Issue 168

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CONTENTS
p2 5 Reasons Why REITs are Better than
Physical Property Investments
p5 Singapore Property News This Week
p11 Resale Property Transactions
(July 23 July 29 )
Welcome to the 168
th
edition of the
Singapore Property Weekly.
Hope you like it!
Mr. Propwise
FROM THE
EDITOR
SINGAPORE PROPERTY WEEKLY Issue 168
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By Calvin Yeo (guest contributor)
Property investing is getting tougher in
Singapore. The cooling measures, especially
the Total Debt Servicing Ratio, Additional
Buyer Stamp Duties as well as the Seller
Stamp Duties have made it much harder for
Singaporeans to invest in physical properties.
REITs as an Alternative to Property
Investments
So what should a property investor do? One
thing you can consider is investing in Real
Estate Investment Trusts (REITs). REITs are
basically trusts which invest in properties.
5 Reasons Why REITs are Better than Physical Property Investments
SINGAPORE PROPERTY WEEKLY Issue 168
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REITs are traded on stock exchanges and
receive a special tax treatment. Typically, a
REIT needs to pay out at least 90% of the net
income to be eligible for tax treatment.
Here are some advantages of buying REITs
instead of physical properties:
1. Easily Diversify Into Different Types of
Properties and Regions
With REITs, you are not limited to the
standard residential and commercial
properties which most property investors are
used to. You can even buy into hospitals
(First REIT), office buildings (Keppel REIT),
hotels (Fraser Hospitality Trust) as well as
shopping centers (CapitaMall Trust). You can
even buy REITs which own properties in
different countries such as Indonesia
(LippoMall) and even Europe with the
upcoming Germany-based REIT.
2. Easy to Buy and Sell
Since REITs are actively traded on a stock
exchange, they are pretty easy to buy and
sell. As compared to properties which will
take a much longer time to find the right
buyer, agree on the price as well as go
through the legal process which can take
anywhere from 3 to 6 months. For REITs, you
can just buy or sell at the market price and
the transaction is done instantly.
3. Start Investing With Less Money
Property investments generally require a lot
of money upfront, from the 20%
downpayment in addition to the legal fees
involved. With the TDSR and mortgage cap
rules, more money will be required upfront
especially if you already own your house.
SINGAPORE PROPERTY WEEKLY Issue 168
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For REITs, you can start investing with as
little as $800, since OUE Commercial REIT is
only about $0.80 per share and the minimum
is 1,000 shares per transaction.
4. REIT Management Takes Care of
Tenants and Maintenance
If you are familiar with property investments,
you will know that investment properties
require a fair bit of work, normally working
with agents, tenants and contractors. REITs
have a management team which takes care
of all this work, making them a relatively
hassle free investment.
5. Collect Steady Stream of Dividends
While property investments generate rental,
there are times when the tenant does not pay
or worse still your property remains empty.
REITs do not have this problem. Due to the
diversified nature of their portfolio, vacancy
rates are usually low and they have to give
out dividends as per their dividend policy.
REITs usually pay out dividends quarterly or
semi-annually, making them an ideal way to
generate income for retirement.
Calvin Yeo, CFA, CFP is the Managing
Director of Doctor Wealth Pte Ltd, which is
revolutionizing the financial advisory industry
by building an online platform to provide high
quality and comprehensive financial advice
for free.
SINGAPORE PROPERTY WEEKLY Issue 168
Singapore Property This Week
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Residential
H1private homes rental yield increasing
Data from the Urban Redevelopment
Authority that was compiled by STProperty
showed that the gross rental yields for private
homes has increased in H1 2014, especially
in the suburban area of Singapore. The gross
rental yields are measured based on the
annual median gross rent per square foot and
the median resale price per square foot for
that area. Gross rental yields in the north-east
region have surged from 3.73 per cent last
year to 4.03 per cent in H1 2014. Prime
locations like Orchard had one of the lowest
gross rental yields at 2.7 per cent in H1 this
year. However, all regions across Singapore
experienced an improvement in gross rental
yields. Nonetheless, analysts believe that the
recent spike was merely an anomaly that was
caused by buyers anticipation of capital
appreciation, as rental yields have been in a
slump since 2009. Analysts argue that
vacancy rates have increased and the leasing
market remains weak. As such, Ong Kah
Seng from RST Research does not expect
the increase in rental yields to affect buying
decisions. He warns that net yields should
take into consideration all costs and taxes
related to the rental. Also it should measure a
basket of transacted units over a period of
time in order to measure the actual net yield.
