Singapore is one of the most sought-after locations for property investments in Southeast Asia, thanks to its stable economy, high living standards, and cosmopolitan culture. However, foreign buyers who are interested in purchasing a property in Singapore must take note of the various taxes and fees that they are required to pay. These taxes are imposed by the government to regulate the property market and ensure that it remains affordable for Singaporean citizens. Understanding these taxes is essential for foreign buyers to make informed decisions and avoid any unexpected costs.

In this article, we will delve deeper into the taxes that foreign buyers have to take note of when purchasing a property in Singapore. We will be breaking these taxes down in terms of the type of properties in question.

Residential Property Taxes

Residential property in Singapore refers to any type of property that is designed and intended for individuals or families to live in. This includes apartments, condominiums, landed properties such as bungalows and terraced houses, as well as HDB (Housing and Development Board) flats.

In Singapore, residential properties are highly sought after due to the city-state’s limited land area and high population density. As such, the residential property market in Singapore is highly competitive, with prices that can vary greatly depending on factors such as location, size, and amenities.

Buyer’s Stamp Duty (BSD)

The first tax that foreign buyers should take note of is the Buyer’s Stamp Duty (BSD). The BSD is a tax levied on all property purchases in Singapore. As the name suggests, only the buying party has to pay this tax. The BSD amount is calculated based on the purchase price mentioned in the document or the market value of the property, whichever is higher. In the recent Budget 2023, it was announced that BSD rates for higher-value residential and non-residential properties would be raised with effect from 15 Feb 2023. Below are the current BSD rates for residential properties, as at the time of writing.

It is important to understand that the Buyer’s Stamp Duty (BSD) is not a flat tax but a progressive one. This means that the percentage rates of BSD will be applied to different market value brackets of the property being acquired, tabulated up to the full purchase or valuation price. To make this clearer, let’s take an example:

Additional Buyer’s Stamp Duty (ABSD)

For foreign buyers who are not permanent residents, an additional tax called the Additional Buyer’s Stamp Duty (ABSD) will be levied on any residential property purchase.

In response to the surging demand for residential properties in Singapore’s real estate market, the government implemented the ABSD in 2011. This measure is intended to cool down the property market and manage the demand.

It is crucial to note that ABSD is exclusively applicable to residential properties, and the rates vary depending on the residency status of the buyer. In December 2021, the latest ABSD rates were announced, and the current rates are as follows:

• For SPRs, a 5% ABSD is mandatory for their first property, 30% for their second property, and 35% for their third and subsequent properties.
• Foreign buyers who are not SPRs, are required to pay a flat rate of 60% ABSD on all properties they acquire.

Below is a comprehensive table comparing the ABSD rates for different residency statuses. Foreign buyers need to take note of these rates as they can significantly impact the overall cost of buying a property in Singapore.

Annual Property Tax

Property tax is a wealth tax levied on the ownership of properties, regardless of whether the property is occupied or vacant. However, to encourage home ownership, the rates for owner-occupier residential properties are set lower than that of non-owner-occupier residential properties and non-residential properties. Owner-occupier residential properties are residential properties where the owner lives in the property.

Property tax is calculated by a progressive tax model, and the amount payable is calculated by multiplying the tax rate with the annual value (AV) of the unit. The AV of a property is derived from an estimate of the potential rental income it could generate if leased out, taking into account the current market value of comparable properties.

Because of the rise in market rents, the AVs of properties have increased. To reflect this trend, the authorities have revised the property tax rates for 2023 and 2024. Below is a concise table showing the owner-occupier tax rates.

As mentioned, the annual property tax is a progressive tax model. Below is an example of the property tax payable for a residential property with an AV of $84,000.

Seller’s Stamp Duty (SSD)

In order to prevent the flipping of properties in Singapore, the Seller’s Stamp Duty (SSD) is levied on residential properties that are sold within 3 years of acquisition. Similar to the BSD, SSD rates are based on the selling price or current market value of the property, whichever is higher.

The current SSD rates are as follows:

However, foreigners are exempted from SSD when they have to sell their residential properties in Singapore as required under the Residential Property Act. For example, under the Residential Property Act, a foreigner is required to obtain approval from the Singapore Land Authority (SLA) before acquiring certain types of residential property, such as landed property. If a foreigner acquires landed property but fails to obtain the requisite approval, they would then have to sell the property. When doing so, SSD will not apply.

Non-Residential Property Taxes

Non-residential property in Singapore refers to any property that is not intended for residential use. This can include commercial buildings, industrial facilities, retail spaces, and office spaces. Non-residential properties are generally used for business purposes, such as manufacturing, trading, or providing services.

Commercial properties, for instance, are often used for retail or office purposes, while industrial properties are used for manufacturing or production. Retail spaces are typically used for businesses that require a physical storefront, such as shops or restaurants, while office spaces are used for businesses that require administrative or professional workspaces.

Non-residential properties in Singapore are subject to different regulations and taxes than residential properties.

Not Applicable: Additional Buyer’s Stamp Duty (ABSD)

One of the biggest advantages of investing in non-residential properties in Singapore as a foreigner is that the ABSD does not extend to commercial and industrial properties. Unlike residential properties, foreign buyers of commercial and industrial properties are not obligated to pay an upfront ABSD fee, which is set at 60% of the purchase price for residential properties.

This exemption is particularly advantageous as it allows foreign investors to invest in these types of properties without the burden of a substantial tax liability, which is often a significant barrier to entry for residential property buyers.

Furthermore, it provides foreign investors with greater flexibility to diversify their investment portfolios and allocate their capital to various asset classes. By offering this exemption, Singapore is providing foreign investors with an attractive opportunity to invest in the country’s commercial and industrial property sectors and enhance their investment strategies.

Buyer’s Stamp Duty (BSD)

Similar to residential properties, the Buyer’s Stamp Duty (BSD) is applicable for non-residential properties as well. However, the rates are slightly different. Below is a table showing the latest BSD rates for non-residential properties:

The BSD for non-resident properties is also a progressive tax, which means that the percentage rates will be applied to different market value brackets of the property being acquired, tabulated up to the full purchase or valuation price (whichever is higher).

Goods & Services Tax (GST)

When purchasing a commercial property from a company that is registered for Goods and Services Tax (GST), buyers must pay GST, which is currently set at 8%, on the purchase price. However, if the buyer themselves is also registered for GST, they can claim back the amount paid. Conversely, if the buyer is not registered for GST, they must pay the full amount without the possibility of a rebate. This factor should be carefully weighed in the overall investment decision, as it can impact the total cost of the property.

It is important to keep in mind that if the property is subject to GST, the same tax will also be applicable to the rent collected from that property. Thus, investors need to be aware of this additional expense and incorporate it into their financial projections.

Looking towards the future, it is vital to note that the GST rate is set to increase by 1% in 2024, bringing the total up to 9% GST. This upcoming change should also be taken into consideration when assessing the overall costs associated with the investment.

It is crucial to follow the law regarding GST, as collecting GST on the rent of a commercial or industrial property when not registered for it is illegal and considered a criminal offence. Therefore, it is essential to be aware of the applicable regulations and ensure compliance to avoid any legal repercussions.

Seller’s Stamp Duty (SSD) for Industrial Properties

Short-term sale of industrial properties will be subjected to the Seller’s Stamp Duty (SSD). This applies to industrial properties (warehouses, factories, etc.) but not commercial properties (offices, shops, medical suites, shophouses) and is a key factor that distinguishes these two types of non-residential property. Below is a breakdown of the current SSD rates for industrial properties.

Annual Property Tax

Like residential properties, non-residential properties are also subjected to property tax. Non-residential properties are subjected to a flat tax of 10% of the AV. Owner-occupier tax rates will not apply to non-residential properties even if bought for own use or occupation.

Below is an example of the property tax payable for a non-residential property with an AV of $54,000.

Closing Thoughts

In summary, the property tax applicable for foreign buyers in Singapore is an important consideration for those looking to invest in the Singapore’s real estate market. With tax policies such as ABSD and other restrictions for foreign buyers, it has become more challenging for foreigners to purchase properties in Singapore. However, these measures have been put in place to ensure that the housing market remains stable and accessible for Singaporeans. 

Despite the tax policies, Singapore remains an attractive destination for property investments due to its strong economy, political stability, and strategic location. Overall, the property tax policies may act as a deterrent for some foreign buyers, but for those who are willing to navigate the tax landscape, the rewards of investing in Singapore’s property market can be significant.

If you need help navigating the property landscape in Singapore, do not hesitate to reach out to us here for guidance or a second opinion.

Disclaimer: The information provided in this article is accurate as of the date of publication and is based on the rules and regulations concerning stamp duty rates and taxes in effect at the time. While we strive to update our past articles diligently, please be aware that tax laws and regulations can change frequently, and it is essential to verify the most current rules and guidelines from the relevant government authorities or consult with a qualified professional for the latest updates and accurate advice.

The post From ABSD to SSD: A Deep Dive into Singapore’s Property Tax Landscape for Foreign Buyers appeared first on Insights by PropertyLimBrothers.

Descending from the North, we have Yio Chu Kang and Seletar. While this particular area in Singapore doesn’t get as much attention in the real estate market, it might be holding some gems. District 28, which hosts Yio Chu Kang and Seletar came in at a notable fourth place among all the districts in the OCR when it comes to growth.

District 28 managed to clock 6.6% on its Compound Annual Growth Rate from 2019 to Q2 2022. Average prices increased by 21.2% over this period of time. Yio Chu Kang and Seletar had a moderate number of transactions, with a total volume of 700.

In the fourth instalment of the Top 5 OCR Leasehold Resale Condos series motivated by PLB’s 2022 Q2 report, we will introduce the top 5 growth condos of District 28. Get ready as we whip out some interesting names in this little known district.

Fifth Place: The Greenwich

In fifth place, we have The Greenwich, a 99-year leasehold condominium with its lease starting in 2009. It was completed in 2014 with a total of 319 units. This relatively small development has almost half of its units sized between 600 and 700 sqft.

From 2019 to 2022 Q2, the average psf of the transactions for The Greenwich was  $1,148. Despite the smaller development size, it had a good deal flow of 59 transactions over the same period of time. The CAGR for this project was 3.4% and it did an absolute growth of 10.7%.

The Greenwich is conveniently located next to Greenwich V, one of two malls in the Seletar area to meet the everyday needs of the residents here. This condo is located along Seletar Road and Yio Chu Kang Road (the main road in this area).

