singapore property weekly issue 210

8/9/2019 Singapore Property Weekly Issue 210

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Issue 210Copyright © 2011-2014 www.Propwise.sg . All Rights Reserved.

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CONTENTS

p2 Should Investors Buy Overseas Properties

with Rental Guarantees?

p9 Singapore Property News This Week

p13 Resale Property Transactions

(May 13 – May 19 )

Welcome to the 210 th edition of theSingapore 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]


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SINGAPORE PROPERTY WEEKLY Issue 210

Page | 2Back to Contents

By Gerald Tay (guest contributor)

I want to highlight the risk to investors of thelatest money making scheme to sweep theproperty industry. Overseas properties arebeing heavily promoted at various property

networking events. These properties usuallycome with a “Rental Guarantee. ”

So What Is Rental Guarantee?

A rental guarantee means the developer isgiving a buyer the certainty of rental income

for a predetermined period, usually two years.This saves the buyer from having to look for atenant, particularly in the coming few yearswhen economic uncertainty and a risingsupply of homes may drive up vacancy rates.

Should Investors Buy Overseas Properties withRental Guarantees?


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Some developers are offering 6 to 7 percentguaranteed returns for two or three years toentice buyers.

There are two types of Rental GuaranteeProperty Schemes offered to unwittingbuyers:

1. Developer‟s Guarantee

2. Multiple-Let Guarantee

1. Developer’s Guarantee

Here's how this scheme can lose a typicalinvestor $100,000 in two years: A developer has 150 units and needs to sell them for $450,000 each. But the market is over-supplied and their true value is only$400,000. The market rental is only $400 aweek. At a purchase price of $450,000, theinvestor's gross return is only 4.6%. Investorswon‟t find those numbers attractive.

Here‟s where the deception starts. Thedeveloper prices the units at $450,000 andguarantees a rent of $520 a week for twoyears. This provides a return of 6%. It nowlooks good to investors.

The developer will lease the apartments onthe true market value of $400 and make upthe $120 shortfall to the investor. It soundslike the developer is making a loss, but it's

not. The cost to the developer to finance theguarantee of $120 a week comes to a total of $12,480 over two years.

But the buyer has paid to the developer $450,000 for a unit that's worth only$400,000. The Developer has profited

$37,520 upfront from the buyer. In a 150 unitdevelopment, the developer will make anextra $5.63 million by selling apartments for more than they're worth to ignorant buyers.


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you‟re asking for trouble. ”

2. Multi-Let Guarantee

It‟s a simple concept: Rent a house, then sub-

let the rooms to sub-tenants and make asmuch profit as possible.

The scheme involves property entrepreneursacting as middlemen between tenants andlandlords to sublet rooms. Theseentrepreneurs contact landlords directly or through property management agencies andoffer long term guaranteed rent to buyers.They also offer to carry out minor repairs tothe property and to find and manage tenantson behalf of the landlord. This means thatwilling landlords can avoid the day-to-dayhassles of managing a property and at thesame time enjoy a guaranteed revenuestream.

The tenant agrees to look after the property,take care of maintenance issues and in somecases even carry out a refurbishment of theproperty. Then, the tenant sub-lets as many

rooms as possible to willing sub-tenants whoare happy to rent a converted lounge or dining room and live in a house shared withsix other strangers. The “renter” then creamsa profit on the difference between the rent heis paying the owner/landlord and the rentcoming in from the sub-tenants as a result of the multi-let.

Many property “gurus” claim to make highprofits on their property portfolios withouthaving to buy properties or raise large cash

sums for renovations or a deposit. They claimto earn tens of thousands a month on thehundreds of properties they own.


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What they don‟t mention are the dirty behind-the-scenes secrets.

Sub-letting of rooms is illegal in manycountries. As well as making money fromillegal sub-letting, these high-profile „gurus‟are supplementing their income by providingworkshops, seminars and „How-to‟publications.

In many countries like the UK, Sub-Letting

must be licensed by local councils and aresubject to strict regulation. It can be costly toconform to these regulations and there areheavy penalties for letting out rooms without alicense. It may even lead to repossession for breaking the law. Even if the landlord is

unaware that their property is being used for sub-letting illegally, they may still be liable.

