How to Identify a Value Buy – Cashew Heights Case Study

Hello again, dear readers!

After the last two articles on how to market your property in a challenging market and case studies on how I achieved record-breaking prices for my seller clients in 2014, we finally have something for readers on the buy side! 

If you’ve been actively house hunting, you are probably familiar with and perhaps rather jaded by the marketing terms, “Value Buy!”, “Star Buy!” and its variations – these catchphrases have been overused and misused far too often. So today, I’d like to demonstrate what a true value buy should look like.

Value Buy Doesn’t Have To Mean Below-Valuation

Firstly, a sound investment doesn’t have to mean buying at a steep discount. (Although this is everybody’s ideal! ) Most buyers (and their agents) seem to think that simply checking past transacted prices for the particular development and then slashing the price by oh, say 10-20%, is The Way to getting a “value buy”.

That, my friend, is more likely to get you a rejected offer and disappointment. Sellers have access to the very same transaction data, so barring severe cashflow problems, a haunted house, or insanity, they’re unlikely to agree to getting ripped off.

A more sensible, realistic approach is to seek out properties that are undervalued, with good latent potential. This definitely takes more brain work and research, but less is left to luck and chance. So let’s get cracking!

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Cashew Heights

Nothing like a live example to illustrate a concept, so let me use an exclusive listing I have at Cashew Heights as a case study. Based on my price of $905psf for a mid-floor 1,658sft unit, I consider this a stellar example of a “Value Buy”, for reasons I shall subsequently explain. Continue reading “How to Identify a Value Buy – Cashew Heights Case Study”

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Singapore Luxury Property: A Dormant Market Worth Exploring

With personal income tax capped at a modest 20% and no capital-gains tax, it’s unsurprising that Singapore has become a magnet for wealth around the region. In a recent survey of 1,000 mobile millionaires, Singapore was deemed the most desirable place to call home in Asia – billionaires Richard Chandler and Eduardo Saverin are amongst the notable individuals who have chosen Singapore as their home-away-from-home.

According to Boston Consulting Group’s 2012 Global Wealth Report, Singapore has the world’s highest density of millionaire households at 17.1% or 188,000 households. At the same time, its popularity as an offshore banking hub is also growing in leaps and bounds, with wealth under management set to overtake Switzerland by 2020. Switzerland currently manages some $2.8trillion in assets, whereas Singapore has seen assets under management grow from just $50billion in 2000, to $550billion by end-2011.

It is somewhat counter-intuitive then that Singapore’s luxury property market has performed dismally in recent years, particularly when the property market as a whole has had a spectacular run. One could blame it all on the whopping 15% additional buyer’s stamp duty payable by foreigners, but ABSD was initially introduced only in December 2011 and raised only recently in January 2013, whereas the luxury market has been slow since the financial crisis of 2008, never recovering its shine unlike the mass-market sector which experienced a rapid rebound beyond previous highs. Sales of non-landed homes above S$5M screeched to a halt between October 2008 to March 2009, and barely hit 400 transactions in the whole of 2012. In 2007, there were more than triple that number of transactions, at a time when there was a lot less money and a lot more exciting alternative investment options competing for a share of the pie.

The Marq by SC Global
The Marq by SC Global
The Ritz-Carlton Residences
The Ritz-Carlton Residences

Continue reading “Singapore Luxury Property: A Dormant Market Worth Exploring”

Stratum – First Impressions

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Let me start by stating upfront that my agency SLP is one of the joint marketing agents for this project, thus it would be improper for me to voice overly critical views on Stratum. Happily for me, after studying the marketing information provided to agents and conducted my own independent research, I have to say I’m suitably impressed and feel I’m able air my opinions here without fear of offending the developers. As I believe there’s sufficient marketing material available to readers, I shall be sharing my own personal viewpoints here, so excuse the semi-casual tone of this piece.

When assessing a real estate target, my usual practice is to start with rental yields as leading indicators for future price movement. I was heartened to see that based on 2012 Q4 rental data, projects around the area like Livia and Ris Grandeur both enjoyed a healthy 3.9%p.a. gross yield.

Bearing in mind that there are several residential projects underway, one would be concerned about new supplies putting downward pressure on the rental yields. However, my sense is that this is a neighbourhood with relatively high owner-occupancy rates, thus the supply of units available for rent should form a low percentage of the total number of units coming online over the next few years.

The numbers appear to support my hypothesis. Thanks to the good folks at squarefoot.com.sg, I was able to determine that there were a total of 43 rental contracts concluded at Ris Grandeur in the year 2012. Assuming that most units are leased for 2-year periods, and that the average number of rentals concluded each year is fairly stable, I estimate that roughly 86 or so units at the 453-unit Ris Grandeur are likely to be investor units, a low 20% of the total number of homes there. And of course, with the Additional Buyers Stamp Duty introduced since 7 December 2011 and further increased on 11 January 2013, the percentage of investor owners of upcoming projects in the vicinity is likely to remain low. I don’t expect rentals to be too badly affected by the supplies of new units coming online over the next few years, as the bulk are being bought by end-users. Continue reading “Stratum – First Impressions”

Property Showcase: Parvis @ Holland Hill

Parvis Site Plan

Development Name: Parvis (pronounced par-vee, though most refer to it as par-vis, yours truly included)
District 10, Freehold
Developer: Ho Bee Group & MCL Land
Address: 12/16/18 Holland Hill ( 3 blocks of 12 floors)

• 2-Bedroom (51 units): 990 – 1,440 sq ft
• 3-Bedroom (100 units): 1,700 – 2,260 sq ft
• 4-Bedroom (76 units): 1990 – 2,600 sq ft
• Penthouse (21 units): 2,300 -3,230 sq ft

Set atop Holland Hill, my first grouse was that vehicular access was only via Farrer Road, from the Queensway side, however my grumbles were soon forgotten once I reached the sprawling 246,000 square foot grounds.

You’ll notice the difference from the minute you hit the driveway, firstly the concierge front-desk to the left as you enter. A concept first made popular by SC Global with their flagship project The Marq, it’s now practically a standard for all luxury developments around the Orchard area, but something considerably rarer in the Holland area. Secondly, the basement carpark – 273 parking lots for 248 apartments – each generously-sized, and no narrow, awkward corners where you might scratch your beloved vehicle. The basement carpark is also unlike your usual depressingly dark and stuffy basement carpark. It actually feels rather bright and breezy thanks to good ventilation, and the modern sculptures placed at various spots are a welcome touch, breaking up the monotony of a space more known for function than form.
Continue reading “Property Showcase: Parvis @ Holland Hill”