Issue 88

Copyright © 2011-2012 All Rights Reserved.

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Lessons from Our Journey to Financial Freedom
Property Buying Tip #2: To take or not to take a mortgage loan? Singapore Property News This Week Resale Property Transactions



Welcome to the 88th edition of the Singapore Property Weekly.

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(January 9 – January 15)
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Lessons from Our Journey to Financial Freedom
By Eileen Tan and Ui Wei Teck (guest contributors) Real Estate and Value Investing are two of the ways you can grow your wealth if you adopt the correct mindset and strategy while working for others or running your own business. With wealth, you can have peace of mind, greater freedom to pursue what you truly enjoy doing, and contribute to do your part for the less advantaged.

With sufficient wealth built while you are still working, you will have no fear when any change occurs as the unexpected change has been expected and prepared for. If you have not already started to invest seriously, now is the time to get educated.
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SINGAPORE PROPERTY WEEKLY Issue 87 In this article we will share our journey to becoming financially free. Long-term vs. Medium-term investments twenties and sold both properties when the prices had risen by 200% to 300%. We benefited from the bull market unknowingly during the 1990s. With no property investment knowledge then, we made our first mistake by thinking that property prices would continue to go up and moved into a landed house. It was like a dream come true to own a landed house and drive a luxury car during our early thirties. Property investing is cyclical We came to realize that Property investment is cyclical when our house price plunged over the next few years due to the Asian Financial Crisis, bubble bursting and SARS. It was one disaster after another. The economy only started to pick up when the Singapore Government announced development plans for the Integrated Resorts.
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There are investments which require a longer duration to bear fruit so start early to benefit from them. Time is the best capital you have when you start early. Let’s look at the long and medium term investments for Property as elaborated below:
• Long-Term (> 5 years): Go for Capital Upside Potential or En-Bloc Opportunities which require longer holding periods for maximum returns. • Medium-Term (< 5 years): Go for Good Rental Yield so you can sell it at a reasonable market rate to benefit from Capital Upside. In our case, we bought both a public housing flat and a private apartment during our late
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SINGAPORE PROPERTY WEEKLY Issue 87 This was big news that revived the interest to invest in Singapore again. It was this reversal of a property downtrend that prompted us to invest in a private property near an upcoming business hub and an MRT (Mass Rapid Transit) Interchange. We had to wait until the next bull market cycle to sell our landed house which was bought near the prior peak. The fortunate thing is that our mistake didn’t cause a disaster as we spent 12 years staying in a beautiful house where we brought up two lovely children. Learning to live simply daughter to move as she loved her neighbours and we struck a deal by moving to a two-storey public housing flat (a Mansionette) within the same neighbourhood, near an MRT station, neighbourhood parks and amenities. My son said we should have bought the flat 12 years ago! By moving to a flat and with passive income from the fully paid-off condominium, we had achieved our dream of financial freedom! Discovering investing a passion for property

We had a “wakeup call” when we could sell our house for some profit and decided to start our retirement journey in our early forties. We also wanted our children to live as heartlanders and not to take things for granted. It was not easy to convince our
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However, we had so much passion for real estate and found that we had the capacity to invest more. We had also built up our Financial Literacy and understood that being Financially Free does not mean being Debt Free. We are conscious about not overborrowing by keeping our Debt-Service Ratio
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SINGAPORE PROPERTY WEEKLY Issue 87 at safe levels. We subsequently invested in uncompleted and resale condominiums in prime districts, and also co-invested in a commercial property. Our high yielding resale and uncompleted properties are classified as our mediumterm investments. These are the properties that will bring in a good rental yield and will be sold when the prices have risen reasonably. A gain of 100% to 200% Return on Investment is good enough as we have to leave some room for the next buyer to continue to gain from their investments. In investing, you have to be prepared to be wrong. Nobody can predict the future correctly all the time, so do not invest if you cannot afford to be wrong. Analyze the downside first, and only invest if you have the holding power to not sell the property at the wrong part of the market cycle. By Eileen Tan and Ui Wei Teck, authors of Enjoying Mid-Life Without Crisis.

