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Issue 40

Copyright © 2011-2012 www.Propwise.sg. All Rights Reserved.

CONTENTS
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Singapore Property News This Week Robert Kiyosaki’s Definition Of

FROM THE

EDITOR

Welcome to the 40th edition of the Singapore Property Weekly. Hope you like it! Mr. Propwise

Assets And Liabilities Is Wrong

p11 Resale Property Transactions
(February 8 – February 14)

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SINGAPORE PROPERTY WEEKLY Issue 40

Singapore Property This Week
Residential
Older housing estates to see more resale transactions With the $20,000 bonus for older Singaporeans who sell their flats and purchase three-room or smaller flats, older housing estates in Bukit Merah, Toa Payoh and Queenstown with more senior owners are likely to see more resale transactions. This may lead to a slight increase in prices of such flats since some 5% of existing HDB households is predicted to switch to threeroom or smaller flats with the introduction of the bonus. The target of 400,000 housing units within 400 metres of MRT stations in the next 10 years would also mean an increase in
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government land sales close to MRT stations. However, these are more likely to be for public rather than private housing developments. Two freehold sites up for collective sale The first site located along Bartley Road actually consists of two separate plots that can be tendered together or separately. Taken together, the 65,305 sq ft combined site zoned residential with a height limit of 5 storeys and 1.4 gross plot ratio is asking for $73 - $75 million or 798 to $820 psf ppr, or $726 to $746 psf ppr if the extra 10% GFA for balconies is included. Taken separately, the 55,286 sq ft 25-unit Bartley Grove Apartment plot is asking for $62.35 million to $64.04 million, down from its earlier asking price of $70 million in 2010.
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SINGAPORE PROPERTY WEEKLY Issue 40 The 10,019 sq ft plot with three adjoining terrace houses (No 25, 27, and 29 Bartley Road) is asking for $10.65 million to $10.96 million. The new development on this site is likely to appeal to families with children, being located near schools such as Cedar Primary School, Nanyang Junior College and the Australian and American international schools. 65 units of Bartley Residences sold Of the 120 released units in at 99-year leasehold 702-unit Bartley Residences, Hong Leong Group has sold 65 units (90% to Singaporeans and PRs). The prices range from $610,000 to $670,000 for a one-bedder, $970,000 to $1.1 million for a two-bedder, $1.2 million to $1.4 million for a three-bedder, $1.65 million to $1.9 million for a four-bedder and $1.8 million to $2.1 million for a dual-key unit. After a discount of up to 20%, the average price psf is $1,240. Motoring tycoon Peter Kwee sells a vacant freehold land parcel along Nassim Road The 23,920 sq ft parcel was sold for about $47.8 million or $2,000 psf, a record price for Nassim Road, to a Singaporean businessman. Originally part of a site with a
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The tender for the site closes at March 21.
26,050 sq ft Kovan Court located along Kovan Road is asking for $29 million or $795 psf ppr. The four-storey 16-unit walkup apartment has a 1.4 plot ratio (and consequently, a 36,470 sq ft GFA) and a maximum building height of five storeys. It can also be potentially amalgamated with a 996 sq ft state land in front of Kovan Court.

The tender for the site closes on March 21.

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SINGAPORE PROPERTY WEEKLY Issue 40 net land area of 109,059 sq ft jointly purchased by Mr Kwee and Tee Yih Jia executive chairman Sam Goi at $50.4 million or $462 psf, the land parcel currently sold is part of the 63,300 sq ft plot Mr Kwee got when they split up the plot. The other part was sold to Sukmawati Widjaja for $25.5 million or $647 psf in 2003. Commercial Rents for business and high-tech spaces increased in 2011 amidst slowdown In 2011, the rents for business and science park space and high-tech space increased by 5.6% and 9.6% respectively. The rental figures for the business park space and hightech space, which reached $3.85 psf and at $2.85 psf per month in Q3 2011 respectively and stayed flat for the remainder of the year, are likely to fall by 5 to 10% in 2012. The
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increase in 2011 was likely to be driven by companies shifting their back-office operations to the business parks, attracted by the quality and lower rental rates. With the increase in supply of around million sq ft of business park space in 2012, out of which 22.7 per cent is owner-occupied and 63 per cent has been pre-committed, the rental rates are expected to slow, but not by much since certain industries may see growth and there is a high pre-commitment rate.