While there might be no nearby MRT stations for some of the properties in Yio Chu Kang and Seletar, the main road leads to the CTE highway with a short drive. This area is a quieter estate with many private residences and Landed homes. The perk of privacy in this more peaceful area might be a selling point for some interested parties.

The Greenwich scores 66% in total on the MOAT Analysis. As mentioned above in the location analysis, the privacy of this area puts Exit Audience and MRT Effect scores at a lower level. Otherwise, this project scores decently on the MOAT Analysis. 

It has a score of 5 on Rental Demand and Quantum Effect, signalling that this area is still a desirable location for rentals and affordable for Singaporean buyers. The volume is considerably high for a small development (Volume Effect of 4) but there is a good amount of space for residents (Landsize Density Effect of 4).

Overall, The Greenwich might appeal more to homeowners who have access to alternative means of transportation such as cars or motorcycles. It would also appeal to residents who prefer more privacy.

Fourth Place: Seletar Park Residence

In fourth place, we have Seletar Park Residences. It is a 99-year leasehold condominium with its lease starting in 2011. It was completed in 2015 with a total of 276 units. Slightly more than half of the units are sized under 900 sqft, but there is a wider range of unit sizes as compared to The Greenwich.

From 2019 to 2022 Q2, Seletar Park Residence had an average psf of $1,238. With an even smaller number of total units, the volume of 67 transacted units in this period is considered to be an impressive deal flow. This project achieved a CAGR of 3.9% and an Absolute growth of 12.1%.

In terms of location, Seletar Park Residence is located beside The Greenwich. The appeal of the location is similar to that of The Greenwich. However, to add to the above analysis, there are some construction works on the other side of Yio Chu Kang Road. This might have some temporary concerns for noise and dust.

An additional note is that while the south-side of Yio Chu Kang Road in this area is mostly private residences and Landed properties, the north-side of the road has more public residences. This is especially true as we get close to Fernvale LRT in the north.

Seletar Park Residence has a score of 62% on the MOAT Analysis. This is slightly lower than The Greenwich due to the higher psf levels, which brought down Quantum Effect by 1 point. Other than that, Rental Demand scored a 5, Landsize Density, Bala’s Curve Effect, and Volume Effect scored a 4. This is a similar MOAT profile when compared to The Greenwich. Yet, Seletar Park Residence managed to marginally outperform The Greenwich.

Third Place: Riverbank @ Fernvale

Coming in Third, we have Riverbank @ Fernvale. This 99-year leasehold condominium is young, with its lease starting in 2013. This condo was completed in 2017 with a total of 555 units. Almost half of the units are comfortably sized at around 1,001 and 1,100 sqft.

From 2019 to 2022 Q2, Riverbank @ Fernvale had an average psf of $1,251. There is also a healthy volume of 105 transactions in this period. Riverbank managed to achieve a CAGR of 4.3% and Absolute growth of 13.5%.

Located along Sungei Punggol, Riverbank @ Fernvale lives up to its namesake. It is located west of Sengkang MRT station, and between Kupang and Layar LRT. This is on the fringe of the Seletar area bordering District 19. There is a good mix of public and private housing in the area. With a decently sized park northeast across the road.

Riverbank @ Fernvale has a high MOAT score of 72%. It scores a 5 on Rental Demand, Quantum Effect, Parents’ Attraction Effect, and Exit Audience. Generally, Riverbank does well as an affordable OCR condo option (for its age) in a residential area in the northeast.

Among other options presented in this district, Riverbank @ Fernvale has a higher MOAT score and over 90 years of lease, giving the next owner an extended time frame to see the price appreciate before the effects of lease decay kick in.

Second Place: Sunrise Gardens

In second place, we have Sunrise Gardens, a 99-year leasehold condo with its lease starting in 1995. It has a total of 252 units, more than 85% of units in this condo are sized above 1,200 sqft. This makes the project much more desirable for families who prefer a larger living space.

From 2019 to 2022 Q2, the average transacted psf was $883 with a total volume of 40 transactions. Sunrise Gardens also achieved a CAGR of 4.5% and an Absolute growth of 14.0% in the same period. At that average psf, it is to no surprise that the price disparity would eventually push prices up further for Sunrise Gardens. It puts this project at a favourable quantum for prospective buyers. Of course, this is keeping in mind that the property has around 72 years of lease left.

Sunrise Gardens is located along Yio Chu Kang Road and the Central Expressway. It is found in a private housing cluster with other private condos and Landed property in the estate. The almost direct access to the CTE makes travelling to the CBD a breeze for car owners. However, there might be some concerns about the noise pollution being located right next to the expressway.

Even without a car, Sunrise Gardens is a short bus ride away from Yio Chu Kang MRT. This particular option might be appealing to a buyer profile that prefers privacy and accessibility via private transportation.

Sunrise Gardens scores a total of 60% on the MOAT Analysis. The lower score is mainly due to the lower volume, rental demand, and remaining lease for the condo. The Exit Audience, MRT Effect, and Parents’ Attraction Effect also has a low score of 1. With this MOAT profile, it signals to us that the buying audience for Sunrise Gardens is very niche. 

The privacy, high landsize density, and disparity in the region and district level might be more appealing to a more mature audience who are willing to take the tradeoffs mentioned above. This brings us to a potential buying audience of retirees who have access to private transportation and are not as sensitive to possible noise pollution from the highway.

First Place: Seletar Springs Condominium

Finally, in first place, we have Seletar Springs Condominium. This is a 99-year leasehold condominium with its lease starting from 1997. It was completed in 2000 with a total of 362 units, with a wide range of unit sizes. Approximately two thirds are sized above 1,300 square feet. This might be attractive for larger families.

From 2019 to 2022 Q2, Seletar Springs Condominium transacted at an average of $860 psf and had a total volume of 56 transactions. It achieved a CAGR of 6.1% with an Absolute growth of 19.4%.

Like Riverbank @ Fernvale, Seletar Springs Condominium is located along Sungei Punggol albeit further south. This location gives the condo some access to schools in the surrounding neighbourhood. It is also located in an estate with a good mix of private and public housing.

Seletar Springs Condo is located at the fringe of District 28, and borders District 19. It is located west of Sengkang and Buangkok MRT and south of Fernvale and Layar LRT. This location might still be more convenient for car owners.

Among the other top growth condos in district 28, Seletar Springs Condo does very well on the MOAT Analysis with a total score of 70%. It has a score of 5 on Quantum Effect, Landsize Density and Exit Audience. While the remaining lease on the condo is in its low 70s range, the average psf is being transacted at a fair point with this in mind.

This might be a good opportunity for buyers looking for an affordable option in this neighbourhood. Simultaneously, for interested seller residents of this condo, the appreciation of the property might present a tempting opportunity to exit and upgrade.

Closing Thoughts

In the less well-known district 28, there are some developments that shine on growth. Yio Chu Kang and Seletar might not seem like much, but this district achieved an honourable fourth place in the Q2 OCR Resale performance category.

While the top growth condos in this district are mostly smaller developments, they are seeing impressive growth and volume for their size and definitely seem to be punching above their weight.

However, there are a sizable amount of unprofitable transactions despite high growth for some of these condos. In particular, The Greenwich and Seletar Park Residences. This is mainly due to high prices at launch, which eventually declined in the late 2010s. Many homeowners exited at a loss.

This is an important reminder for buyers to be cautious about new launch projects and be more selective in their property choice when it comes to the true growth potential of the condominium.

If you want to find out more about the condos on this list, or want to find out how to better navigate your property journey in the current turbulent market, contact us here now!

The post More Stars in the North? — Top 5 Growth Condos in Yio Chu Kang & Seletar (D28) appeared first on Insights by PropertyLimBrothers.

District 20 has been a darling of Singapore’s property market when it comes to OCR districts. Although some parts of District 20 come under the RCR, it still managed to clock in decent growth despite a lower disparity gap. The Ang Mo Kio and Bishan area is loved by residents. The Bishan area is known for being the well-connected heart of Singapore. Although it is not the main business district, it is geographically positioned smack in the middle.

Ang Mo Kio is also loved by residents. With the recent new launch AMO almost selling out on its launch weekend, we can tell that there is huge pent up demand for this area. Needless to say, certain homebuyers are also attracted to the popular and reputable schools in this district.

District 20 squeezes into the Top 5 Growth Districts in the OCR with a solid 6.6% Compound Annual Growth Rate (CAGR) and an Absolute growth rate of 21% from 2019 to 2022 Q2. This feature is motivated by our Q2 report done in light of the turbulent macroeconomic changes that are going on in the global economy.

In this article, we will introduce the Top 5 Resale Leasehold Condos in District 20. Now let’s jump right into it and bring you the best in the heart of Singapore.

Fifth Place: Clover By The Park

At fifth place in the rankings, we have Clover By The Park. It is a 99-year leasehold condo with its lease starting in 2007. Completed in 2011 with 616 units, this condo has provided residents with much needed living space with all units sized above 1,200sqft. 

It is one of the few condos with around 40% of units providing 1,601 to 1,800 sqft of space. There is also a selection of units offering more than 2,500 sqft of space. This is great for large families or multigenerational homes looking for a comfortable place to live.

From 2019 to 2022 Q2, Clover By The Park transacted at an average psf of $1,496. It has a smaller volume of 77 transactions, possibly because it is such a desirable location. Previous homeowners might find it hard to let go. In addition, Clover By The Park achieved a CAGR of 5.1% and 16.0% in Absolute growth in the same period.

Clover By The Park is located south of Bishan-Ang Mo Kio Park and northwest of Bishan MRT interchange (approx. 1km away). Catholic High School is also within 600m of the condo and Eunoia JC is around 700m away. This residential estate has a good mix of public and private housing as well.

Looking at the larger area, Clover By The Park has a great mix of perks when it comes to location. It has ready access to nature in the form of a large park. It has 3 MRT lines within an accessible range. More importantly, Bishan MRT and Junction 8 are only a short 1km distance away.

Clover By The Parks has a total MOAT Analysis score of 60%. While the location is considered great from the initial analysis, the MOATs adjust our expectations downwards. This is where we ask, “Are we paying too much? Is Bishan overrated?”

Compared to the region, the prices are definitely above average. Although this seems more fairly priced when we look at the district alone. However, the Quantum is not exactly affordable to all Singaporeans. The MOAT Analysis brings more reality into the picture when we look at the scores in totality. Perhaps, there is some reason to believe that properties in this district are quite expensive for what it’s worth.

Nonetheless, it seems that the demand for private properties in District 20 is still fierce and people are willing to pay the premium for the location. In the case of these persistent demand conditions, it may be that a core demographic of higher middle class homebuyers is driving these high prices for Condos in District 20.