Some middlemen may pose as tenants, butthen convert the property and sub-let

individual rooms without the landlord‟sknowledge. The first time the landlord mayknow that there is a problem may be whenneighbours complain about the number of

people living in the property. Sometimes thelandlord will receive the agreed upon rent, butin other situations the landlord may never seea penny.

One case in which a Singaporean buyer

shared with me was, his tenant took leaseson cheap USA single family homes andillegally subdivided them into rooms. Up tofifteen illegal tenants lived in each house andthe tenant didn‟t pass on the rent to the reallandlord. The owner‟s property manager

called him months later to inform him that hisproperty was harbouring illegal convicts onthe local police “Wanted” list! What followedwas expensive legal action that turned out tobe a financial nightmare for him.


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Another rental guarantee scheme that goeswrong is the recent case of Eco House whosuspended their global operations (includingSingapore) leaving more than 2000 of their

investors in the lurch.How safe is my money?

My co-partners and I have been verysuccessful investing in overseas properties.90% of investors lose money because they

ask the WRONG question, “How do we makemoney?”

They completely ignore asking the mostimportant question which is the key differencebetween successful and loser investors, “HowNOT to lose money?”

Words of Wisdom for Overseas PropertyBuyers: -

Avoid ALL rental guarantee property

schemes available in the market

Rental guarantee is a paper promise –nothing else! Going for any legal recourseis a foolish action. Why bother gettingyourself into such a mess when you canavoid buying it in the first place?

Find and partner with a credibleexperienced investors in the country youwant to buy into. Someone who has deep

underground knowledge of the unknownterrain and who has done it many timesbefore. Make sure he has a vestedinterest in you and your property.

If the above is hard to accomplish, avoidbuying altogether. Cash is king whenbetter opportunity comes along in your home market.

Buy only properties which locals canafford to buy and rent.

S GA O O 210


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When buying overseas properties, a lot of things can go wrong. It's a classic case of buyer beware: rental guarantees oftenguarantee investors nothing but heartache.

By guest contributor Gerald Tay, who is thefounder and coach at CREI Academy GroupPte Ltd , an organization dedicated toempowering retail property investors withsmarter investing philosophy and strategies.

He is a full-time investor with over 13 years of solid experience in building his wealththrough Property Investment and is financially wealthy today.

SINGAPORE PROPERTY WEEKLY I 210

http://www.crei-academy.com/http://www.crei-academy.com/http://www.moneymatters.sg/http://www.crei-academy.com/http://www.crei-academy.com/http://www.crei-academy.com/http://www.crei-academy.com/http://www.crei-academy.com/http://www.crei-academy.com/http://www.crei-academy.com/http://www.crei-academy.com/http://www.crei-academy.com/


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Singapore Property This Week


ResidentialFirs t smar t HDB launches in Punggol

In this month‟s build-to-order exercise, thefirst smart HDB home has been launched.Located at Punggol, Northshore Residences I

and II consist of 12 blocks. Of the 1,402 unitsavailable, 546 are two-bedders, 112 units arethree-bedders, 519 units are four-beddersand 225 units are five-bedders. The project isslated to be completed in 2020. After a$60,000 grant, the two-bedders are priced

from $28,000, the three-bedders are pricedfrom $132,000; the four-bedders cost$249,000; and the five-bedders are pricedfrom $354,000. Market experts expect thatthere will be high application rates as the

four- and five-room flats are cheaper compared to resale flats that are of similar sizes in the vicinity. The HDB project willserve as a test-bed for smart technology suchas a smart car park management system anda waste conveyance system.