Our aged property (more than 30 years old) in a strategic location is classified as our long-term investment. Such investment may not be yielding a high rental but there is upside potential due to its enbloc potential (i.e. the land is not fully utilized based on the plot ratio).
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Property Buying Tip #2: To take or not to take a mortgage loan?

A Mortgage or Housing loan is a good debt where you are able to borrow money to gain a higher return versus the lower mortgage interest rate, especially when the interest rate is lower than the inflation rate. In addition, you can better protect your family with mortgage insurance for the mortgage house. Purchasing a property can be a very stressful financial event in a person’s life. It is a good practice to obtain an in-principle loan approval from the bank for your mortgage loan, before proceeding with the property purchase. With an in-principle loan approved

ahead of time and understanding your property budget, you can keep your stress level to a minimum and focus on selecting your dream house and completing the purchasing process. You can work with a Mortgage Broker for loan analysis as well as to compare the mortgage packages that various banks are offering. By Eileen Tan and Ui Wei Teck, property investors and authors of Enjoying Mid-Life Without Crisis.

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Singapore Property This Week
More developers offer discounts in light of ABSD Far East Organisation is offering additional discounts of up to 4% on projects such as The Seawind at Telok Kurau, SeaHill at West Coast Link and euHabitat at Jalan Eunos; CapitaLand is said to have increased its discounts to 10-15% at 1,715-unit d'Leedon, a luxury condominium at Farrer Road. These are to offset the effects of the increased ABSD rates though such high discount rates will probably be seen only in Q1 2013. (Source: Business Times) Chee Hoon Ave GCB bungalow plot up for sale The 15,184 sq ft plot at 8 Chee Hoon Avenue has been put up for sale by auction. The site with a 37-metre frontage and proximity to Botanic Gardens, Cluny Court and Serene Centre as well as schools such AngloChinese School, Nanyang Primary and Raffles Girls' Primary can potentially fetch over $23 million. The auction will be held on Feb 27. (Source: Business Times)

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SINGAPORE PROPERTY WEEKLY Issue 88 Proportion of foreign purchase to fall in H1 With the increase in ABSD rates in the latest cooling measures, the proportion non-PR foreign purchase of private homes may fall to 3-5% in H1 from 6.3% in 2012, which had in turn, fell from 17.6% in 2011 following the introduction of the ABSD in December 2011. While the proportion of PR purchase of private homes have increased from 13.4% in 2011 to 15.8% in 2012, this may change since a 5% ABSD have been extended to first-time PR buyers, leading to a fall to 512% share. This is especially since PRs who own HDB flats now have to sell their flats after purchasing a private home. In 2012, Singaporeans, PRs and non PRs purchased a total of 24,815, 5,086 and 2,038 private homes respectively, reflecting a 17.7% increase, 20.6% increase and a 63.2%
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fall respectively. The top three foreign buyers (including PRs) of private homes in 2012 are the Malaysians (accounting for 26.1%), mainland Chinese (22%) and Indonesians (19.4%). As a result of the ABSD, the OCR (where mass market homes are located) accounted for 55% of the 7,124 private homes bought by foreigners in 2012, compared to 49% in 2011. It is likely to increase to 60% this year since the ABSD rates have increased. The OCR proportion of private homes purchased by Singaporeans is also likely to increase to 56% from 51% in 2013.

(Source: Business Times)
Two-year deadline for foreign ownerships stays projects with

The rule that all units in projects with any foreign ownership must be sold within two
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SINGAPORE PROPERTY WEEKLY Issue 88 years of the project receiving its TOP will stay despite developers’ appeal for extension of the deadline. Projects that failed to do so face extension charges based on the proportion of unsold units, of 8%, 16%, and 24% of the property purchase price for the first, second and third extra years respectively. However, projects such as those under SC Global Development may be exempt from the extension charges since its chairman and chief executive Simon Cheong can now privatise the company. The extension charges would be especially hard on the luxury property market, which has been seeing slow sales. Furthermore, the recent cooling measures had also included an increase in ABSD rates which will affect foreigners and investors, the main sources of demand for this segment of the market. Prices of luxury property market are expected
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to fall by 5-10% in 2013 as a result of this though some believe otherwise, citing the high liquidity. (Source: Business Times) Freehold 21 Anderson Royal Residence up for sale at $250-260m Oak