Fourth Place: Thomson Grand

Coming in at fourth place, we have Thomson Grand. It is a 99-year leasehold condo with its lease starting in 2010, which can be considered as a relatively young resale condo. It was completed in 2015 with a total of 339 units. Around two thirds of the units are sized about 1,301 sqft.

From 2019 to 2022 Q2, Thomson Grand transacted at an average psf of $1,510 with a total volume of 66 transactions. It also achieved a CAGR of 6.3% and Absolute growth of 20.0% in the same period.

Thomson Grand is located next to Peirce Secondary School, along Sin Ming Walk. This road eventually leads to Bright Hill MRT on the new Thomson-East Coast Line which is only around 400m away. Thomson Grand is located close to Upper Thomson road as well.

Thomson Grand is located along the Kallang River and is found northwest of Clover By The Park. Compared to the previous feature, Thomson Grand has even more access to nature, with Lower Peirce Reservoir and MacRitchie nearby. The MRT is also a lot closer although it is not an interchange.

Thomson Grand scores a total of 66% on the MOAT Analysis. It scores a 5 on Rental Demand and MRT Effect. The Volume Effect, Bala’s Curve Effect, and Landsize Density Effect also do decently with a score of 4. District 20 seems to still be more pricey compared to the region at large. Among District 20 condos, Thomson Grand seems to be close to the median.

Thomson Grand is located among many private properties and Landed homes, this might be a perk to some homebuyers. However, it would seem that there are not as many nearby primary schools for this location. This condo does, however, have time on its side as it is very young for a resale condo. 

This particular condo might appeal to nature lovers who love a good mix of different locations to enjoy the green and blue. With the north-south corridor in the URA plans, properties in District 20 will look to benefit from greater accessibility especially for cyclists.

Third Place: Grandeur 8

In third place, we have Grandeur 8, a 99-year leasehold condo with its lease starting in 2002. It was completed in 2005 with 579 units, all of which are comfortably sized above 1,100 sqft. 

From 2019 to 2022 Q2, Grandeur 8 has an average psf of $1,234. With a total volume of 73 transactions, this is considered slightly low deal flow when compared to the others in the list. Regardless, Grandeur 8 was able to clock a CAGR of 7.1% and an Absolute growth of 23.0%.

Grandeur 8 is located in Ang Mo Kio, with a wide range of educational institutions nearby. Mayflower Primary School is under construction, and we have Yio Chu Kang and Anderson Secondary schools. We also have Anderson-Serangoon Junior College and Nanyang Polytechnic. All of these are within 600m of Grandeur 8.

Grandeur 8 is located between Yio Chu Kang and Ang Mo Kio MRT. Mayflower MRT on the new Thomson-East Coast Line can also be found in the west. There is some form of greenery around with the gardens nearby.

Overall, Grandeur 8 scores 66% on the MOAT Analysis. It scores a 5 on Rental Demand and Exit Audience, and a 4 on Quantum Effect. Grandeur 8 is located with more public housing in the surrounding area. 

The Parents’ Attraction Effect is low mainly because there are fewer primary schools around the condo. However, a key selling point of the condo is that it has a good range of secondary and tertiary education institutions nearby.

Joint-First Place: The Gardens At Bishan

The joint-first in our top 5 list for district 20 is The Gardens At Bishan. This condo has a 99-year lease starting in 1997 and was completed in 2004. It has much more units compared to the previous entries, with a total of 756 units. There is a lot more diversity when it comes to smaller units and might appeal to young couples.

From 2019 to 2022 Q2, The Gardens At Bishan transacted at an average of $1,364 psf with a volume of 110 transactions. It achieved a very high CAGR of 8.0%, by far this is one of the highest growth numbers among individual condos and proved itself as an investment. This counts to an Absolute growth of 25.9% over the short span of 3.5 years.

It is located next to Thomson Grand. While The Gardens At Bishan is substantially older than Thomson Grand, it is transacting at a rather competitive price for its age. The high growth clocked by The Gardens At Bishan might be due to the presence of Bright Hill MRT.

The locational benefits mirror that of Thomson Grand. However, the core difference is the lower lease and that it is marginally closer to the MRT. Other than that, the appeal of great options for outdoor activities in the form of nearby green spaces.

The Gardens At Bishan has a total MOAT Analysis score of 64%. It scores a 5 on Rental Demand, Quantum Effect, MRT Effect. And scores a 4 on Volume Effect. The appeal is there when it comes to the demand from renters and the more affordable quantum.

Joint-First Place: Lakeview Estate

Finally, we have Lakeview Estate coming in at the top of the podium. It is a 99-year leasehold apartment with its lease starting in 1977 with a total of 240 units. While this is an older development, it managed to accomplish a high growth rate despite the effects of lease decay. Again this is a signal of strong demand for properties in District 20 from the Affluent segment. 

 From 2019 to 2022 Q2, Lakeview Estate transacted at an average of $1,050 psf. This is much lower when compared to the rest of the properties in the district. The volume is rather low, with only 15 transactions in this period. It is amazing that Lakeview Estate could achieve a CAGR of 8.0% and an Absolute growth of 25.9%. 

In some way, it is like watching a 70 year old senior complete a full marathon. Such growth numbers are outliers for condos of this age and are bordering on being unbelievable. Nonetheless, the numbers don’t lie and it would seem that the effects of lease decay are not as apparent in District 20.

Lakeview Estate is located 400m away from Marymount MRT on the Circle Line and 600m away from Upper Thomson MRT. It is located very near the entrance of MacRitchie trails. Within the short span of 3.5 years, somehow Lakeview Estate has done phenomenally well.

There is no MOAT score available for this condo. Regardless, the prices have climbed tremendously since 2007. We have noticed a steady and steep increase in price since 2020. This post-pandemic growth might be due to the larger unit sizes found in this project.

From the recent transacted history, most of the unit sizes are 1,615 square feet. Some rarer apartments are sized at 3,035 sqft. Perhaps, part of the reason for the most recent appreciation for Lakeview Estate might be due to the demand for larger homes due to the work-from-home trends.

Closing Thoughts

To conclude, District 20 has been a very attractive district for homebuyers in Singapore. While most of the developments here are medium-sized, there is still a strong pent-up demand from the Affluent segment. The central geography and wide range of popular schools are what appeal to most homebuyers looking at District 20.

In addition, District 20 offers many green spaces especially closer towards the Bishan and Thomson areas. Overall, District 20 stands much to gain from the URA’s plans for the North-South Corridor, which will improve connectivity and improve the conditions for people to travel via bicycles.

The recent completion of the Thomson-East Coast Line might also be contributing to why property prices in this district have been so expensive relative to the region. These expensive but sustained high prices relative to other districts are evidence of the strong demand for this district and prized location of being nearer to the city centre.

If you wish to find more gems in District 20 or would like to know more about how you can better navigate your property journey, contact our experts here now.

The post Top 5 Growth Condos in District 20 appeared first on Insights by PropertyLimBrothers.

The northeast region of Singapore is home to many. The large residential areas span Hougang, Punggol, Sengkang, and parts of Serangoon along the North East MRT Line (Purple). It is no surprise then that District 19 has the highest number of transactions in the OCR from 2019 to 2022 Q2. 

District 19 has the highest volume and wins by a large margin as compared to District 18 which comes in second. Hougang, Punggol, Sengkang, and parts of Serangoon have also grown considerably in price in the post-pandemic era. So much so that it almost placed within the Top 5 OCR Districts for growth.

In this special feature for the highest volume OCR District, D19 achieved an impressive CAGR of 6.5% and a total Absolute growth of 20.8%. All this growth from 2019 to 2022 Q2 is quite a feat, especially when there is a large number of transactions. It would mean that on an aggregate of this huge number of transactions, high growth was still achieved. Kind of like having the whole school full of ace students.

Let’s jump right to the Top 5 resale leasehold condos in District 19!

Fifth Place: Rio Vista

Coming in at fifth place, we have Rio Vista, a 99-year leasehold condominium with its lease starting in 2001. This condo was completed in 2004 with a total of 716 units. More than two-thirds of the units are sized between 1,201 to 1,300 sqft. Overall, this condo has comfortably sized homes for families.

From 2019 to 2022 Q2, Rio Vista transacted at an average of $952 psf. It had a volume of 103 transactions in the same period and achieved a CAGR of 5.8% and an Absolute growth of 18.3%. This is a decent amount of growth for a condo of its age.

Rio Vista is located in Hougang, next to Sungei Serangoon. Nearby, we have Serangoon Secondary School, CHIJ OLN, and Holy Innocents’ High School. Punggol Primary School is also located within a 1km radius. In the surrounding area, we also have many pre-schools available for the young family demographic. This neighbourhood is a good mix of private and public housing, and has the much needed educational institutions to help reduce travelling distance for young families who have children 16 and under.

Hougang Mall and MRT station are also approximately 1km away from Rio Vista. In addition, there is plenty of green and blue in the form of Sungei Serangoon and Punggol Park, giving this neighbourhood a decent dose of nature.

Rio Vista does very well on the MOAT Analysis, with a total score of 72%. It scores a 5 for Quantum Effect and Exit Audience. And it is generally a well-rounded development with the exception of it being slightly further away from the MRT Station. Notably, Rio Vista still scores a 4 for Region and District Disparity, signalling that the current prices are reasonable.

Given the remaining lease, the psf of the condo is still at a very affordable price of $952 psf. This might be of growing interest to future homebuyers as the purchasing power is being cut by the recent cooling measures we have seen from the government.

Fourth Place: Regentville

In fourth place, we have Regentville, a 99-year leasehold condo with its lease starting in 1996. It was completed in 1999 with a total of 580 units. For this development, the target audience might have been for younger or smaller families. Most of the units are sized between 900 to 1,200 sqft, with almost half of them in the 1,101 to 1,200 sqft range.

From 2019 to 2022 Q2, the average transacted psf for Regentville is at a very reasonable $868. It had a total volume of 91 transactions in the same period and achieved a good CAGR of 6.0% and Absolute growth of 18.9%.

Similar to the previous entry, Regentville is located in a neighbourhood with a good mix of public and private housing. There are plenty of schools within the vicinity of the condo. We can find Hougang Primary & Secondary, Xinmin Primary & Secondary, Rosyth School, Yio Chu Kang Primary, Bowen Secondary, and AWWA School within a 1km radius of the condominium.

