Singapore Property Weekly Issue 135

8/13/2019 Singapore Property Weekly Issue 135

1/14

Issue 135Copyright 2011-2013 www.Propwise.sg. All Rights Reserved.
http://www.propwise.sg/http://www.propwise.sg/


2/14

ContributeDo you have articles and insights and articles that youd like to share

with thousands of readers interested in the Singapore property

market? Send them to us at [email protected] , and if theyre good

enough, well publish them here, on our blog and even on Yahoo!

News.

AdvertiseWant to get your brand, product, service or property listing out to

thousands of Singapore property investors at a very reasonable

cost? Head over to www.propwise.sg/advertise/ to find out more.

CONTENTS

p2 Are Overseas Properties with High Rental

Yields a Good Deal?

p7 Singapore Property News This Week

p13 Resale Property Transactions

(December 4 December 10)

Welcome to the 135th edition of the

Singapore Property Weekly.

Hope you like it!

Mr. Propwise

FROM THE

EDITOR
mailto:[email protected]://www.propwise.sg/advertise/http://www.propwise.sg/advertise/mailto:[email protected]


3/14

SINGAPORE PROPERTY WEEKLY Issue 135

Page | 2Back to Contents

ByPaul Ho(Guest contributor)

With property cooling measures in Singapore,

many property buyers are looking outside of

Singapore. The popularity of overseas

investment property fairs shows that

Singaporeans and Singapore-based investors

are buying into overseas property projects.

Some of these property projects offer rentalguarantees whilst others are marketed as

being easy to rent out with strong rental

demand.

Why are these properties attractive to

Singapore based investors?

Some of the reasons include:

Lower price quantum

Lower regulatory hurdles

Higher yield

Are Overseas Properties with High Rental Yields a Good Deal?
http://www.icompareloan.com/resources/tag/paul-ho/http://www.icompareloan.com/resources/tag/paul-ho/http://www.icompareloan.com/resources/tag/paul-ho/http://www.icompareloan.com/resources/tag/paul-ho/


4/14



However, are these so called higher yields

worth their weight in gold?

Let us examine a market such as Thailand,

where the typical rental yield is about 5% to

6% yield. Many Singapore based investors

are attracted by this higher yield compared to

their home market. Now, based on this yield,

should we all go invest in Thailand?

As you prepare to buy your first overseas

property and start to look at financing options,you come across the following:

Full cash purchase

Borrow in Singapore for the overseas

property

Borrow locally

The first option of full cash purchase is of

course the simplest, but requires investors

with deep pockets. Borrowing in Singapore

for overseas property would be possible, but

the borrowed amount is usually in Singapore

dollars. In other words, you owe the money in

Singapore dollars and continue to repay the

loan in Singapore dollars. At the same time,you will be subject to the Singapore

borrowing regulatory regime and currency

fluctuation risks.

The last option is to borrow from local banks.

This would then be subject to whether the

local bank is able to recognize your foreign

(Singapore) income as proof of your servicing

ability, and how much loan to valuation they

are able to loan to you (if they can lend to you

at all).

How do you know if these are goodinvestments or not?

For investments, we need to compare apples-

to-apples. So for instance if you are investing


5/14



in Thailand, then you need to consider the

rental yield and the borrowing cost in

Thailand as if you are based in Thailand.

Hence, it is important to calculate your Return

on Invested Capital as a metric to comparethe various investment markets.

For the case of Thailand, the gross rental

yield is 5.25% to 6.6% (Source:

Globalpropertyguide, Dec 2013), but the

borrowing cost is 6.51% for the 1st year and

even higher on subsequent years (Source:Kasikornbank, Dec 2013).

What does this mean?

For simplicity, let's say the rental yield is 6%

on average and the effective borrowing

interest rate is 6.5%. This means that, hadyou borrowed in Thailand for this property, the

rental is not even enough to service the

interest cost component of your installment.

Illustration of a property investment in

Thailand:

Property price equivalent to : S$500,000

Assume 100% borrowing : S$500,000Interest rate : 6.5%

Gross Rental Yield : 6%

Figure 1: Amortization Table pkg1 = 6.5%,

pkg2 = 7% (Source:

www.iCompareLoan.com/consultant)
http://www.icompareloan.com/consultanthttp://www.icompareloan.com/consultant


6/14



Based on a gross rental yield of 6% on

$500,000, you would obtain $30,000 annual

rental income or $2,500 a month. This gross

rental income of $2,500 is not even sufficient

to cover the interest cost component of the

installment at $2,694.62, let alone covering

the entire installment amount.

