Beyond psf- what’s your property’s bright-&-airy quotient?

In a recent Bloomberg article on Asian Millionaires taking charge of their own wealth, Akbar Shah, Head of Southeast Asia and Australia for Citigroup’s private-banking unit, describes real estate markets as hands-on markets that require a feel. I respectfully agree with her opinion. As I’ve mentioned on several occasions, both verbally and in writing, property analysis is more than just dollar-per-square-foot.

I’m struck by the number of times I’ve heard comments from clients like, “It’s pretty old, kinda rundown even… but somehow I just have a good feel about this place!” or “It’s a pleasant-enough place, but somehow it just doesn’t feel quite right?”

Obviously, when it comes to choosing a place to stay, there’s a wide spectrum of lifestyle needs, tastes and preferences. But one trait that almost all home-seekers unanimously favour in a home is the “bright and airy” factor. I believe this is something that contributes greatly to whether a home conjures up a feeling of spaciousness or not, perhaps even more so than whether a home is 1,200 square foot or 1,400 square foot. In a sense, this also echoes some of the principles of Fengshui – “qi” flows easily in a place that enjoys a good breeze and ample natural light, and in theory makes for a more auspicious home.

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Press Release: CapitaLand Group to relocate to Westgate Tower in 2015

CapitaLand Group to relocate to Westgate Tower in 2015

Westgate targets to meet BCA Green Mark Platinum and Universal Design standards

Singapore, 14 August 2012 – CapitaLand Limited today announced that the CapitaLand Group will relocate to Westgate Tower progressively from early 2015. The Group will occupy 11 floors, a total of about 160,000 square feet (sq ft) of the new 20-storey prime office tower. The relocation will further enhance staff interaction and sense of belonging and provide for a holistic sustainable workplace so that it becomes more productive for all. This centralised destination for “work, live and play” will strongly motivate and integrate the Group as one united family-like organisation.
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Stamp Duties – Who pays what, when, and how much?

From my daily dealings with buyers and sellers of Singapore property, along with enquiries from blog readers, there are a number of queries that constantly pop up on my radar (besides the perennial favorite, “How’s the market?”)

One area that has a lot of people confused is the different stamp duties introduced via the various cooling measures. Apologies to readers who are familiar with the stamp duty matrix and consider this stale, but I reckon the fact that I’ve encountered even senior conveyancing lawyers who aren’t too clear on their stamp duty facts suggests that this is an area that requires clarification.

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Is the Singapore Property Market in Trouble? Part 2

Just to recap, in my previous post, I discussed the risk of additional cooling measures for the property market, which I think is low due to the demography of the people who are actually pushing up the housing prices here. In this post, I shall discuss leverage and interest rate risk.

Risk 2: Risk of US-style housing defaults due to falling prices

A primary cause of the housing crisis in the US is the high leverage that homeowners there have on their property. Leverage means the use of loans to finance purchases of assets. Leverage is good in the sense that you’re using OPM (Other People’s Money) to buy your property, which can significantly increase your return on capital. It also allows you to borrow money cheaply against your home’s equity. However, using loans requires you to pledge your property to the bank as collateral, and in the event that market value falls way below the loan amount, then the bank has the right to ask you to pay down a portion of your outstanding loan. If you were not able to comply, the bank has the right to take over your property and sell it in the market to recover their loan. Although you will get any excess after the bank and CPF board are paid, the amount is typically very little, if any, since this usually happens at the worst time when the market is down. Buyers of such properties are looking to buy at fire-sale prices, and the bank’s main concern is to cover their loan, rather than to try to get a good price for the property, so transaction prices tend to be low. Continue reading “Is the Singapore Property Market in Trouble? Part 2”

Psf, psf – are we too obsessed with numbers?

This might seem to be a drastically different stance from my last post on the dangers of being overly emotional when it comes to property investment, however, I come into contact with a broad spectrum of investors, buyers, sellers, and tenants in my line of work. My purpose is to provide a balanced commentary, and to help moderate potentially self-harming behaviours I come across.

As I’ve mentioned in earlier posts, real estate, particularly residential property, is a very unique asset class. Even for brand new units direct from developers, units with exactly the same floor plan will have a slightly different view by virtue of the fact that 2 units cannot possibly occupy the exact same airspace, thus the views, elevation and orientation will be at least marginally if not drastically different.

I believe this is also why real estate contracts are one of the areas where specific performance can be ordered by the courts. I suppose it is recognised that sometimes monetary compensation simply cannot replace the enjoyment one obtains from owning a particular property.

If even homes with exactly the same layout can have nuances of difference, then is not rather artificial to compare homes on a per square foot basis? I can safely vouch by the sheer number of times I have people asking me, “what’s the floor size for this place, ah?”, that the average human being is unable to accurately gauge the floor area of a home. So why do we dwell so much upon this magic ratio of price to floor area?

I suppose it is difficult to quantify how pleasant or livable a space is in a strictly scientific manner. The pleasure one can potentially derive from a well-designed, ideally-located home is in fact priceless! But a good way to gauge the “homeliness” value of a property is how much a potential tenant is willing to pay to live in it. The irony is that transient tenants looking to stay in a home for a 2-3 year time line are, I think, a lot more focused on the value of a good home, whereas home buyers tend to get overly distracted by comparisons of numbers and ratios that may have little effect on the ultimate enjoyment of their homes.