Regentville is around 1.8km away from Hougang MRT. However, Serangoon North MRT on the upcoming Cross Island Line is around 600m away. This new MRT is estimated to be completed around 2030. The immediate neighbourhood is also a rather dense residential area.

Amazingly, Regentville has an extremely high score of 82% on the MOAT Analysis. This is mainly due to the score of 5 on Rental Demand, Quantum Effect, Parents’ Attraction Effect, and Exit Audience. It also does well on Volume Effect, Region and District Disparity Effects with a score of 4.

This suggests that young families who are expecting or have young children might be attracted to the multiple schooling options nearby (for primary and secondary education). And more importantly, the condo looks to be an affordable option with strong rental demand. This will be an important selling point in tougher buyer markets.

Third Place: Evergreen Park

Coming in third place, we have Evergreen Park. This 99-year leasehold apartment started its lease in 1995 and was completed around 1999 with a total of 394 units. Half of its units are sized between 1,000 to 1,100 sqft and the remaining units are all larger. From 2019 to 2022 Q2, Evergreen Park transacted at an average psf of $858 with a total volume of 56 transactions. Evergreen Park achieved a CAGR of 6.0% and an Absolute Growth of 19.0%.

Evergreen Park is located along the Serangoon River (or Sungei Serangoon), which is further south of Rio Vista (5th place). Hougang MRT and Mall is 800m away from the apartment complex. Within the 800m radius of Evergreen park, we have Holy Innocents’ Primary and High School, CHIJ Our Lady of the Nativity, and Serangoon Secondary.

The location is slightly better than the previous entries in this list due to the closer proximity to the MRT and amenities. The number of schools available in the direct vicinity is also decent. The close access to the Serangoon River and Punggol Park provides some natural space for residents.

Evergreen Park performs well on the MOAT Analysis with a total score of 76%. With a score of 5 on Rental Demand, Quantum Effect, and Exit Audience, there seems to be demand for this area and the quantum is affordable for most Singaporeans. The Region and District Disparity Effect along with Volume Effect scores a decent 4.

Evergreen Park has an attractive price point and may be a popular and affordable option for those who wish to stay in Hougang. For HDB Upgraders looking to still stay near their parents in the neighbourhood, this might appeal to them. Evergreen Park is also priced below the average of the private property located near it. Buyers will need to take note of the age of this apartment as well.

Second Place: Chiltern Park

In second place, we have Chiltern Park. This is a 99-year leasehold condo with its lease starting in 1991. It was completed in 1995 with a total of 500 units. This condo has a great variety of unit sizes which may cater to a greater spread of buyer profiles. While this condo only has around 68 years of lease left on its clock, it has still grown considerably in the past 4 years.

From 2019 to 2022 Q2, Chiltern Park transacted at an average of $1,223 psf. It had a total volume of 57 transactions in this period and achieved a CAGR of 7.2% and Absolute growth of 23.1%. Having such high growth for an older condo such as this is not common. The growth might be driven by strong demand for the property due to the perks of its location.

Chiltern Park is located within 200m of Lorong Chuan MRT station. In the immediate vicinity, we have St Gabriel’s Primary, Nanyang JC, Yangzheng Primary, and Zhonghua Secondary. The extremely close proximity to the MRT is a key factor in the attractiveness of this condo. While there is no shopping mall above the MRT, New Tech Park (NTP+) across the street from Lorong Chuan has some food options.

The psf of Chiltern Park is substantially higher than the other entries in our Top 5 list for District 19. This is because of the more centrally located feature of Chiltern Park, which is smack between Bishan and Serangoon. It also has access to the CTE with a short drive. This puts accessibility as the main selling point of Chiltern Park.

Chiltern Park has a total score of 66% on the MOAT Analysis. While this is the lowest MOAT score in this Top 5 list, it is still quite clear why this condo was able to be priced so high with strong growth. The Rental Demand and MRT Effect has a score of 5, pointing once again to the appeal of accessibility for this project. 

This might be a great option for renters or homebuyers who mostly use public transportation. Even for those who own cars, having quick access to the CTE is a great way to get to the city fast. Chiltern Park has no chill when it comes to being connected.

First Place: The Quartz

On the top of the podium, we have The Quartz, which is a 99-year leasehold condo with its lease starting in 2005. It was completed in 2009 with a total of 625 units. Over 70% of the units are sized between 1,000 to 1,200 sqf, and there are some more options for slightly larger units.

From 2019 to 2022 Q2, The Quartz had an average psf of $1,224 with a total volume of 93 transactions. The Quartz achieved a high CAGR of 7.5% and an Absolute growth of 24.1%. The Quartz is still a relatively young condo but was able to grow an impressive amount. Moving forward, The Quartz might still have enough lease to benefit from future developments in Buangkok.

The Quartz is located across the road from Buangkok MRT. Sengkang Grand Mall is currently under construction and will provide the much needed amenities for the area upon completion. The expected completion date is around the end of 2023. It is a mixed-use development with residential spaces available. This might put The Quartz in a favourable position as Buangkok becomes more desirable and The Quartz is positioned as an affordable disparity play.

The recent developments in Buangkok have helped The Quartz appreciate in value. As the estate continues to mature, there might be more opportunities for further appreciation. There are also Palm View and North Vista Primary schools nearby, which help to improve the condo’s appeal to the parent buyer demographic.

The Quartz has a high score of 78% on the MOAT Analysis. It has a score of 5 on Rental Demand, Quantum Effect, Parents’ Attraction Effect, and Exit Audience. It also does well on MRT Effect, Volume Effect, and Bala’s Curve Effect with a score of 4. This gives the condo a strong profile despite being priced above the median for region and district levels.

The demand for The Quartz might still be high even with the lower disparity scores. For this particular condo, prices might continue to see an upside once Sengkang Grand Mall completes development. The increased amenities around the area is reason to see further upside in demand for renters and buyers.

Closing Thoughts

To conclude, most of the top growth condos in District 19 are clustered around the Hougang area or on the fringes of Hougang. Some exceptions such as Chiltern Park performed exceptionally well due to the benefits of its accessible location.

There is some variation in the MOAT Scores of the Top 5 condos in District 19 but most of them score above 70%. If you live in this district or are considering to buy a private property in this district, you may want to consider this as an additional filtering criteria to improve and speed up the search process.

Overall, we see that private property located near schools does better in this residential district. Catering to the needs of young families helps to appeal to a strong demographic of Millennial parents. And improves the demand situation for properties in this district.

If you wish to know more about the right choice to make for your own personal property search, contact our experts here to find out whether D19 is the right pick for you.

The post Top 5 Growth Condos in the Highest Volume District (OCR-D19) appeared first on Insights by PropertyLimBrothers.

District 23 is located in the Northwest portion of Singapore. It is a large residential cluster that has been tucked away into a quieter part of our bustling city. Choa Chu Kang, Bukit Batok, Hillview, and Bukit Panjang are examples of some of the neighbourhoods found in the area.

Most residents in Singapore might not have visited this part of our island. Other than occasionally passing by on the way to the causeway towards Malaysia. Yet, it was placed as the third highest growth district in the OCR based on our 2022 Q2 report. District 23 has grown by a substantial amount, around a 22.1% increase from 2019 to the end of Q2 2022. This puts it at a Compound Annual Growth Rate (CAGR) of 6.9%, close to tying with the second place, District 22.

Impressive as it may be, do note that past performance is not indicative of future performance. The property prices might have grown substantially, but it is not a surefire way to continuous growth. This is not a buy or sell recommendation.

In this article, we will explore the Top 5 Resale Leasehold Condos in District 23. Where are these fast growing condos located? District 23 spans a large geographic area. Stay tuned to find out where you can find the condos which appreciated the most since 2019.

Fifth Place: Guilin View

In fifth place, we have Guilin View. It is a 99-year leasehold condominium with its lease starting in 1996. It has a total of 655 units which are sized comfortably above 850 sqft, with around half of the units sized between 1,201 and 1,400 sqft.

From 2019 to the end of 2022 Q2, Guilin View transacted at an average of $973 psf and had a total volume of 74 transactions. It achieved a CAGR of 5.4% and 16.5% of absolute growth in the same period.

Guilin View is located less than 400m south of Bukit Gombak MRT, and less than 800m northeast of Bukit Batok MRT. It has a great facing towards Little Guilin Lake which is the namesake of this condo. There is a good mix of public and private residences in the immediate vicinity of Bukit Gombak MRT. 

Apart from boasting a great view of the mini lake and its astounding rock formations, Guilin View has a very strong MOAT profile. The general well-rounded performance of Guilin View is accompanied by a high score of 5 on Rental Demand, Quantum Effect, Exit Audience.

Guilin View scores a total of 78% on the MOAT Analysis. This is a very high score despite the marginally lower remaining lease on this condo (approx. 73 years). Nonetheless, this condo has achieved good price growth in the past few years and remains at an affordable quantum while being located close to the MRT.

Fourth Place: Regent Grove

Regent Grove comes in at fourth place. Between 2019 and 2022 Q2, it transacted at an average of $808 psf with a total volume of 65 transactions. It achieved 5.6% on CAGR, and 17.7% in Absolute Growth in the same period.

Regent Grove is a 99-year leasehold condominium with its lease starting in 1997. It was completed in 2000 with a total of 553 units. Like Guilin View, most of the units are very comfortably sized. For Regent Grove, around two thirds of the units are sized between 1,101 and 1,200 sqft.

Regent Grove is located around 300m from Yew Tee MRT station. It is located in a diverse residential area with a good mix of public housing. Within the immediate vicinity, we also find Unity Secondary School and Yew Tee Primary School.

Regent Grove scores a total of 82% on MOAT Analysis. It has strong performance in Rental Demand, Quantum Effect, and Exit Audience like Guilin View. But in addition, it also scores a 5 in Parents’ Attraction Effect and a marginally better score of 4 on District Disparity Effect.

While the MOAT performance and price growth have done exceptionally well for Regent Grove, the declining lease may grow to be a concern after another decade or two. Apart from that concern, the more affordable price range may grow to be more attractive as market conditions get tougher and purchasing power of buyers continues to dip due to cooling measures and the economic slowdown.

Third Place: Palm Gardens

In third place, we have Palm Gardens. It is a 99-year leasehold condominium with its lease starting in 1996. It was completed in 2000 with a total of 694 units, and to some surprise, it has a similar unit size distribution as compared to the two condos we have shared in this article. Almost two thirds of the condominium units are sized between 1,201 to 1,300 sqft, a very comfortable range for families.