In other words, your Return on invested

Capital (based on 100% borrowing) would

yield a negative return. However if you hadinvested 100% cash (zero borrowings), your

return on invested capital would be 6%.

What this means is, based on these average

figures, many properties in Thailand has no

investment appeal if you were to borrow in

Thailand to invest in such properties for rentalyield.

Is it good then to invest in Thailand

properties?

This does not mean that it's not good to

invest in Thailand, as many people still do so

for different reasons. However these property

buyers do so using largely cash and some

token borrowing.

With bank deposit interest rates so low in

Singapore, these investors are participating in

exchanging Singapore currency to Thaicurrency and using this to purchase an asset

that yields a Thai currency gross return on

asset of 6% and a gross return of 6% (if they

use 100% cash and zero financing) in Thai

baht terms. As a reference, Thai deposit

savings rates yields about 3.25% as at Dec2013.


7/14



For those with ample cash, this is a form of

asset diversification.

In Summary

Hence, as an investor, it is important for you

to assess the returns not only based on yield

versus yield (across different countries) as

they are different and have different local cost

of funds. Perhaps you could also consider

local borrowing costs. In this case, on the

surface, Thailand properties may seem

overpriced as there is inadequate rental

income to cover even the interest costs of

borrowing, or conversely, it could also be that

rental rates are currently too low and is

lagging the property prices.

However, investing away from one's base

country can also be a form of asset

diversification.

By Paul Ho, holder of an MBA from a

reputable university and editor of

www.iCompareLoan.com, Singapores first

Cloud-based Home Loan reporting platform

used by Property agents, financial advisors

as well as Mortgage brokers.

SINGAPORE PROPERTY WEEKLY I 135
http://www.icompareloan.com/http://www.icompareloan.com/http://www.icompareloan.com/http://www.icompareloan.com/http://www.icompareloan.com/http://www.icompareloan.com/


8/14


Singapore Property This Week


Residential

N o v e m b e r n e w h o m e s a l e s : b u y e r s m o r e

s e l ec t i v e o n l o c a t i o n a n d p r i c i n g

Novembers sales figures for new private

homes show that buyers are now more

selective on location and attractive pricing.According to data from the Urban

Redevelopment Authority (URA), developers

moved 1,228 units (excluding executive

condominiums) in November, which is a 15

percent increase from the figure of 1,070 in

October. This translates to a take-up rate of95 percent for the 1,293 new private homes

launched in November. Since the total debt

service ratio (TDSR) framework was

introduced in late June, developers sold just

481 private homes in July, compared with1,806 units in June. But Novembers sold

units prove that buyers are still having

interest to attractively priced and well-located

projects.

(Source: Business Times)

F i v e r e s i d e n t i a l s i t e s t o b e l a u n c h e d t h i s

m o n t h

Under the H2 2013 Government Land Sales

Programme, five 99-year leasehold

residential sites which are estimated to yield

about 3,000 homes will be launched for sale

this month. These sites are: two executive

condominium (EC) sites at Choa Chu Kang

Grove, a site at Yishun Ave 9,

SINGAPORE PROPERTY WEEKLY I 135


9/14



a plot at Geylang East Ave 1, and a site at

Sims Drive. The two EC sites at Choa Chu

Kang are about 177,120 sq ft each, with

maximum gross floor area (GFA) of about

619,920 sq ft and would yield about 575 units

each. These EC sites are the first to be

launched after the latest measures including

a cap on the mortgage servicing ratio at 30

per cent of gross monthly income, and the

introduction of a resale levy for second-timer

applicants buying EC units directly from

developers.


TD SR: t he game c hanger in 2013

Introduced in late June by the MonetaryAuthority of Singapore (MAS), the total debt

servicing ratio (TDSR) framework applied to

all property loans granted by financial

institutions to individuals, and was reported to

be a game changer for the property market in

2013. In July, just a month after the TDSR

was introduced, private home sales declined

from 1,806 units in June to only 481 in July,

excluding executive condominiums (ECs).

The number of homes launched also

decreased to 557 in July from 1,768 units in

June. Elaine Chow, head of research at

Chesterton Singapore, said that compared

with the series of cooling measures imposed

previously, the TDSR single-handedly chilled

the private residential market. Christine Li,

head of research at OrangeTee, said that it

was only after TDSR that developers started

to reduce their selling prices.