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Is the Singapore Property Market in Trouble? Part 1

Recently, I’ve been hearing a lot of speculation in the newspapers, blogs and forums about new cooling measures for the property market and how domestic lending has gone through the roof and may precipitate in property crash etc. The common thread in all the rumours and commentaries is that the property sector is not going to be good. I’d like to list out some of these topics to just discuss how bad the situation is, or if the speculation is unfounded.

It looks like it’s going to be quite a long discussion, so I’m going to break it up into a few posts to make it more readable.

Risk 1: More cooling measures

With housing prices continuing to rise, are we going to need new property market cooling measures? Before I try to answer that, here is a quick overview of the 5 rounds of property market cooling measures that the government has already implemented over the last few years:

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The “Good School” Effect

Singaporean parents are well-known for their singleminded determination to send their children to the best possible school they can – whether it means renting/buying a home within 1 kilometre of the preferred school, joining a clan or church, or performing random menial tasks like directing traffic, washing fish tanks or juggling chainsaws blindfolded.

Any local mother past her first trimester is likely to be able to tell you what the various Phases of the Primary One Registration Criteria involve, and that for schools with oversubscriptions at any particular Phase, priority is determined by the proximity of the child’s home to the school.

For popular schools like Nanyang Primary School and Raffles Girls Primary School, the available slots are usually fully taken up by Phase 2A. And yet even so, I still encounter many a parent looking to buy property “near SCGS/Nanyang/MGS/RGPS/etc” in the hopes that it might enhance their chances of scoring a spot for their child.


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More can “afford” S$1M homes now, but should they really be buying?

Read this on Singapore Business Review this morning. I think it can be highly dangerous to adopt this idea of “affordability” and could land  novice investors in hot soup when markets head south or interest rates begin to climb.

Please don’t ever gauge affordability on current mortgage interest rates. It was not so long ago that lending rates were at 3.5-5% pa. The low rates we enjoy today are more anomaly than the norm, in the long run.

Project how much you can afford to borrow based on a more conservative interest rate of 3.45%pa rather than today’s 1-2%pa.

You need to buffer yourself against interest rates rising (though I expect rates to remain low till at least 2014) and also rental returns dropping in the event of a economic slowdown.

I’ll do up an example to illustrate when I have the time, but meanwhile read below with caution!

Medical Suites – A Choice Commercial Property Investment

I had the opportunity to view the latest addition to the Novena medical hub yesterday –Novena Specialist Center. Having handled the purchase and mortgage of over 50 medical suites during my time as a real estate lawyer, this class of commercial property will always hold a special place in my heart, but I think there are many more relevant factors that make them a great investment buy.

Artist Impression of Novena Specialist Center

Medical Tourism

According to the Healthcare Services Group of the Economic Review Committee, there could well be one million medical tourists to have visited our shores by the close of 2012. Although the strengthening Singapore dollar has made her somewhat less attractive to neighbouring countries like Malaysia, Indonesia, and Thailand, I believe that those who can afford it would still prefer to have surgical procedures done in Singapore. Health is not something most would want to stint on, particularly higher-end procedures. Thus while the numbers of patients visiting may be lower than some neighbouring countries, the actual revenue generated is comparable.

In the World Health Organisation’s last report on international health systems, Singapore was ranked sixth out of 191, and the only Asian country besides Japan to garner a spot in the Top 10. Supporting infrastructure such our airport, roads, biomedical research facilities, hotels and tourism spots also add to Singapore’s allure as a medical tourist destination.

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Hybrid property – Cluster Homes

I find that expats here often face the dilemma of wanting to live in a landed house just as they did back home, yet also desiring more social interaction and a sense of communal living to beat the loneliness of being alone in a foreign land. Cluster homes help bridge the gap – landed houses within a managed estate, with provision of shared facilities such as swimming pool and gymnasium. It also helps that they often rent at a much lower $ psf/mth than their condo apartment counterparts.

I had the opportunity to view a number of cluster house developments today while assisting a tenant client in securing a home in Singapore, so I thought I’d share my thoughts as well as client’s feedback on the projects we visited.


Radiance @ Bukit Timah – Artist Impression

Radiance @ Bukit Timah
We had to snake our way around narrow lanes dotted with parked cars to reach this estate, which I felt could pose quite an annoyance when you’re in a rush to get in or out. The 17 terrace units enclosed 3 sides of a small rectangular swimming pool decked in shades of sea-green, with a small gym room at the fourth side of the pool. Fairly convenient in the sense that you’re walking distance from the stretch of popular f&b outlets along the Chun Tin Road stretch right opposite Beauty World and Bukit Timah Shopping Centre (both rather sleepy old shopping centres), though those not inclined to hiking up slopey roads (yours truly) would definitely need a car to get around. My nature-loving client rather liked the tranquil corner unit facing away from the main road, with views of Bukit Timah Hill from the roof terrace. One thing we both found odd was how the place seems to already be showing signs of weathering despite being just two years old. Continue reading “Hybrid property – Cluster Homes”