From 2019 to 2022 Q2, Palm Gardens transacted at an average of $869 psf with a total volume of 105 transactions . In the same period, Palm Gardens achieved a 5.7% CAGR, and 18% on Absolute Growth.

Palm Gardens is located less than 300m from South View LRT, Keat Hong LRT and is within 1km of Choa Chu Kang MRT. It is found on Hong San Walk, which is between Choa Chu Kang Way and Choa Chu Kang Ave 1.

The area surrounding Palm Gardens is mostly filled with a mix of private and public housing. Choa Chu Kang is one of the larger residential clusters and the district transacts at a relatively higher volume compared to other districts in the OCR. This is what we observe of the top 5 growth condos in District 23 thus far. 

Comparing Palm Gardens to the prior 2 condominiums, Palm Gardens has marginally higher growth but has a marginally lower MOAT score of 76%. Nonetheless, this is still an exceptionally high MOAT score when we compare this to the entire condo population. Palm Gardens scores a 5 on Quantum Effect and Exit Audience. And is well-rounded in the other aspects of the MOAT Analysis.

The strong performance of these large residential clusters across District 23 goes to show that you do not necessarily need to be located close to the city centre, a shopping mall, or an integrated transport interchange to be able to grow. As long as the demand and supply conditions are right for the district, properties across Singapore are able to appreciate decently.

Second Place: The Madeira

The Madeira is placed second among the Top 5 Growth Condos in District 23. It is a 99-year leasehold condo located in Bukit Batok. Its lease started in 2000, and the condo was completed in 2003 with a total of 456 units. Almost half of the units are sized between 1,301 to 1,400 sqft.

From 2019 to 2022 Q2, the average transacted price of units in The Madeira was around $995 psf. It had a total volume of 52 transactions, achieving a CAGR of 5.8% and Absolute Growth of 18.3% over the course of the same period.

The Madeira is located close to Guilin View (our number 5 entry). The Madeira is also less than 300m from Bukit Gombak MRT, and is one of the few private properties located close to the MRT in this area.

The Madeira performs exceptionally well on the MOAT Analysis with a total score of 80%. Again, it exhibits a strong all-rounder performance when it comes to the MOAT. It scores a 5 on Rental Demand, Quantum Effect, and Exit Audience. And has marginally more lease (3-4 years) than the other projects we have mentioned.

Overall, The Madeira’s location is great. And with a strong MOAT, future upside would not come as a surprise as it still scores quite high (4 points) on District and Region Disparity.

First Place: Hilltop Grove

Finally, coming in at First Place, we have Hilltop Grove. It is a 99-year leasehold condo with its lease starting in 1996. It was completed in 2001 with a total of 192 units, more than half of which are sized between 1,201 and 1,400 sqft. Hilltop Groves is the smallest of all the Top 5 Growth condos and one of the furthest away from MRT stations. 

Yet, it has grown the most within the short time span of three and a half years. From 2019 to 2022 Q2, it was transacting at an average price of $948 psf with a small volume of 26 transactions. Nonetheless, it has a CAGR of 7%, and an Absolute Growth of 22.6%.

Compared to the rest of the Top 5 Growth Condos, Hilltop Grove is located in a cluster of private housing. It is located at the end of Hillview Avenue, quietly tucked into a more private area of District 23. Perhaps this is one of the reasons for the growth performance of Hilltop Grove.

Hilltop Grove looks deceptively close to Bukit Gombak MRT but it is not accessible through Bukit Batok Town Park. From walking to public transport, the closest way is probably through Bukit Batok East Ave 2.

Hilltop Grove scores 64% in total on the MOAT Analysis. This is similar to District 27, where we see the top growth condo being a small development located in a quieter corner of the district. The high growth number may be due to strong sales performance from recent transactions in the post-pandemic property price boom. 

Part of the reason for the strong growth number despite the lower MOAT score might be that the relatively low average price of $948 psf still gives it room to grow to the upside when compared to other private housing estates. With the appropriate buyers, prices can appreciate decently within a short period of time for smaller developments. Thus, lower MOAT scores are more of an exception rather than a rule when it comes to the growth potential of Condos.

Closing Thoughts

There are some interesting features the Top 5 Growth Condos in District 23 have in common. First, most of the condos were completed around 2000. This indicates that there is decent room for appreciation for 99-year leasehold condominiums even into the third decade of ownership.

Another interesting feature is that 3 out of the top 5 condos are located around the Bukit Gombak area. Despite it being a relatively more mature estate as compared to Canberra in our District 27 article, more mature residential estates in the OCR can also provide decent growth conditions for Condos.

Finally, 4 out of 5 of the Top Growth Condos in District 23 have a very high MOAT score above 75%. This high MOAT score may be indicative (but not necessarily deterministic) of the strong growth potential for Condos. As we have seen, some outliers with a lower MOAT score might still be able to top the charts when it comes to the growth.

If you wish to know more about how this affects your property journey, or if you want to learn more about how our MOAT Analysis can help you in your property search, contact us here!

The post Where are the Top 5 Growth Condos in District 23? appeared first on Insights by PropertyLimBrothers.

Our 2022 Q2 report has highlighted some incredibly interesting findings. Out of all the districts in the OCR, District 27 (Yishun, Sembawang) performed the best in terms of its Compound Annual Growth Rate (CAGR). Why is this so? People might have expected slightly more “central” OCR districts to perform better. Yet, Yishun and Sembawang in District 27 have pulled off a strong underdog victory in terms of their growth from 2019 to 2022 Q2.

In this new short series, we cover the Top 5 Condos in OCR districts by their CAGR. This series is motivated by some interesting findings in our Q2 report and we are keen to find gems in the OCR as we explore the top growth condos all over Singapore. Please note that this does not constitute a buy or sell recommendation. Such a decision would need to be made while taking into account your personal situation, goals, and finances. 

This article will introduce you to the Top 5 Growth Condos in the Yishun and Sembawang area. We will also make use of PLB’s MOAT Analysis to show you how each of these properties has excelled during the recent 3 years of growth in the post-pandemic boom for Singapore’s property market. Some of these projects might surprise you, so stay on for the ride.

Coming in at Number 5: Eight Courtyards

Eight Courtyards came in fifth place (actually joint fourth) in terms of its CAGR within district 27. It is a 99-year leasehold private condominium located along Canberra drive. The lease started in 2010 and the project was completed in 2014, with a total number of 654 units.

In the period we are looking at (2019 to 2022Q2), Eight Courtyards did an average psf of $1,127 with a cumulative volume of 104 transactions. The CAGR for this specific project is 5.5% and the absolute growth in these two and a half years was 17.3%.

Eight Courtyards is approximately 600m away from Canberra MRT and 1.2km away from Yishun MRT, both on the North-South Line (Red Line). It is located between the new Canberra estate and the mature Yishun Central estate.

Eight Courtyards not only did great on its growth, it also scored very high on PLB’s MOAT Analysis. With a grand total of 80%, Eight Courtyards definitely puts itself a league above what we usually expect from condominiums and apartments. It excelled at Rental Demand, Quantum Effect, Parents’ Attraction Effect, and Exit Audience, scoring a 5. It also does reasonably well in Bala’s Curve Effect and Region Disparity Effect, with a score of 4.

Eight Courtyards has a solid all-rounder performance, with none of its MOAT components falling below a score of 3. This might be a good option to look at for people looking to make D27 their home. Eight Courtyards might be increasingly attractive as the new launch market heats up to sky-high prices. The persistent inflationary forces will continue to price out market participants.

Eventually, more affordable resale condos in the OCR such as Eight Courtyards and the other projects we will introduce might attract demand and continue to appreciate handsomely. Coming in currently at $1,1xx, it is definitely at a tempting price point even for a 99-year leasehold property.

Fourth Place goes to: Yishun Emerald

The joint fourth highest CAGR for condos in district 27 goes to Yishun Emerald. Not so surprisingly, this 99-year leasehold condominium is located right next to Eight Courtyards. This affirms the location’s growth performance and its potential. 

Yishun Emerald has its lease starting in 1998 and was completed in 2002, with a total of 436 units. From 2019 to 2022 Q2, Yishun Emerald had an average psf of $828, with a cumulative volume of 67 transactions. The CAGR for this project was 5.5% and the absolute growth rate for this period was 17.3%.

The core difference between Yishun Emerald and Eight Courtyards is that Yishun Emerald has 12 years less in lease. It also scores lower on the Region District Disparity score because its psf is around the median of the condos in the region with a comparable age. In return, it does marginally better than Eight Courtyards for Landsize Density Effect.

In comparison to Eight Courtyards which ties with Yishun Emerald in terms of growth, the Yishun Emerald project still scores a high 78% on MOAT (2% less than Eight Courtyards). For buyers interested in this area, the key tradeoff is between lease and psf. Yishun Emerald has 12 years of lease less but is priced at an average of $299 psf lower than Eight Courtyards. This is an important tradeoff to keep in mind, even though both joint fourth condos have had the same CAGR since 2019.

Reaching the Podium as Third: Canberra Residences

Moving on to the projects that reached the podium, Canberra Residences comes in at 3rd place. With a cumulative volume of 54 transactions from 2019 to 2022Q2, at an average psf of $989. This puts Canberra Residences at a CAGR of 5.6%, and an absolute growth rate of 17.9%. Canberra Residences managed to squeeze out a marginally better capital appreciation as opposed to the joint fourth condos. 

Canberra Residences’ 99-year lease started in 2010, and the project was completed in 2013 with 320 units in total. As you can see, the Canberra estate is filled with a large number of HDB and private condominiums. This huge residential cluster is driving the growth we see in District 27.

Canberra Residences is located 1km northwest of Yishun Emerald and Eight Courtyards. It is located between Canberra and Sembawang stations. It is found along Sembawang Road, Canberra Drive, and Jalan Sendudok.

It has the same overall MOAT score as Yishun Emerald, sitting at 78%. It is also an all-rounder, but does better in Bala’s Curve Effect and Region Disparity Effect at the expense of Parents’ Attraction Effect score. Overall, Canberra Residences is another in the district that provides affordable private housing and promising growth prospects at the same time. 

What people are looking for in property can be found in the OCR if they keep an open mind in their search process. Although not the most accessible or ideal location (which is a fair trade-off), it comes in at an attractive price point and still has room for improvement as property prices continue to climb.

The MOAT Analysis that complements our search of the Top 5 Growth Condos in the Yishun and Sembawang area has so far gone hand in hand. So far in this article, the properties that do well in terms of their CAGR also have very high MOAT scores of greater than 75%. This is not to say that MOAT is a great predictor of growth, but it does give us more confidence in the growth potential of Condos we are researching. 