(Source: Business Times)

9,431 HDB flats laun ched for sale

9,431 flats were launched for sale in thismonth‟s build-to-order (BTO) and sale of balance flat (SBF) exercise. Online

applications for this month‟s BTO and SBFwill cease on June 2. Market experts believethat Clementi Crest will draw high interest dueto its prime location, and close proximity to

SINGAPORE PROPERTY WEEKLY I 210


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retail amenities and the MRT Station. Also,market experts believe that NorthshoreResidences I & II will be a hot favouriteamong buyers as it is reasonably priced and

will feature the use of smart technology.Eugene Lim from ERA Realty believes thatthe BTO prices for Clementi Crest may beperceived as high. This is because four-roomflats at Clementi Crest have been priced from$478,000, and five-room flats have been

priced from $576,000. According to Lim, 99-year leasehold condo units in the West Coastare priced below $1 million for two-bedroomunits and $1 million for three-bedroom units,as such, buyers may perceive the BTO pricesfor Clementi Crest as high. Also, the recordnumber of units released this month isexpected to affect resale demand in May andJune, said Lim.


P ri c es o f c o m p l et ed n o n -l an d ed p r i va te

homes fel l by 0.1% in Apri l

According to flash estimates by NUS, pricesof completed non-landed private homes havefallen by 0.1% in April from the previousmonth. The sub-index for central region hasalso fallen by 0.1% in April from March.However, the sub-index for the non-centralregion remained the same. Ong Kah Sengbelieves buyers are cautious about beingcompleted properties in April as more newprojects are expected to be completed in thecoming months. However, since the fall inprices has been subtle, market expertsbelieve that buyers are still interested in the

resale market, despite competition fromdeveloper projects. Ong added that the profileof buyers for resale properties differ frombuyers for developer sales.



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Typically, buyers for resale properties requirea unit immediately while buyers for developer sales can afford to wait, said Ong. As such,the market for developer sales may not be a

direct competitor of the resale market.


OrangeTee: proximi ty to MRT s ta t ion may

not im pact ren tal y ie lds

According to a study by OrangeTee, projectsthat are located near to MRT stations may notresult in higher rental yields. Of the 34projects in the study, 20 which were identifiedto have high rental yields were not within 400meters of the MRT station. Particularly, 56%of the projects that were identified to havehigh rental yield were located outside thecentral region. Of the projects that wereidentified to have high rental yield, 12 percentof them were located in the core central

region while 32 per cent were located in therest of central region. According to the study,rental yields in the outside central region maybe higher due to lower prices. The study also

showed that leasehold properties were themost attractive in the rental market as a 99-year leasehold property usually has lower relative psf upon purchase compared to afreehold property.


Overa l l ren ts expec ted to fa l l by 5% to 7%

in 2015

According to CBRE, the overall rent isexpected to fall by 5% to 7% this year. Notonly so, the total leasing volume is alsoexpected to fall by 5% to 10% for the rest of the year. This is due to a surge in the number of new homes completed in 2015. Accordingto the Business Times, 10.4% more homes



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will be completed this year, up from the19,921 homes completed in 2014. CBREadded that in the central region, the leasingclimate will be competitive. In Q1 this year,

there was a 3.1% quarter-on-quarter increasein lease commencements to 15,229 units.This is 13.5% higher than the lease volume inQ1 last year. The average rent for luxuryhomes remained at $4.95 psf per month inQ1 this year according to CBRE. However,

the average rent for homes in the rest of theprime districts has fallen by 1.1% quarter-on-quarter to $4.55 psf per month in Q1 thisyear. Also, the average rents for the rest of the island fell by 1.6% quarter-on-quarter to$3.15 psf per month in the same period of

time.


Freehold s i te a t Ridout Rd expec ted to be

so ld for more than $90m

A 73,277 sq ft freehold site at Ridout Road isexpected to be sold for more than $90 million,or $1,288 psf. According to the BusinessTimes, this would be the biggest transactionin a Good Class Bungalow Area, as the priceis higher than the previous record of $87.5million that was set in 2001. Currently, thefreehold site consists of a two-storeybungalow that has a two single-storeyouthouse and an open field. However, the sitemay be redeveloped into as many as four smaller plots of land that are at least 1,400sqm. Only Singaporeans are allowed to

purchase landed homes in Good ClassBungalow Areas following a change in policyin 2012.




