote Originally Posted by Arcachon View Post
    If you have spare cash and need to pay Income Tax buying property as a form of saving and reduce your Tax.
    Usually spared cash is after tax, buying property u pay stamp duties and etc. Only capital gain is tax free but after 4th year. Rental income needs to pay income tax. But in England I heard 51% income tax. ( hearsay)

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    Quote Originally Posted by Arcachon View Post
    Put money in the Bank the best, depreciate with time.

    Anyone with money in the Bank that appreciate with time please advise.
    I think the angmo property investor loves cash in the bank. You can read up on the 3+1 plan. I tend to agree with the writer, Brett Alegre-Wood too, and like him, I build up a cash buffer as well.

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    Quote Originally Posted by Warren49 View Post
    I think the angmo property investor loves cash in the bank. You can read up on the 3+1 plan. I tend to agree with the writer, Brett Alegre-Wood too, and like him, I build up a cash buffer as well.
    http://www.straitstimes.com/opinion/...e-here-to-stay

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    Quote Originally Posted by Warren49 View Post
    I think the angmo property investor loves cash in the bank. You can read up on the 3+1 plan. I tend to agree with the writer, Brett Alegre-Wood too, and like him, I build up a cash buffer as well.
    Like the 3 + 1 plan.

    http://www.3plus1planbook.com/freebook/

    Also upload a copy to the Facebook group.

    CondoSingapore - https://www.facebook.com/groups/1645462279058971/

    This is also good

    http://www.ccsales.com/the_richest_man_in_babylon.pdf

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    3 + 1 is suitable in a loan friendly environment. One of the main advocate is for interest only loans. Might not be very suitable for current environment although I agree with some of the proposed fundamentals.

    Thanks for sharing.

    Quote Originally Posted by Arcachon View Post
    Like the 3 + 1 plan.

    http://www.3plus1planbook.com/freebook/

    Also upload a copy to the Facebook group.

    CondoSingapore - https://www.facebook.com/groups/1645462279058971/

    This is also good

    http://www.ccsales.com/the_richest_man_in_babylon.pdf
    The three laws of Kelonguni:

    Where there is kelong, there is guni.
    No kelong no guni.
    More kelong = more guni.

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    Quote Originally Posted by Kelonguni View Post
    This one we did a calculations last year. The absolute lowest point for rent on par with HDB is $1,500. Adding in the facilities should be $1,600 to 1,800.

    If can't sustain at this rental, then OCR shoebox landlords better exit.

    Personally, I do see their relevance as stepping stones to transit to private, but I could be wrong as well. Best of luck!
    Only 3xxk studios can compete for 1500 rent and still nett profitable. When is the next 3xxk new launch?

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    That is the absolute worst case show hand scenario.

    Below 2k I guess most people would prefer not to rent out? What do you think?

    Quote Originally Posted by azeoprop View Post
    Only 3xxk studios can compete for 1500 rent and still nett profitable. When is the next 3xxk new launch?
    The three laws of Kelonguni:

    Where there is kelong, there is guni.
    No kelong no guni.
    More kelong = more guni.

  19. #19
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    Quote Originally Posted by Kelonguni View Post
    That is the absolute worst case show hand scenario.

    Below 2k I guess most people would prefer not to rent out? What do you think?
    The now top 3xxk 1 bedders at parc rosewood are asking from around 1.5k.

    http://www.propertyguru.com.sg/listi...-parc-rosewood

    http://www.propertyguru.com.sg/listi...-parc-rosewood

    http://www.propertyguru.com.sg/listi...-parc-rosewood

  20. #20
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    I see. I have checked the URA rental caveats and indeed 1500 is the base, with the majority of shoebox rental at 1.6 to 1.7k.

    Has to be tailormade to price bought and rental demand of location I guess.

    Rental profile at Woodlands area? Not a bad thing also to moderate the rent for people coming here to work.

    The path forward will be interesting.


    Quote Originally Posted by azeoprop View Post
    The three laws of Kelonguni:

    Where there is kelong, there is guni.
    No kelong no guni.
    More kelong = more guni.

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