To take this a step further, factors of the MOAT Analysis are not as dynamic as price movements in the market. MOAT Scores are relatively stable although it is updated as we receive more information through caveats lodged in the project. Thus, if we can consistently use stable MOAT scores to find properties that will eventually hit a high growth rate one day, it would be an absolute win.

Properties with high MOAT scores may not necessarily perform well throughout their entire lifetime. But when properties with high MOAT scores are strangely priced around or below median, it is a sign that we should dig deeper if it is a great value-oriented property.

First Runner Up: Sun Plaza

Now onto the runner up to the growth race in District 27, Sun Plaza takes it home with an average psf of 828 from 2019 to 2022 Q2. It has a cumulative volume of 10 transactions in this period, and a CAGR of 8.3%. It has an absolute growth rate of 26.9%

Sun Plaza is a mixed-use development located next to Sembawang MRT. It is a 99-year leasehold apartment with its lease starting from 1996. It has a total of 76 units. Although 26 years have passed since, Sun Plaza is still going strong with 73 years of lease. Part of this may be due to the integrated development status. With a mall right below your home, and an MRT station and bus interchange beside it, the property might still be very desirable despite the lease decay.

The larger area surrounding Sun Plaza is the large residential estate of Sembawang, which has both HDBs and private properties in the area. From a glance, the Sun Plaza seems to be the core shopping and transport centre for the area. The footfall and demand to stay nearer to this area.

The MOAT Analysis gives us a surprisingly high reading of 82%. The highest in the article so far. It does very well with a score of 5 in Rental Demand, Quantum Effect, Parents’ Attraction Effect, MRT Effect, Exit Audience, and Landsize Density Effect. Despite the low Volume Effect score of 2 and the decaying lease putting Bala’s Curve Effect at 3.

The growth of Sun Plaza occurred despite the disadvantages of decaying lease and low volume. With an average psf of $828 over the three and a half year period, it would seem that having a lower psf price compared to the average prices of nearby comparable properties. 

A lower average price relative to the market average for that location gives the property’s price room to advance upwards. When housing prices become increasingly unaffordable and out of reach from the median income earner, it is more likely that the demand will be concentrated among more affordable properties.

This price disparity creates an upward pressure on the lower priced condos in the same area. Yet, the price is appropriately discounted by factors such as a decaying lease. Most importantly, just because a property is priced relatively low does not mean that they immediately have a high potential for growth.

Ultimately, the potential for growth is still driven by the desirability of the location and the project. More importantly, reasons are needed for the price to continue to appreciate into the future. That’s part of the reason why people look at URA Master Plans and the larger estate in general. To find out if the property will become more desirable in the future.

1st Place goes to: Euphony Gardens

The first place with the highest CAGR since 2019 is Euphony Gardens. This might take you by surprise, as it certainly did surprise us. Euphony Gardens is a 99-year leasehold condo with its lease starting in 1998. It was completed in 2001 with a total of 304 units. It is located along Jalan Mata Ayer, which is around 1.2km southwest of Yishun MRT.

Euphony Gardens had an average psf of $803 since 2019. It had a total cumulative volume of 53 transactions. The CAGR of this project is 8.7% and it did an absolute growth of 28.6% in this period. This high CAGR is surprising for a condo of this age and location. In some sense, it can be considered as an unexpected underdog victory for Euphony Gardens.

Euphony Gardens is located near a part of Sembawang Road. There are only 3 other condominiums in this vicinity. Otherwise, due east is Chong Pang HDB estate, which can be considered to be a matured area of Yishun.

Surprisingly, Euphony Gardens only has a MOAT score of 68%. It excels in the Rental Demand, Quantum Effect, and Exit Audience. However, it has a low score on Landsize Density and MRT Effect. Transportation options in this location are more scarce but not entirely isolated.

Contrary, to the previous condos that made it into the top 5 highest CAGR, Euphony Gardens is the only one with a MOAT score of lower than 75%. Yet, it is the one with the highest growth in this short period. Perhaps for Euphony Gardens more so than the other entries, the price growth is mainly driven by the larger macro forces on inflation in the property market rather than the intrinsic locational and project benefits and USPs.

Interestingly, this condo commands a similar rental price to other projects nearby. Because of the lower psf of the project, the rental yield ends up being much higher than the rest. Again the high growth number may be a result of the lower psf.

Closing Thoughts

To conclude this article on the Top 5 Growth Condos in District 27, there are a few important caveats to remember. First, this is not a buy or sell recommendation. We are sharing our findings on the top growth condos to see if we can find out what they have in common and whether we can identify these condos before the growth materialises.

There are two important caveats you should consider on these Top 5 Condos. Note that there is a non-negligible number of unprofitable transactions for some of the top growth condos. Perhaps the reason why the growth materialised is because previous owners of the property were willing to sell the property at a loss, giving a value surplus to the next owner.

Next, lease decay in these condos does not indicate an automatic decline in prices. Because of inflation, prices also face an upward pressure despite this lease decay. As a result, we see a form of volatility in price as the two forces battle each other. The result is high growth for buyers who were able to buy the property at a discounted price. Other tangible reasons for the demand of older projects include the size of the units and the size of the development, which are generally larger due to lower land cost during the time of development.

Some additional things to take into consideration is how most of the MOAT scores of the high growth properties in District 27 are very high. A high MOAT score of greater than 75% may indicate that the property has a high potential for growth. This is a criteria we will continue to explore as we look at the other Top Growth Condos in the OCR. If you are interested in a property in the promising District 27, feel free to reach out to us!

The post How did Yishun & Sembawang Top Out Growth in the OCR? — The Top 5 Condos in D27 appeared first on Insights by PropertyLimBrothers.

 

Should I stay or should I go? When condominiums are near their TOP date, homeowners expect a bump up in the prices of their homes. Then prompts the question, is it time to sell it to realise those gains or should I continue staying and ride the wave? Questions like these are very important to homeowners looking for their next upgrade or are considering a move to another location for lifestyle reasons.

In this article, we will consider how Stirling Residences has appreciated so well in its recent TOP in 2022 Q2. We will also contextualise this in the current market conditions and whether or not this level of appreciation is considered unusual. Finally, we will take a glance into the not so distant future, to see if such levels of appreciation can be sustained even after the TOP period. The numbers used were extracted on 14 June 2022.

Contextualising Stirling Residences & the Sell Decision

Stirling Residences is a 99-year leasehold apartment from 2017. It is located in District 3, Queenstown and has a total number of 1,259 units. According to Squarefoot Research, the buyer profile of this apartment is predominantly Singaporean (77.9%). The remaining buyers are Permanent Residents (17.4%) and Foreigners (4.5%). This is typical of condominiums and apartments in Singapore, with around three quarters of the inhabitants being Singaporeans.

A simple majority of the buyers have their current addresses as HDBs (51.2%), and the remaining buyers are from private properties (48.8%). This is most commonly interpreted as the proportion of HDB upgraders out of the whole project. Generally, this allows you to gauge the demographics of buyers and sellers. It is possible that this project continues to be attractive to HDB upgraders looking for a resale apartment. Maintaining the 50-50 split between HDB upgraders and private property owners should not be surprising.

This project was developed by LN Development (Stirling) Private Limited, which is a joint venture between Logan Property Holdings Company Limited and Nanshan Group. While you may not have heard of them in the Singaporean real estate market, they have made their mark in the Chinese market.

Why are some people thinking of selling at TOP? Well, the psf of Stirling Residences has risen significantly since it launched almost 4 years ago in July 2018. It was selling at an average psf of $1,764 and that has risen to an average psf of between $2,143 (May 2022) to $2,315 (as of 14 June 2022). That is an increase of around 21% to 31% in the short span of 4 years. Many would be tempted to realise those gains especially in light of the looming economic troubles in the global market.

As we have discussed in our Quarter 1 Report, new launch prices have been growing a lot faster than resale prices for condominiums and apartments. The chart below shows the growth rates for new sales and resales of 99-year leasehold condos. The trend significantly tapers for resale performance, adding to the temptation of perhaps realising gains from freshly TOP-ed condos to jump to another project.

There are many caveats and cautionary warnings that should be put in here, especially if this is your only home. Selling your home and repurchasing a new launch or resale condo can present a high reinvestment risk. The large amount of capital involved, along with a significant lock-in time due to Seller’s Stamp Duty, makes your next buying decision a very important one. Most players on the market have trouble with managing their selling and purchasing timeline. Majority of them either end up with a period without a home from selling too early or getting slapped with the ABSD as they were not able to sell in time. Also remember that if you sell the house while you still have a loan locked-in, you might have to pay the penalty for early settlement.

The reinvestment risk is worsened by current market conditions of rising inflation and interest rates. Waiting to buy after you have sold might put you in a worse position as prices of housing are rapidly rising along with other basic goods in the global economy. If you wait to repurchase, you might have little choice but deal with higher prices. This problem of rising prices is magnified by rising mortgage interest rates, which will increase the cost of borrowing across the board. These factors will contribute to a risk of lower subsequent returns if the reinvestment decision is poorly made.

Why such high appreciation rates?

Is it normal to achieve this level of appreciation for new launch condominiums? Over the course of almost 4 years, the average psf of Stirling residences have risen from $1,700 to approximately $2,200. That’s a rough paper gain of around 29.4% or 7.35% annualised. Considering a buying price of $1.2 million, with a 75% loan at 2% interest, the total return on investment is approximately 217.6% or 54.4% annualised. A more conservative estimate with mortgage lock-in penalties and additional legal costs would be 180% or 45% annualised. This is the power of leverage.

There is also a preference for investing in new launches because of the Progressive Payment Scheme. This reduces the cost of capital for early buyers and they only pay the mortgage on the loan amount that is released to developers. Making it a lot friendlier for the cash flows of homeowners and investors.

The steep appreciation in the property price may be due to multiple factors which we cannot exactly tear apart and analyse. One reason could be due to developers gradually raising prices of units as they grow more confident in the ability to sell the remaining units. Some developers release the units for sale in phases, and gradually increase the prices.

Another reason could be the TOP effect, or the appreciation in prices as the property freshly hits the resale market. The profile of buyers are likely to prefer to live in new condos (first resident) but more importantly have the need to move in. The fresh state of the condo for residence or rent gives it a unique position to command a premium over other existing condos in the market.

Alternatively, what can explain the TOP effect is also the fact that the buyers of new launches may not be willing to sell their properties unless it is at a much higher price. These owners can have the option of staying-in themselves or renting the property out. The incentives to sell the home must be substantial enough for them to let go of the property. This is especially true when you consider the fact that they have been holding onto the property throughout its 4 years of construction.