SINGAPORE PROPERTY WEEKLY Issue 40

Robert Kiyosaki’s Definition Of Assets And Liabilities Are Wrong
By Dennis Ng The subject on personal finance is one that is widely discussed, and rightfully so. But with so much being taught on this topic, it is not surprising that many people are led to have misconceptions about the subject on personal finance. Prior to my fall during the 1998 financial crisis, I knew next to nothing about personal finance, until I was taught a hard lesson during the 1998 financial crisis. In a bid to deepen my understanding on personal finance thereafter, I picked up Rich Dad, Poor Dad written by Robert Kiyosaki. Admittedly, it is one of the most popular books today.

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SINGAPORE PROPERTY WEEKLY Issue 40 When I knew very little about personal finance, I actually believed and abided by every single word spelt out in the book. But as I grew my knowledge in personal finance and began to master my finances, I realised that not every word he said was correct. For one, I personally think that his definition of assets and liabilities are wrong. But in my opinion, cashflow is not the key determinant of whether something is perceived to be an asset or liability. In my opinion, assets are simply what you own, while liabilities are simply what you owe. Contrary to what Robert Kiyosaki stands for, I believe that there are assets which do not provide us with any cash inflow, but have real value and are so seen to be valuable. “Your house is not an asset” In his book, Robert Kiyosaki went to the extent of saying that a house is not an asset, as one is unable to generate any income or cash inflow from the house. He even went on to elaborate that even if your house is fully paid for, it is still not an asset as it does not provide you with any cash inflow.

According to Robert Kiyosaki, assets put money in your pockets, while liabilities take money from your pockets. In his book, he mentioned that cashflow is key. And based on these definitions, something is only considered an asset if it provides you with positive cashflow and puts money in your pocket. Conversely, if something takes money from your pocket, resulting in cash outflow, it is considered to be a liability.

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SINGAPORE PROPERTY WEEKLY Issue 40 However, he has forgotten that in the long run, the value of a property typically goes up, as a result of inflation. So even if you are occupying your house and do not derive any income from owing it now, the fact that the value of your house goes up with time, means that you would benefit from the increase in the house’s value eventually. Needless to say, everyone needs a shelter over their heads. So we would either rent a house, or buy one. If you decide to rent instead of buying a house, you would still need to pay rent. On the other hand, if you are to buy a house through a housing loan, you would then have a valuable asset that has a market value, once the loan has been fully paid for. If you are to buy a house when you are young and subsequently sell it for a smaller house, you would make money simply because the market value of the bigger house is more than that of the smaller house. So in my opinion, a house is most certainly an asset—which is why the rich typically set out to own their homes, while the poor and some middle class individuals generally rent theirs. “Uncompleted properties are liabilities” Based on Robert Kiyosaki’s definition of assets and liabilities, it is suggested that any property still under construction is a liability, and not an asset, because an uncompleted property does not provide us with any rental income. For which, if you had borrowed money to purchase an uncompleted property, money would flow out of your pocket to pay for monthly housing loan instalments when
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SINGAPORE PROPERTY WEEKLY Issue 40 the property is still under construction. In which case, he seems to ignore the fact that investment returns from property come in two forms—rental income and/or capital appreciation of the property. Contrary to his belief, the key to property investment is not cashflow, but the price paid for the property. For instance, if you had bought any uncompleted property at any location in 2004—when property market was in its doldrums—by the time the property is constructed in 2007, the market value of the property would have easily gone up by over 100%. If you had listened to Robert Kiyosaki and avoided buying any property under construction as it would supposedly incur negative cashflow, you would have missed out on many opportunities to make money from property investments. And if one had waited until 2007 to buy the property, when it had been constructed and rented out, one would have to pay double the purchasing price. Assuming a rental yield of 4%, you would need to collect 25 years worth of rental income to make that same 100% from rent.

And if you had bought a property when its price was high and had been forced to sell when property prices were low, you would again suffer a big loss even if you had managed to rent out the property. “Stocks without dividends are liabilities”
Again, if we are to follow Robert Kiyosaki’s definition of assets and liabilities, we would avoid buying any stock that does not pay a

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SINGAPORE PROPERTY WEEKLY Issue 40 dividend. But many companies, when they are first listed in the stock exchange, typically do not pay dividends in their bid to retain its profits to expand its operations. Are these companies then necessarily deemed to be a liability? For instance, when Google was first listed a few years ago, it did not pay any dividends. And if you had heeded Robert Kiyosaki’s advice to not buy stocks of companies that do not pay out dividends, you would have missed the opportunity to invest in Google when its share price was just valued at US$85. Today, Google does give out dividends and its share price is valued at about US$400, or a 370% increment. In which case, in order to earn returns that amount to 370% equivalent in dividends, assuming a dividend yield of 5%, you would have to wait a long 74 years! “Anything that does not provide cashflow is a liability” If you are to listen to Robert Kiyosaki, you will never be seen buying any antique, art piece, fine wine or collectors’ item, simply because they do not provide us with any income or cashflow. Yet, it is common knowledge that the value of many antiques, collectors’ items, art pieces and fine wine do go up significantly over time. Again, if you are to listen to him, you would also not invest in gold or silver, since they do not provide one with any cashflow. However, we know that commodities such as gold and silver might be a good hedge against inflation. In fact, such is the investment prospects of these commodities that in 2010, gold prices shot up from US$1,000 to over US$1,500,