SINGAPORE PROPERTY WEEKLY Issue 168
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Yet, Christine Li from OrangeTee believes
that the increase in gross rental yields is a
form of price correction.
(Source: Business Times)
MND: Easing property stamp duty will
force prices up
In parliament, Member of Parliament Foo
Mee Har questioned the need to retain
current property cooling measures, such as
those related to the Additional Buyers Stamp
Duty (ABSD). In response to that, Minister for
National Development Khaw Boon Wan said
that said that if cooling measures were eased,
it would create an upwards pressure on
demand and force property prices up.
Nonetheless, there are concessions for
married Singaporean couples and other home
owners who want to upgrade their flats, said
Minister Khaw. Market watchers predict that
there would be 1.5 per cent drop in prices
every quarter for the next two years given
that cooling measures are unlikely to be lifted
soon. Under the ABSD scheme, Singapore
citizens who already own one residential
property will have to pay 7 per cent in stamp
duty if they purchase another home. Also,
Singapore citizens with more than one
property will pay 10 per cent in stamp duty
when on their subsequent purchase. Since
the introduction of such cooling measures,
residential prices have begun easing. Song
Seng Wun, from CIMB, predicts that the
government will not ease cooling measures
as long as global interest rates do not
increase.
(Source: Business Times)
SINGAPORE PROPERTY WEEKLY Issue 168
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HDB resale flat prices at new low
Prices of resale HDB flats have hit a new low
since February 2012. According to data by
the Singapore Real Estate Exchange (SRX),
prices fell by 0.8 per cent in June and 0.9 per
cent in July. Market experts believe that the
mortgage servicing ratio (MSR), the total debt
servicing ratio (TDSR) framework and the
capping of loan tenures at 25 years have
contributed to the fall in HDB resale flat
prices. Market experts expect resale prices to
fall by 8 per cent by the end of 2014.
Currently, prices have decreased by a total of
4 per cent since the start of 2014. Ong Kah
Seng from RST Research believes that
resale prices will be stabilised next year. With
the increase in build-to-order flats and
balance flats, the HDB resale market has
shrunk. Yet, in July, 1,341 HDB flats were
sold. This was a 2 per cent increase from
June. Nonetheless, Ong predicts that resale
property volumes will fall again in August as
buyers are less likely to make purchases
during the hungry ghost month. On the
other hand, rental property volumes have
improved by 1.7 per cent to 1,600 HDB flats
in July. Eugene Lim from ERA Realty said
that HDB flats rental yields are higher than
that of private properties. He said that HDB
rental flats can reap about 6 to 8 per cent in
rental yields, while private home owners
usually reap only about 2 to 4 per cent in
terms of rental yields. Nonetheless Christine
Li from OrangeTee predicts that the HDB
leasing market will remain weak as demand
from foreign workers shrinks.
(Source: Business Times)
SINGAPORE PROPERTY WEEKLY Issue 168
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Increase in H1 transaction volume for
Good Class Bungalows
A Good Class Bungalow located along
Jervois Road and Tanglin Road has been sold
for $18.8 million or $1,247 per square foot.
The two-storey freehold bungalow is about
15,073 square feet and has a total built-up
area of about 7,600 square feet. In the last 11
years, the bungalow has changed hands four
times. According to Urban Redevelopment
Authority, 39 locations have been demarcated
as Good Class Bungalow Areas. Homes
residing in such areas cannot be sub-divided
or built more than two storeys high. They
typically have a minimum land area of 1,400
square metres. According to CBRE, 15 Good
Class Bungalow transactions were made in
H1 this year. This has boosted the total
transaction value to more than $344 million,
which is higher than the $233 million that was
transacted in H2 last year. Despite the
increase in transaction volumes in the first
half of the year, William Wong from RealStar
Premier Group said that the total debt
servicing ratio framework has affected the
sales of Good Class Bungalows. Wong
predicts that by Q4 this year, buyers would
have adjusted to the new prices and there
may be more transactions made.
TDSR affects tender of site at Fernvale
Road
Two residential sites at Fernvale Road
attracted fewer tender bids and lower bidding
prices, compared to two other sites within the
area that were sold last year. Analysts believe
that the total debt servicing ratio (TDSR)
framework has weakened the market. The
99-year Parcel A plot at Fernvale Road
attracted only four bids while its adjacent site,
Parcel B, drew only three bids.