10/14



HDB s ur vey : r es id en ts s up po rt Ser s

renew al p lan

The latest survey by HDB shows that

residents strongly support the Selective En

bloc Redevelopment Scheme (Sers), which is

part of the government's Estate Renewal

Strategy for the older public housing estates.

Sers allows residents to have an opportunity

to move from their old flats to newer flats

without having to move out of their familiar

neighbourhood, which matches 99 percent of

the surveyed households strong sense of

belonging to their town/estate. The newer

subsidised flats are equipped with modern

facilities and fresh 99-year leases. Financial

concessions are also given to residents toease cash flow and facilitate relocation.


G o v e r n m e n t c u t s d o w n o n l a n d s a l e s

The Ministry of National Development (MND)

is scaling back the Government Land Sales

(GLS) Programme for private housing,

commercial and hotel sites for the first half of

2014 under weight of supply for a soft

landing. The government will launch only

4,630 private homes (including 2,165

executive condominiums) from its confirmed

list in H1 2014, which is 22.3 percent lower

than that of the current H2 2013, and is also

the lowest half-yearly quantum since H1 2010

of 2,925 units. The confirmed list for H1 2014

would add to the existing large pipeline

supply of about 97,400 private housing units

(including ECs). In addition, supply on thereserve list will decrease 15.1 percent to

6,955 units (including 605 ECs) in H1 2014



11/14



from 8,195 units (inclusive of 535 ECs) as of

now.


O ld e r s i t es t o s t ea l l i m e li g h t i n H 1 2 0 14 GL S

Although Ministry of National Development

(MND) introduced seven new sites on the

confirmed and reserve lists for the H1 2014

Government Land Sales (GLS) Programme,

older sites of H2 2013 slate are reported to

steal the limelight. These sites include the

highly anticipated 2.5-hectare land parcel at

Prince Charles Crescent (Parcel B) for private

condo. The land parcel can generate about

655 homes, and is next to Wing Tai's The

Crest condo project. As for EC sites, the land

parcel in Choa Chu Kang Drive is likely to

attract a higher number of bids due to the

demand from upgraders living in the Choa

Chu Kang area.


Commercial

Grade A C BD rent s t o r ise in 2014

Although big office leasing deals this year are

mostly in decentralised locations, activities in

CBD area is set to rise due to very limited

supply of future new projects outside the city

next year. CBRE predicted that pre-leasingactivity would be concentrated in higher-

quality buildings, and Grade A CBD rents will

grow. Particularly, the average monthly rental

value for Grade A (CBD Core) offices will

increase about 8 percent next year, followed

by stronger growth of 10-plus percent in2015, with limited new supply and a broad-

based recovery in demand. On the other

hand, this year is likely to end with a 2

percent rent increase in the average monthly



12/14



rental value for Grade A (CBD Core) office

space to $9.75 psf, following the value of only

$9.55 psf in the first three quarters of 2013.

CBRE's Grade A (CBD Core) basket covers

the best-quality office buildings in RafflesPlace, Marina Bay and Marina Centre.


O ff ic e p ro jec t i n W oo d lan d s Reg io nal

C ent re up f or t ender

The first predominantly office project in the

Woodlands Regional Centre has been

launched by URA for tender. The winning bid

for the project is widely predicted from only

$500 psf ppr to $1,100 psf ppr. The project is

on a 99-year leasehold site next to Causeway

Point. It is reported that at least 90 percent or

629,602 sq ft of the 699,557 sq ft maximum

gross floor area (GFA) for the site must be for

offices, and a further minimum 5,382 sq ft

must be for childcare centre use. The rest of

GFA can be used for additional office or retail,

food and beverage and/or entertainment, but

residential use is not allowed.


C h a n g i Airports Pr ojec t J ew el c o st s

$1.47b

Project Jewel, the mixed-use development

aiming to boost Changis capacity and

cement its position as a leading air hub, is

reported to cost $1.47 billion including land

costs and will be launched by end of 2018.