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Non-Landed Residential Resale Property Transactions for the Week of May 13 – May 19

PostalDistrict

Project NameArea(sqft)

TransactedPrice ($)

Price($ psf)

Tenure

3 DOMAIN 21 1281 1730000 1351 99

3 PEARL BANK APARTMENT 1755 1300000 741 99

4 CARIBBEAN AT KEPPEL BAY 1281 1900000 1483 99

5 HERITAGE VIEW 969 1155000 1192 99

5 HERITAGE VIEW 1195 1385000 1159 99

5 VARSITY PARK CONDOMINIUM 1453 1680000 1156 99

5 BOTANNIA 1270 1448000 1140 956

5 HERITAGE VIEW 2616 2880000 1101 99

5 VISTA PARK 947 835000 882 99

8 CITY LOFT 366 630000 1721 FH

8 LOFT @ RANGOON 420 632000 1505 FH

9 MARTIN NO 38 969 2500000 2581 FH

9 MARTIN PLACE RESIDENCES 1722 3310000 1922 FH

9 RIVERGATE 1798 3380000 1880 FH

9 8 @ MOUNT SOPHIA 1378 2010000 1459 103

10 ARDMORE PARK 2885 8450000 2929 FH

10 GOODWOOD RESIDENCE 2486 6400000 2574 FH

10 GOODWOOD RESIDENCE 2486 6280000 2526 FH

10 GRANGE RESIDENCES 2583 6200000 2400 FH

10 ONE TREE HILL RESIDENCE 1227 2455000 2001 FH10 MONTVIEW 1475 2100000 1424 FH

10 NATHAN PLACE 1798 2420000 1346 FH

10 GLENTREES 1345 1600000 1189 999

11 THE LINC 1281 2060000 1608 FH

PostalDistrict


TransactedPrice ($)

Price($ psf)

Tenure

11 STRATA 1066 1650000 1548 FH

11 NINETEEN SHELFORD ROAD 861 1320000 1533 FH

11 THOMSON EURO-ASIA 1130 1725000 1526 FH

11 ADAM PARK CONDOMINIUM 1163 1580000 1359 FH

11 NOVENA COURT 861 1100000 1277 FH

11 WATTEN ESTATE CONDOMINIUM 2594 3050000 1176 FH

12 PRESTIGE HEIGHTS 344 550000 1597 FH

13 CLYDESWOOD 1173 970000 827 FH

14 ASTORIA PARK 1195 1250000 1046 99

14 THE HELICONIA 1302 1238000 951 FH

15 AALTO 1959 2988000 1525 FH

15 COTE D'AZUR 1313 1820000 1386 99

15 COSTA RHU 2217 3050000 1375 99

15 THE WATERSIDE 2411 3050000 1265 FH

15 ROXY SQUARE 603 761000 1262 9999

15 COSTA RHU 1399 1412990 1010 99

15 NEPTUNE COURT 1636 1160000 709 99

15 CASTLE LOFT 1173 792000 675 FH

16 OPTIMA @ TANAH MERAH 1055 1250000 1185 99

16 COSTA DEL SOL 1324 1519952 1148 9916 BAYSHORE PARK 2239 1700000 759 99

16 BEDOK COURT 2271 1570000 691 99

18 EASTPOINT GREEN 1130 900000 796 99

18 THE TROPICA 1238 981888 793 99



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

PostalDistrict


TransactedPrice ($)

Price($ psf)

Tenure

19 CASA RIVIERA 1206 1160000 962 FH

20 THE GARDENS AT BISHAN 1152 1328000 1153 99

20 RAFFLESIA CONDOMINIUM 1324 1430000 1080 99

20 THOMSON VIEW CONDOMINIUM 2024 1480000 731 99

21 THE CASCADIA 1292 1900000 1471 FH

21 THE HILLSIDE 1302 1388000 1066 FH

21 PANDAN VALLEY 2024 1900000 939 FH

22 THE LAKEFRONT RESIDENCES 1216 1600000 1315 99

22 THE LAKESHORE 926 1010000 1091 99

22 THE CENTRIS 1302 1290000 990 99

23 HILLVIEW PARK 807 880000 1090 FH

23 REGENT HEIGHTS 1163 921000 792 99

23 REGENT HEIGHTS 1023 800000 782 99

23 NORTHVALE 1087 830000 763 9926 BULLION PARK 1238 1250000 1010 FH
http://propertymarketinsights.com/

singapore property weekly issue 210

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