SINGAPORE PROPERTY WEEKLY Issue 168
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On the other hand, two other sites that
tendered in April and June last year had
attracted eight and nine bids respectively. The
winning bid for Parcel A and B at Fernvale
Road was at $438.17 psf ppr and $448.35 psf
ppr respectively. Yet, last year, the other two
neighbouring site sold for $489 psf ppr and
$533 psf ppr. Those two sites are being
developed into condos with a water-frontage,
said Ong Teck Hui from JLL. Following the
implementation of TDSR framework,
developers are less willing to bid highly for
land plots due to the shrinking property
market said Nicholas Mak from SLP
International.
(Source: Business Times)
Commercial
Greater collaboration among property
agents amidst slowing market
JLL Singapore has recently acquired a 20 per
cent stake in PropNex International. This
acquisition comes amidst a slowing property
market. According to Christopher Fossick
from JLL, this move will enable the two
property agencies to share resources, and at
the same time, help JLL to strengthen its
network in Singapore. On the other hand,
PropNex will be able to extend its portfolio
internationally by leveraging on JLLs
network. PropNex, which closes about 31,000
transactions per year, is a strong contender in
Singapore. It owns at least one third of the
market share.
SINGAPORE PROPERTY WEEKLY Issue 168
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Steven Tan from OrangeTee predicts that
there will be more partnerships among
property agents in the months to come as the
market size shrinks. According to Tan, since
the start of a partnership between four
agencies, the Project Alliance Group has
been able to sell more properties. Tan added
that other smaller agencies may soon join this
alliance.
(Source: Business Times)
SINGAPORE PROPERTY WEEKLY Issue 168
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Non-Landed Residential Resale Property Transactions for the Week of Jul 23 Jul 29
NOTE: This data only covers non-landed residential resale property
transactions with caveats lodged with the Singapore Land Authority.
Typically, caveats are lodged at least 2-3 weeks after a purchaser
signs an OTP, hence the lagged nature of the data.
Postal
District
Project Name
Area
(sqft)
Transacted
Price ($)
Price
($ psf)
Tenure
1 ONE SHENTON 1,561 3,100,000 1,986 99
3 TIONG BAHRU ESTATE 1,001 1,330,000 1,329 FH
4 THE PEARL @ MOUNT FABER 1,087 1,400,000 1,288 99
4 THE BERTH BY THE COVE 3,046 3,500,000 1,149 99
5 ONE-NORTH RESIDENCES 592 935,000 1,579 99
5 VARSITY PARK CONDOMINIUM 1,302 1,600,000 1,228 99
5 THE SPECTRUM 1,087 1,200,000 1,104 FH
9 ESPADA 355 939,999 2,646 FH
9 RIVERGATE 1,507 3,480,000 2,309 FH
9 THE INSPIRA 1,206 2,100,000 1,742 FH
9 MIRAGE TOWER 1,367 2,200,000 1,609 FH
10 BELMOND GREEN 1,335 2,180,000 1,633 FH
10 THE ELEMENT @ STEVENS 958 1,435,000 1,498 FH
11 THE ANSLEY 1,292 1,800,000 1,394 FH
11 ADAM PARK CONDOMINIUM 1,216 1,580,000 1,299 FH
11 THOMSON 800 3,832 3,958,000 1,033 FH
12 TRELLIS TOWERS 1,141 1,550,000 1,358 FH
12 OLEANDER TOWERS 1,152 1,122,000 974 99
13 PARC MONDRIAN 1,184 1,460,000 1,233 FH
14 DAKOTA RESIDENCES 1,023 1,430,000 1,398 99
14 ASTON MANSIONS 1,141 850,000 745 99
14 SUMMER VIEW 1,292 900,000 697 FH
Postal
District
Project Name
Area
(sqft)
Transacted
Price ($)
Price
($ psf)
Tenure
15 NATURALIS 1,335 1,380,000 1,034 FH
16 STRATFORD COURT 1,345 1,200,000 892 99
16 FAIRMOUNT CONDOMINIUM 1,475 1,280,000 868 99
16 TROPICANA CONDOMINIUM 1,658 1,350,000 814 999
18 LIVIA 1,259 1,150,000 913 99
18 CHANGI RISE CONDOMINIUM 1,259 1,053,000 836 99
18 ELIAS GREEN 1,615 970,000 601 99
18 TAMPINES COURT 1,658 885,000 534 101
19 CHILTERN PARK 1,647 1,550,000 941 99
20 LAKEVIEW ESTATE 1,615 1,280,000 793 99
20 SHUNFU VILLE 1,679 1,280,000 762 99
21 SIGNATURE PARK 1,087 1,120,000 1,030 FH
23 THE JADE 1,615 1,722,000 1,067 99
23 THE PETALS 4,402 2,500,000 568 FH