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SINGAPORE PROPERTY WEEKLY Issue 40 representing a growth of 50%. In the same year, silver prices reported a bigger increase, rising from about US$17 to over US$30, representing a growth of 76%! Although gold and silver could potentially be lucrative investments, one must exercise caution when investing in them. In which case, be warned that investing in gold and silver do not provide one with any income or interest. So if an individual or company claims that they are able to offer you high interest by investing into physical gold or silver, it could really turn out to be a scam instead. Regardless of the investment vehicle we take interest in, it is essential for us to grow our financial knowledge in general. Failing which, we might not become the savvy investor that we so long to be and miss out on the many investment opportunities out there. By Dennis Ng, Director of Leverage Holding and Master Your Finance.

Excerpted from his latest book, What Your School Never Taught You About Money. For a limited time Propwise.sg readers can buy the hardcopy book at just $23 including free delivery (within Singapore), more than 20% off the usual price of $28.90. Click here to get it now

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SINGAPORE PROPERTY WEEKLY Issue 40

Non-Landed Residential Resale Property Transactions for the Week of Feb 8 – Feb 14
Postal District 3 4 5 5 5 8 9 9 9 9 10 10 10 10 10 10 10 11 11 12 12 15 15 15 15 Project Name RIVER PLACE CARIBBEAN AT KEPPEL BAY MURANO THE PARC CONDOMINIUM WEST BAY CONDOMINIUM CITY SQUARE RESIDENCES VIDA VIDA ORCHARD SCOTTS URBANA FOUR SEASONS PARK ST REGIS RESIDENCES SINGAPORE BELMOND GREEN THE ELEMENT @ STEVENS CASA JERVOIS REGENCY LODGE THE ESTORIL 1 MOULMEIN RISE MEDGE THE ARTE TRELLIS TOWERS SANCTUARY GREEN WATER PLACE SANCTUARY GREEN UNITED MANSION Area Transacted Price Tenure (sqft) Price ($) ($ psf) 1,033 1,270,000 1,229 99 1,281 1,730,000 1,351 99 861 930,000 1,080 FH 1,442 1,380,000 957 FH 872 780,000 895 99 570 950,000 1,665 FH 850 2,473,397 2,909 FH 850 2,390,838 2,812 FH 2,088 3,880,000 1,858 99 1,313 2,232,100 1,700 FH 2,260 5,700,000 2,522 FH 5,543 11,700,000 2,111 999 1,313 2,300,000 1,751 FH 1,324 1,670,000 1,261 FH 1,593 1,950,000 1,224 FH 1,281 1,550,000 1,210 FH 2,088 2,400,000 1,149 FH 1,238 1,770,000 1,430 FH 1,313 1,452,800 1,106 FH 1,625 1,980,000 1,218 FH 1,485 1,600,000 1,077 FH 775 975,000 1,258 99 1,216 1,396,800 1,148 99 1,141 1,280,000 1,122 99 1,238 1,080,000 872 FH

Postal District 15 16 16 16 17 19 20 20 22 23 23 23 27 28

Project Name GRAY MANSIONS TANAMERA CREST EAST MEADOWS THE TAIPAN LOYANG VALLEY SUNGLADE CLOVER BY THE PARK SIN MING PLAZA LAKEPOINT CONDOMINIUM GLENDALE PARK HILLVIEW HEIGHTS NORTHVALE ORCHID PARK CONDOMINIUM SUNRISE GARDENS

Area Transacted Price Tenure (sqft) Price ($) ($ psf) 1,216 983,070 808 FH 1,001 950,888 950 99 1,238 1,130,000 913 99 1,044 950,000 910 FH 1,528 900,000 589 99 861 990,000 1,150 99 1,292 1,380,000 1,068 99 1,259 1,020,000 810 FH 1,884 1,180,000 626 99 1,044 980,000 939 FH 1,216 1,140,000 937 FH 1,033 800,000 774 99 872 720,000 826 99 2,034 1,350,000 664 99

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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