The 10-storey 34-unit development located in the Ardmore Park residential enclave is asking for $250-260 million. It has 85,552 sq ft of strata area on sits on a 49,048 sq ft site. Nearly 100% of the units are leased out. Features and amenities offered includes private lift lobbies, concierge services, a swimming pool, tennis courts, gymnasium, a BBQ area and a children's playground. In addition to being located near Orchard Road, it is also near schools such as Raffles Girls' School, Anglo-Chinese School and the Chinese International School.
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SINGAPORE PROPERTY WEEKLY Issue 88 The expression of interest exercise will close at 3pm on Feb 28. (Source: Business Times) of stamp duty transactions. This meant that buying shares in SPVs would not help in avoiding the ABSD. (Source: Business Times) OCR completed condos saw highest gains in Q4 2012 Prices of completed, non-landed private homes in the OCR saw a 5.6% increase in Q4 2012, compared to 2.4% for uncompleted homes in the OCR in the same period. Similarly, prices of completed homes in the CCR saw a 1.5% increase from Q3 to Q4, compared to a 0.4% fall for uncompleted homes. The RCR saw a 1% increase for both completed and uncompleted homes. This brought the prices of completed and uncompleted homes to an overall increase of 3.2% and 1.7% respectively. The overall private home price index which includes both
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Yishun mixed site draws $212.1m top bid
The mixed commercial and residential development site at the corner of Yishun Ring Road and Yishun Avenue 9 attracted a total of 13 bids, with the top bid of $212.1 million or $794.44 psf from a unitof Chip Eng Seng Corporation. The developer could potentially sell the retail and residential components at 3,000-$4,000 psf and $900 psf respectively. (Source: Business Times) ABSD payable for properties via SPV companies buying

IRAS has recently stated that companies purchasing residential properties are subject to a 15% ABSD and that it will carry out audits
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SINGAPORE PROPERTY WEEKLY Issue 88 landed and non-landed homes, completed and uncompleted, increased by 1.8% in Q4, bringing the full year increase to 2.8%. Prices for completed homes in the OCR gained the most with an 8.8% increase, compared to the 4.4% increase in the prices of uncompleted homes in the OCR. This is attributed to the high prices in new launches leading to more demand for completed homes, which in turn drove the prices up. Looking ahead, the transaction volume in the both the primary and secondary markets are expected to fall by 10-15%. (Source: Business Times) Prices of HDB resale flats likely to remain stable Despite achieving a record breaking figure of 202.9 in Q4 2012 (a 2.5% increase from Q3 and 6.6% increase from 2011), HDB’s Resale
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Price Index is likely to remain stable in 2013, with an increase of 3-5% though some predicted a decline of no more than 3%. This is especially since the latest round of cooling measures includes an increase of ABSD rates, restrictions on the MSR, rules to ban PR from subletting their entire flat and requiring them to sell their flats after buying private homes; all of which would help control prices. These latest cooling measures would also cause a downward pressure on COVs, which may fall by 10-20% for bigger flats, which would in turn moderate resale prices. The overall median COV saw an 11.67% increase to $33,500 in Q4 2012, with the median COV increasing by 15.15% to $38,000 for five-room flats and 16.67% to $35,000 for four-room flats. These, coupled with the upcoming supply of at least 23,000 BTO flats in 2013, will help to control HDB resale prices.
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SINGAPORE PROPERTY WEEKLY Issue 88 Meanwhile, resale transactions fell by 14% in Q4 to 5,631 from Q3’s 6,560, bringing the total for 2012 to 25,094, a 2% increase from 2011. (Source: Business Times) Commercial Over 90% of 99-year Alexandra Central’s units sold Alexandra Central, a 99-year leasehold hotel and retail development located at the junction of Alexandra Road and Jalan Bukit Merah has sold 114 of its 116 units ranging from 10-103 sq m (108-1,109 sq ft) at $7,000, $5,600 and $4,400-$4,800 for ground floor units and second- and third- floor units respectively. The hotel and retail development consists of a 13-storey hotel in addition to the retail space on three levels. Located near Ikea @ Alexandra, Queensway Shopping Centre and
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Anchorpoint Shopping Centre, its popularity is attributed to the diversion of investment from the residential property market as a result of the cooling measures and the scarcity of retail spaces on sale. (Source: Business Times) 99-year leasehold healthy interest SBF Center sees