An interesting trend from the historical transactions is the gradual dispersion of asking and transacted prices over time. This could be reflecting either the transaction of larger units (hence lower psf) or that the value is unequally distributed among units (some units harder to sell than others or owners desperately letting go). Being able to discern where your unit falls on the trendline (if you’re a seller) is important if you are looking to put it on the market. For buyers, the high variance presents some opportunities to find value for money purchases if you are able to discern if the property is fairly valued on the market.

Stirling Residences is unique also due to the prevalence of smaller units in the project. 41.7% of the total units are primarily 2-Bedders from 601-700 sqft. This could skew the psf transacted onto the higher range over time. As smaller units typically have a higher psf. This could partially explain why the appreciation of this project was so rapid, if more 2-Bedders were transacted closer to the present time.

Generally, it seems that people prefer newer condos, even if it is leasehold. At least within the immediate vicinity of Stirling Residences, the average psf of older condos in the area are transacting at a much lower price. We look at five nearby condos: Queens, Alexis, The Anchorage, Queens Peak, and Commonwealth Towers.

The more recent condo additions to the Queensland area are typically the ones selling at a higher price. It would seem that the older condos (freehold or not) do not catch up in terms of average psf, to the newer condos such as Queens Peak (completed 2020) and Commonwealth Towers (completed 2017). Although it is difficult to compare it this way, as these two newer condos are located closer to the MRT.

The interesting thing about Stirling Residences is the fact that it is marginally further away from the MRT as compared to Queens Peak and Commonwealth Towers and yet is able to command a higher selling price. This could be most likely attributed to the fact that it is a newer project that has just TOP-ed.

Where is Stirling Residences going from here?

Is the price of Stirling Residences able to sustain the rapid annualised growth of 7.35% a year? Where are the prices headed? Let’s look at the comparison with Queens Peak and Commonwealth Towers over time. Putting aside the differences in the project features itself, we look at the price comparison between those three properties.

From a simple comparison between the three properties, it would seem that age is an important factor when it comes to the appreciation of the property. Most of the appreciation seems to occur before the TOP. After which, price only slowly appreciates as seen from Queens Peak and Commonwealth Towers.

That being said, there are some interesting features that allow Stirling Residences to stand out a little. Compared to Queens Peak (76 units) and Commonwealth Towers (117 units), Stirling residences have more 2-Bedder rooms offered (524 units). This caters more towards couples, working professionals, or expatriates without children.

While this is a unique selling point of Stirling Residences in some sense, sellers must realise that if they currently own a 2-Bedder, they would face more competition from their own condo than others. The good thing is that at least nearby condos do not add to the competition of selling the same kind of units for instance 1-Bedder (400-600 sqft) and 3-Bedder (701-900 sqft) apartments.

Closing Thoughts

In this article, we have highlighted the main reason for selling as the high appreciation gains from the TOP. Moving forward, Stirling Residences might have a limited capacity for capital appreciation as shown from the comparison with Queens Peak and Commonwealth Towers. The main reason for the high capital appreciation of Stirling Residences can be attributed to the TOP effect along with the well strategised unit size distribution from the developers.

The main reasons not to sell include the high reinvestment risk presented by the timeline planning for the subsequent property purchase, and current market conditions (rising inflation and interest rates).

Having considered both sides of the argument, often what is most important in a selling or buying decision is the personal needs of the decision maker. Perhaps, you have bought a 2-Bedder but now intend to have children. Personal family needs would change and you might consider upgrading to a bigger property. Or perhaps you are an investor looking to flip into another new launch or resale condo to achieve better returns. Whichever it is, as long as the reinvestment and market risks are well managed, a sell decision could be beneficial to the long term performance of the property portfolio.

If you need more help making sense of the current situation in District 3 or Stirling Residences’ TOP, you may reach out to our experts here. We can help you understand your needs better and provide you with timely advice on how to navigate reinvestment and market risks.

The post How did Stirling Residences owners achieve over 30% gains in capital appreciation? appeared first on Insights by PropertyLimBrothers.

 

Decoupling is a concept that has taken Singapore by storm since the turn of the century. It is a simple yet elegant idea. Sell your existing home, be it a condo or HDB. Use the proceeds to foot the downpayment for two new private condos, one under each spouse’s name. One for your own stay (typically bigger), and the other for investment or rental income (shoebox unit). This was a very attractive idea to the middle-income population looking to grow their own property portfolio, whether for legacy or retirement purposes.

Real estate in the 2000s felt to most people as a “sure-win” method to investing. A low risk, high leverage way to increase their net worth. This heated obsession with property buying led to euphoric, speculative buying of property. Pushing prices further up, before the bubble popped together with the Global Financial Crisis in 2008. There were many factors contributing to this “property-fever” in the late 2000s. Are we witnessing a similar craziness in the property markets today?

In this article, we revisit the idea of decoupling and probe if it is still a viable property investment strategy in the current regulatory and economic environment. We explore why decoupling made so much sense to investors in the 2014s, and why it might not make that much sense to today’s investor. To build on the idea of decoupling and its successors, we offer a few perspectives on how we should make sense of decoupling in the current investment climate.

The Wild Property Market Before Decoupling was a Thing

Before the rapid implementation of cooling measures from 2009-2013, property buying was a phenomenon of its own. You might have heard stories of condominiums selling out at launch, units going out to buyers like hot cakes. Investors run to the showroom with their chequebooks, ready to sign and pay for the down payment for multiple units on the same day of the launch. These are imageries of a by-gone era. Yet, it still runs vibrant in the minds of experienced property investors and realtors.

There are three key difficulties in building a property portfolio. First, was the issue of down payment for the subsequent properties without liquidating existing ones. Next, it was the cash flow issue of servicing two or more property loans. Finally, it was the exit opportunities and the ease of selling the property. The regulations in the real estate industry before the Global Financial Crisis were rather easy-going in some sense. The three key difficulties in accumulating real estate were not as difficult as now.

In the past, there was 90% Loan-To-Valuation for private properties, Interest Only Housing Loans & Interest Absorption Schemes (both outlawed), and low transaction costs for flipping properties (before the introduction of SSD and ABSD). These made it a lot easier for the public to participate in the real estate market, and sometimes speculative. We will focus on the two aspects of affordability: reduced down payment & cash flow aids.

First, the down payment required for private properties before 2008 was 10% of the property value. Banks before the Global Financial Crisis were more than happy to offer a 90% LTV. After all, that means more people will be able to afford to buy a property and more interest payments from them. Sounds like a win-win right? What really sweetened the deal was that CPF OA could be used to pay for half of the cash down payment (5% of property value) after July 2005. This was a tremendous benefit for buyers. Imagine buying a one million dollar Condo. All you needed for the down payment was 50k in cash and 50k in CPF OA. Of course, some additional cash is needed for legal fees and buyer’s stamp duty.

Second, the next hurdle after the down payment was to be able to service a huge 90% LTV loan. Could middle-income earners do it all by themselves? Surely, it would have been too strenuous on personal finances to foot such a heavy mortgage. Two key schemes as forms of cash flow aid enabled them to afford such a loan. The Interest only Housing Loan (IOL) and the Interest Absorption Scheme (IAS). The IOL allowed loanees to pay only the interest payments without paying back the principal amount. This greatly reduced the mortgage payable each month (sometimes almost as much as half). The IAS, on the other hand, was a scheme offered by developers to absorb the interest payments of the loan until the construction was done.

With these two pillars in place, it became easier for members of the public to afford real estate to a degree where it was possible to speculate in the market. It became feasible for middle-income families to work their way into owning multiple properties. However, the Global Financial Crisis in 2008 rocked the boat hard. Financial institutions in the U.S. experienced a rude wake up call with defaults from irresponsible lending. This subprime mortgage crisis caused the global financial system to go into a tailspin.

In a bid to prevent such a disaster from happening in Singapore, regulators here have learnt to tighten up on the real estate market. Making it less prone to speculation, and stabilising it to make sure that financial institutions are not exposed to too much risk from bad debt. As a result, IOL and IAS were outlawed in 2009. LTV was lowered, and ABSD was added. Our previous article on Cooling Measures covers part of this history.

How and Why did Decoupling took off

As the Cooling Measures started to stack up from 2009 to 2014, people’s dreams of owning multiple properties were dashed — at least temporarily. The introduction of decoupling, enabled people to embrace the ABSD rules and was a strategy emphasising the legal flexibility of homeownership in order to build a property portfolio. Decoupling has nothing to do with divorce, by the way. But it does have something to do with how spouses legally arrange themselves for homeownership.

The concept was simple. Instead of owning one property with two names, each spouse can potentially own one property without having to pay the ABSD. This makes owning two homes possible without paying for ABSD. A divorce is not necessary. The buying process simply has to state only one of the spouses as the legal owner of the property. While this avoids the additional ABSD costs, property buyers still had to deal with lower LTVs (which means higher down payments and higher mortgage payments).

The hurdles of having a cash pile to foot the down payments for two properties, and having sufficient income to support the loans for two homes are substantially difficult. In order to overcome the first challenge of the down payment, prospective homeowners would be advised to ideally get a BTO flat first. The profits from the sale of the BTO upon MOP, accompanied by the savings throughout the entire period would help to build the financial base to afford the down payments for the two properties. While there is a general consensus that BTOs do earn some profits, its ultimate purpose is still to provide affordable public housing. And people should remember that. To further reduce the down payment amount for multiple properties, it was most popular among HDB upgraders to purchase a mid-sized private condo for their own stay (typically two to three bedrooms) along with a small shoebox apartment for the investment property (typically studio or one bedroom).

This strategy was immensely popular during the mid-2010s as it played on the hopes of owning multiple properties for legacy and retirement purposes. Whilst it is more difficult to do so during this period, the decoupling strategy offered HDB upgraders (which were the biggest group of consumers for the condo mass market) a dream that is tempting and tough to refuse. Even though the decoupling strategy was considered feasible, it sometimes put families at risk of a precarious financial position. Cash reserves might have been spent dry simply to afford a second property. Families might be overleveraged and put themselves at risk of default if there’s a property market downturn or retrenchment exercise.