The project is developed by Changi Airport

Group (CAG) and CapitaMallsAsia (CMA). It

will be constructed on the existing 3.5-hectare

carpark site in front of Terminal 1 that has a

lease term expiring in 2073. The multi-storey

complex will span a total gross floor area of

about 134,000 square metres,



13/14



of which 17,000 sq m is for airport operations,

5,000 sq m for hotel space, 90,000 sq m for

retail space and 22,000 sq m for attractions

such as a large indoor garden and 40-metre

waterfall. The net lettable area of the retailspace is 53,500 sq m. Project Jewel adds a

passenger handling capacity of three million

to Changi's current 66 million per year, and

expands space in T1 for taxi bays and

baggage claim.


http://propertymarketinsights.com/


14/14



Non-Landed Residential Resale Property Transactions for the Week of Dec 4 Dec 10

NOTE: This data only covers non-landed residential resale propertytransactions with caveats lodged with the Singapore LandAuthority. Typically, caveats are lodged at least 2-3 weeks after apurchaser signs an OTP, hence the lagged nature of the data.

Postal

DistrictProject Name

Area

(sqft)

Transacted

Price ($)

Price

($ psf)Tenure

3 ASCENTIA SKY 1,023 1,660,000 1,623 99

3 LANDMARK TOWERS 3,294 3,300,000 1,002 99

4 THE COAST AT SENTOSA COVE 2,820 4,800,000 1,702 99

5 MONTEREY PARK CONDOMINIUM 1,625 1,780,000 1,095 999

8 CITYLIGHTS 678 1,100,000 1,622 99

8 CITY SQUARE RESIDENCES 1,195 1,620,000 1,356 FH

9 HILLTOPS 1,733 5,900,000 3,404 FH

9 RESIDENCES AT EMERALD HILL 2,282 6 ,544,776 2,868 FH

9 ONE DEVONSHIRE 1,216 2,827,200 2,324 FH

10 THE MONTANA 592 1,145,790 1,935 FH

10 THE MONTANA 775 1,458,530 1,882 FH

10 ASTRID MEADOWS 2,745 4,728,000 1,723 FH

10 ONE JERVOIS 1,496 2,400,000 1,604 FH

10 MUTIARA VIEW 1,173 1,760,000 1,500 FH

10 VALLEY PARK 1,216 1,800,000 1,480 999

11 THE TREVOSE 1,012 1,400,000 1,384 99

11 NOVENA COURT 861 1,130,000 1,312 FH

12 TREVISTA 915 1,400,000 1,530 99

12 TREVISTA 1,270 1,550,000 1,220 99

12 ST FRANCIS COURT 1,270 1,060,000 835 99

13 PLATINUM EDGE 829 1,220,000 1,472 FH

14 ATRIUM RESIDENCES 969 938,000 968 FH

15 AMBER RESIDENCES 2,217 3,500,000 1,578 FH

15 PEBBLE BAY 2,626 4,050,000 1,542 99

Postal

DistrictProject Name

Area

(sqft)

Transacted

Price ($)

Price

($ psf)Tenure

15 THE MAKENA 1,636 2,285,000 1,397 FH

15 CASA MEYFORT 1,765 2,420,000 1,371 FH

15 WATER PLACE 1,216 1,580,000 1,299 99

15 THE SUNNIFLORA 829 1,020,000 1,231 FH

15 KING'S MANSION 1,604 1,950,000 1,216 FH

15 STILL MANSIONS 1,141 1,180,000 1,034 FH

15 COASTARINA 1,636 1,636,000 1,000 FH

15 MANDARIN GARDEN CONDOMINIUM 2,024 1,965,000 971 99

15 NEPTUNE COURT 1,270 1,040,000 819 99

16 EASTWOOD REGENCY 495 715,000 1,444 FH

16 COSTA DEL SOL 1,755 2,500,000 1,425 99

18 OASIS @ ELIAS 980 925,000 944 99

18 LIVIA 1,324 1,230,000 929 99

18 TAMPINES COURT 1,711 1,060,000 619 101

19 STADIA 969 1,060,000 1,094 FH

19 KENSINGTON PARK CONDOMINIUM 1,668 1,700,000 1,019 999

19 FORTUNE PARK 1,249 1,010,000 809 FH

20 GRANDEUR 8 1,259 1,408,000 1,118 99

20 BRADDELL VIEW 1,453 1,200,000 826 99

21 THE RAINTREE 926 1,080,000 1,167 99

23 MERAWOODS 1,345 1,390,000 1,033 999

27 THE SENSORIA 1,259 1,138,000 904 FH

Date post:	04-Jun-2018
Category:	Documents
Upload:	propwisesg
View:	214 times
Download:	0 times

Singapore Property Weekly Issue 135

Documents