The development consists of 197 offices 192 smaller strata units (592-1,442 sq ft) and five floor plate offices (10,549 sq ft) - and 48 medical suites (614-1,345 sq ft), which are marketed at $3,300-3,500 psf and $3,8004,000 psf respectively. The office space, in particular the floor plate offices, has seen much interest. Strata office spaces are expected to be popular, with a potential price increase of 10% in 2013. Prices of retail space, however, may remain stagnant.
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SINGAPORE PROPERTY WEEKLY Issue 88 Commercial properties are also likely to be more popular than industrial properties though completed industrial properties with tenants may continue to see interests, especially from long-term investors. (Source: Business Times) Office leasing to fall; more demand for small units Office space leasing activity is expected to fall in the next six months, and driven mainly by demand for smaller units (1,000-5,000 sq ft) as the financial sector, which previously demand large space, are demanding less of such spaces as a result of banks shifting back office operations to suburban regions and the economic slowdown. Rents in the CBD are also expected to fall by 0.5% in Q1 from Q2. Serviced offices, however, are likely to continue seeing strong demand since they
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are cheaper, being fully fitted and offers monthly renewals rather than two-year tenures. (Source: Business Times) Govt will introduce cooling measures in commercial sector if necessary URA has stated that it would introduce cooling measures in the commercial property sector to moderate investment demand if necessary. This is especially investors had been increasingly diverting their attention to the commercial sector following cooling measures in the residential sector and recently, the industrial sector. Recent projects such as the yet-to-be launched SBF Center on Robinson Road have already seen much interest while the 99-year leasehold hotelcum-retail development, Alexandra Central, had sold 114 of its 116 strata retail units.
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SINGAPORE PROPERTY WEEKLY Issue 88 However, commercial property such as strata officeit only generates yields of 2-4%, unlike the 8-10% of industrial property. In addition, URA also stated that it would work to ensure that small units do not constitute an overly large proportion of a development. (Source: Business Times) Q4 property figures reflects speculation The primary market of private homes saw 22,197 units in sales volume, compared to the 12,811 units in the secondary market. This reflects speculation since investors prefer purchasing new homes with progressive payments while waiting out the four-year period covered by the SSD. Likewise, the large gap between prices and rents of various properties also suggests that there is speculative demand. Prices of office and shop spaces gained 1.4% and 2% respectively, accompanied by a 1.3% and 0.3% fall in rents. Similarly, the overall private home price index saw an increase of 2.8% with a 2.1% increase in rents while the All Industrial price index increased by 25.8%with a 10.1% increase in rents.Strata factories, followed by shops, saw the highest number of subsale transactions (which are used to measure the level of speculation) in 2012. There were 189 subsale deals of strata factory units in 2012, compared to 70 in 2011, and 54 subsale deals involving shop units in 2012, compared to 11 the year before. Only three subsale deals involved offices. (Source: Business Times)