These middle-income families were dual-income in nature. Both spouses are working hard at the rat race to be able to continue servicing the property loan, stretching their debt servicing ratios to the limit. This leaves little room for discretionary and emergency expenses. To help decouplers deal with the cash flow issue, the decoupling strategy was more effective with new launch condominiums. The Progressive Payment Scheme helped with the mortgage at the earlier stages when the property was still being built. The mortgage is only effective on the capital disbursed to developers upon completing specific milestones in the construction of the condo. After the property is completed, the investment property can be rented out to assist with the mortgage payments. Alternatively, it can be sold for a profit if there is a handsome capital appreciation on the investment.

As you can see, many considered the decoupling strategy to be rather clever. Using multiple pieces of the puzzle to make owning two properties possible for middle-income families. It is not easy to pull off this decoupling strategy well. There is bound to be a high level of financial stress involved in such a huge investment move. However, we have to acknowledge that decoupling has helped many families start working on their property portfolio dream. Is such a strategy still feasible or efficient in helping families get to that property collection vision now?

Does Decoupling Still Work in Today’s World?

If decoupling on its own wasn’t tough enough, it is now even harder to execute than in the mid-2010s (at the peak of its popularity). Primarily, the LTV is even lower than before (75% or below). TDSR was also reduced  (55% currently). Both are big hits to the ability for people to afford private property, let alone buy multiple ones. With regulators gradually scaling up the cooling measures on private property, will decoupling still work with tighter housing loan requirements? ABSD might be less of an issue now than LTV and TDSR for the middle-income property investors.

Let’s take a look at how the tighter debt requirements affect the viability of decoupling? Comparing 2015 and the present, we look at how much income individuals would need to afford a $1 million investment condo and a $1.5 million own-stay condo. Assuming that the tenure of the loan is 30 years at an interest rate of 2% (estimated mid-to-long term average rate), we round mortgage payments to the next dollar. We calculate the theoretical minimum income required based on the TDSR ratio (banks might or might not offer loans based on credit scores and TDSR guidelines). This is the bare minimum, the advisable income level would be much higher, preferably within the 30% Mortgage Servicing Ratio (MSR).

Looking at the table above, we can see that the down payment required based on the current rules is much higher (by $125k in fact). This is no small matter. Even if each spouse saves $1,000 each month, it will take the couple 5 years and 3 months before they can accomplish this goal. The minimum income required may not look like a huge difference, but it will matter more when we factor in car loans and other forms of debt.

Decoupling today may still be feasible but it takes considerably more money and time to execute. It is far from being an efficient strategy for families to build wealth. What is the way forward? Is there a better way for people to build a property portfolio? How should they go about their first steps? One alternative is to go for growth. Just because you own multiple properties, doesn’t mean your portfolio will automatically perform. Instead, re-prioritising high-growth potential properties might be a better choice for middle-income families to grow their capital before they move on to purchase multiple properties.

Less is more. When it comes to capital appreciation, banking on a single, larger apartment might do better than a decoupled combination (mid-sized + small sized). Although rental income is likely not applicable for the single larger apartment, it could probably do better on the capital appreciation front.  Our previous articles have talked about how the future of work has pushed a preference for larger homes forward. Even with people going back to the office, it would seem that the desire for bigger living spaces remains strong.

Over the past 7 years, smaller apartments have been priced at a higher psf but have a lower growth rate (33%) as compared to larger apartments (41%). In more recent history, from the pandemic in 2020Q3, large apartments still outperform smaller apartments by a margin of 6%. Smaller apartments only grew 14% in the span of 7 quarters while larger ones grew 21%. Going back to our focus on capital gains, less properties may help you achieve better capital returns if you select the right property.

Closing Thoughts

Decoupling may lose out to more efficient capital appreciation strategies that focus on growing wealth and capital rather than the count of properties in the portfolio. Such a performance based focus will help families achieve their larger long term goals, be it legacy for their children, living in landed property, or having a property portfolio for retirement.

If you wish to know more about decoupling strategies and capital appreciation strategies for property portfolios, reach out to our experts here. How we buy, sell, and select homes are catered to each individual’s needs. Goals will be different. Financial situations will be different. The ideal strategy will be different. Does decoupling still make sense for you? Talk to us to find out more!

The post Does Decoupling Still Make Sense? appeared first on Insights by PropertyLimBrothers.

 

For owners of HDB flats and Executive Condominiums (EC), the Minimum Occupancy Period (MOP) is one of the big dates to be excited about. Once the MOP has been met, the HDB or EC can be sold on the open market. What’s next after you sell your home? Do you have a proper exit plan?

Most owners of HDBs or ECs might be tempted by the mouth-watering appreciation gains and look to make a sell decision before thinking elaborately about their next step. Are you going to buy another BTO, Resale HDB, EC? Or are you going to rent? Stay with your parents? Maybe venture into private property? What choice will you make?

This article will try to map out what might be the next step for you. Before you decide you hastily sell your HDB or EC, read this article to see which might be a better next step to take.

#1 Going for Round 2 (BTO or EC)

Feeling lucky? Some owners of HDBs and ECs might want to go for a second round. Perhaps a Prime Location Public Housing (PLH) BTO caught your eye? Or maybe you just like the new BTO or EC launches. Others might go for this option if they are not in a rush and don’t mind waiting a couple more years for another round of MOP capital gains. We have an article here that covers how capital gains look like for ECs after MOP.

The key thing to look out for when you are doing this is the timeline. You may only ballot for a new BTO or EC after the MOP is over. You may not do it during the MOP. Because of the balloting system, there is some uncertainty over whether you might get the project and unit that you want. This translates to a longer and potentially undefined waiting period before making your next property move. The plan for round 2 is all centred on the assumption that you get lucky with a favourable queue number for the next property.

Once you get a good queue number and plan to commit to the decision, you need to know that:

1. Once you have booked the flat, you will have 4 months to signing the lease agreement (where the down payment is due)

   • If you intend to use the proceeds from the sale of your existing HDB or EC, you have a short runway to liquidate your home. We do not recommend this as BTO down payments are typically more affordable and the short timeline might be too risky.

2. After the lease agreement is signed you will have 3 to 5 years to wait before collecting the keys. Once the keys have been collected you will have 6 months to dispose of your previous property.

   • If you are not using the proceeds from your current HDB or EC sale for the down payment, you have plenty of time to dispose of the property.

3. ABSD will not apply since the government knows that your previous property will eventually have to be sold.

4. If you have taken grants for your previous HDB or EC purchase, a resale levy will be deducted from the proceeds of your sale.

   • If you previously purchased a resale HDB or EC on the open market without grants, this will not apply.

You can see here that the timeline is rather messy, and timing is of the utmost importance in this exit plan. Since most Singaporeans like to bankroll new property purchases with the gains from the previous sales, the timeline might be very tight (4 months) to sell the property. If there are no good offers from buyers, this might lead to a less than ideal sales price for your property. Knowing this in advance and having a marketing and staging plan would definitely help reduce the lead time to selling your property on time.

For people who want to avoid potentially stressful situations with timing, it might be better to fund the down payment with cash or CPF. This way there will be a leeway of approximately 3 years and 10 months to sell your property. Plenty of time. Note, however, that you will need to have plans for your accommodations before your new BTO or EC is completed and ready to move in. With construction or renovation details, this might be for quite a long duration. If you plan on going for round 2, we wish you all the best for favourable ballot results!

#2 Resale HDB or EC

For resale HDBs, the process is a lot simpler. There is no balloting involved, and the timeline is less complicated. Simply put, you have to dispose of your property within 6 months of receiving the keys to your new Resale flat. The key difference is that you do not have to pay the resale levy if you’re not taking any grants for your resale purchase.

The perks of this option is that there is less uncertainty as compared to BTOs or new EC launches. Since resale flats are already constructed, there is less uncertainty over construction delays. Furthermore, you may move in (hopefully) after your purchase is complete if there are no hiccups with the seller moving out.

The issue here is that if you choose to only sell your existing home after the collection of keys, you still have a tight timeline to work with. 6 months to sell your home might be a challenge if the market sentiments are bearish or faced with cooling measures. Nonetheless, this option acts as a good in-between affordable option for people who do not want to take their chances with a new BTO or EC and do not want to go for the private property option.

#3 Private Property

This option appeals to HDB or EC upgraders who do not wish to be hit by another round of MOP. Unlike the previous options, for private property the key limitation is the seller stamp duty (3 years). With this option being 2 years shorter than the 5 year MOP, there is a little more flexibility for investors looking to exit sooner in their property moves. Again, the 6 month timeline applies once you have exercised the option to purchase the private property whether it is a new launch or a resale private property. Remember that ABSD will apply if you are not able to sell your previous property in time.

The key perk of going into private property is that you may rent out the entire property immediately from purchase. A popular strategy that you would have heard of is decoupling: have 1 condo under each spouse’s name, one for ownstay and the other for rental income. Regardless of whether you are going for a new launch or resale, we strongly recommend a detailed study into your family’s personal financial situation.

While this option seems to be the least restrictive, it is also complex in the sense that it is difficult to make an optimised investment decision. Should you decouple in the first place? Can you afford to? Or should you focus on buying a bigger and more comfortable home (which will inevitably be more expensive)? Making the right decision seems harder for private property. There is less margin for error and the risks might be higher. There are more variables here in making the right decision and there should be sufficient analysis that shows your plan is resilient.

If you have even an ounce of doubt or uncertainty, you should spend more time to consider if you are making the right decisions. If you do decide to go with the decoupling strategy, make sure that you are not over-leveraged and taking on more debt than your family should. Just like how you shouldn’t max out your credit cards, you shouldn’t max out your TDSR. It will put you in a dangerous zone should either spouse lose their jobs or be unable to foot the mortgage (touch wood).

One way we recommend dealing with this issue is to make sure the private properties you pick have strong intrinsic value with good prospects to appreciate. Factors such as distance from MRT, schools, and other amenities would matter in helping the property act as a good store of value. At PropertyLimBrothers, we do an elaborate study using our MOAT analysis to give a rating on the property in question. Check out the article here and the video in this link.

Closing Thoughts

To summarise what we have discussed so far, here are the things you should look out for when you decide to sell your HDB or EC after MOP:

1. Note down the timeline of when you have to sell the property

2. Check if resale levy applies

3. Have proper accommodation plans to make sure you don’t end up without a place to live

4. If you intend to bankroll the down payment with your previous property, you will need to seek out alternative living arrangements while waiting for your new place

5. Watch out for potential delays in your plans to move in to your new place

6. Do a detailed analysis of your next property to make sure it has strong intrinsic value

If you need an expert opinion to help you out with your own situation, contact us here!

The post Selling your HDB or EC after MOP? What’s Next? appeared first on Insights by PropertyLimBrothers.