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Non-Landed Residential Resale Property Transactions for the Week of Jan 9 – Jan 15
Postal District 1 3 3 4 5 5 5 5 5 5 8 8 8 9 9 9 9 9 9 9 9 9 9 10 Area (sqft) 1,184 1,195 2,110 1,507 431 560 980 926 893 872 570 538 1,195 1,173 1,216 710 1,905 1,119 980 893 1,733 1,119 1,453 2,874 Transacted Price ($) 2,700,000 1,650,000 2,100,000 2,900,000 755,000 830,000 1,300,000 950,000 880,000 820,000 1,070,000 843,800 1,830,000 2,700,000 2,588,000 1,480,000 3,760,000 2,200,000 1,760,000 1,480,000 2,771,000 1,735,000 1,800,000 8,600,000 Price Tenure ($ psf) 2,280 99 1,381 99 995 FH 1,924 99 1,754 FH 1,483 FH 1,327 FH 1,026 99 985 99 940 99 1,876 FH 1,568 FH 1,532 FH 2,301 FH 2,128 FH 2,083 FH 1,974 FH 1,965 FH 1,797 FH 1,657 103 1,599 FH 1,550 999 1,239 99 2,992 FH Postal District 10 10 10 10 10 10 10 11 11 11 11 11 11 11 12 12 14 14 14 14 14 14 15 15 Area (sqft) 1,841 1,496 689 1,744 6,512 2,002 2,002 1,991 1,808 764 829 1,690 980 3,735 334 1,066 1,184 1,109 1,195 1,012 1,249 1,130 614 1,561 Transacted Price ($) 3,730,000 2,830,000 1,202,800 2,620,000 8,300,000 2,520,000 2,500,000 4,250,785 3,180,000 1,325,000 1,350,000 2,555,000 1,460,000 3,950,000 648,000 1,330,000 1,390,000 1,268,000 1,250,000 980,000 1,185,410 880,000 815,000 2,030,000 Price Tenure ($ psf) 2,026 FH 1,891 99 1,746 FH 1,502 FH 1,275 99 1,259 999 1,249 999 2,135 FH 1,759 FH 1,734 FH 1,629 FH 1,512 FH 1,491 FH 1,058 99 1,942 FH 1,248 FH 1,174 FH 1,144 FH 1,046 99 969 FH 949 99 779 FH 1,328 99 1,301 99



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Postal District 15 15 15 15 15 15 15 15 16 16 16 18 18 18 18 18 19 19 19 19 21 21 21 21 21 22 22 Project Name ONE FORT BUTTERWORTH 8 PEBBLE BAY BELLEZZA @ KATONG DE CASALLE COSTA RHU MANDARIN GARDEN CONDOMINIUM IDYLLIC RESIDENCES BAYSHORE PARK CASAFINA BEDOK COURT RIS GRANDEUR LIVIA EASTPOINT GREEN EASTPOINT GREEN MELVILLE PARK CHILTERN PARK CASA RIVIERA NOUVELLE PARK ROSALIA PARK THE CASCADIA THE CASCADIA SUMMERHILL THE RAINTREE PANDAN VALLEY LAKEPOINT CONDOMINIUM IVORY HEIGHTS Area (sqft) 1,055 1,776 1,894 861 1,292 1,399 1,528 1,927 936 1,163 2,411 1,292 1,539 1,130 1,130 1,206 915 1,389 1,550 1,690 1,173 1,173 1,302 1,292 2,562 1,033 1,701 Transacted Price ($) 1,318,000 2,198,688 2,330,000 1,050,000 1,350,000 1,450,000 1,480,000 1,720,000 900,000 1,100,000 1,900,000 1,250,000 1,488,888 1,050,000 1,017,000 880,000 1,058,000 1,400,000 1,400,000 1,400,000 1,994,000 1,987,000 1,465,000 1,350,000 2,620,000 860,000 1,365,000 Price Tenure ($ psf) 1,249 FH 1,238 FH 1,230 99 1,219 FH 1,045 FH 1,036 99 968 99 893 FH 961 99 946 99 788 99 968 FH 967 99 929 99 900 99 730 99 1,156 99 1,008 FH 903 FH 828 FH 1,700 FH 1,694 FH 1,125 FH 1,045 99 1,023 FH 832 99 803 100

Postal District 23 23 23 23 26 28


Area (sqft) 958 861 1,195 1,163 1,238 1,313

Transacted Price ($) 1,010,000 840,000 1,145,000 920,000 1,300,000 1,148,538

Price Tenure ($ psf) 1,054 FH 975 99 958 99 791 99 1,050 FH 875 FH

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.

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