Issue 112

Copyright 2011-2013 www.Propwise.sg. All Rights Reserved.

CONTENTS
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The Singapore Property Wealth
Trap aka Capital Gains Property Selling Tip # 5: Completion of Sales Singapore Property News This Week Resale Property Transactions (June 26 July 2)

FROM THE

EDITOR

Welcome to the 112th edition of the Singapore Property Weekly.

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SINGAPORE PROPERTY WEEKLY Issue 112

The Singapore Property Wealth Trap aka Capital Gains

By Gerald Tay (guest contributor)
We can see many property investors on the streets who dream to become millionaires. They behave like the hilarious first round participants of The Next Singapore Idol contest who are thick-skinned enough to believe they have it. My late multimillionaire grandfather said, The Rich makes money with control, while dreamers always make money on hope and hope is their only saviour. Dreamers invest on capital gains and hope. You dont need intelligence to make money in a booming market, because anyone can make money when the market is booming.

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SINGAPORE PROPERTY WEEKLY Issue 112 But when the crunch time comes, many of these dreamers lose control, and panic like lab rats. They dont have the necessary skills to prevent a financial disaster. All they have is hope. They have what I called herd intelligence. They see the immediate situation just like everyone else. They copy and paste. They think narrowly and call it being focused. They don't see the context. They don't see the consequences. Thats how dreamers often get ripped into pieces by the unforgiving market. A taste of success breeds complacency After the recent MAS cooling measures, I talked to an acquaintance whom I met. He had made money selling off his first investment property for a six-figure-profit which he bought in 2009 and sold in 2011. As
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an ordinary employee of a local MNC, he felt incredible with such profits in his pockets! Now, believing that he can fly from the success of his first investment, he proceeded to buy two newly launched property units of large developments in 2012. His objective: to sell and make capital gains upon T.O.P in the next few years. When I asked him if he really believed that he could sell higher then, he haughtily said, If I cannot sell, I rent. If I cannot rent, I stay. He proudly continued, Ive recently received many calls from potential buyers for $1.8 million for one of my properties. Initially, thats my asking price but I flatly rejected those offers. Why? I asked. You should have simply accepted the deal and walked away with the money now.
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SINGAPORE PROPERTY WEEKLY Issue 112 Because I wanted $2.2 million as I believe my property will fetch this price due to its location since other recent new launches in other less strategic locations are already asking around this price. I even asked my wife not to entertain those calls unless the buyers are willingly to negotiate at my price, then we talk. What if the market corrects in the next few years? I asked. I can still sell the property at $1.4 million from the $1.6 million I bought. I can afford to lose $200,000 in such situation. 2. Believes his properties have real buyers, when in reality, the potential buyers are no more than property agents marketing gimmicks to entice buyers to sell. 3. Believes he can keep his job to service his mortgage payments when a downturn comes 4. Believes the market, if it corrects, will only fall 12% and he will lose only $200,000 5. Believes interest rates will stay low in the future 6. Believes he can rent out his unit easily when it T.O.Ps (huge development) 7. Believes he can find buyers easily when it T.O.Ps (huge development) 8. Believes property is a sure one-way-bet to riches 9. Believes he can constantly make money on capital gains easily 10. Believes he is a savvy investor and he can now fly
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Making assumptions that are out of your control

This dreamer guy makes far too many assumptions which he cannot control: 1. Believes prices will always go up
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SINGAPORE PROPERTY WEEKLY Issue 112 Hes an amateur who invested with no investment control. His only control was that he felt he could afford to lose $200,000. If youre investing on assumptions and beliefs, good luck to your investments. Capital Gains are like inherited wealth: attained without discipline Most kinds of power require a substantial sacrifice by whoever wants the power. There is an apprenticeship, a discipline lasting many years. Whatever kind of power you want: CEO of the company; Black belt in karate; Spiritual guru; Property millionaire. Whatever it is you seek, you have to put in the time, the practice, the effort. You must give up a lot to get it. It has to be very important to you. And once you attain it, it is your power. It can't be given away. It resides in you. It is literally the result of your discipline. Now, what is interesting about this process is that, by the time someone has acquired the ability to kill with his bare hands, he has most likely also matured to the point where he won't abuse it. So that kind of power has a built in control. The discipline of getting the power changes you so that you won't abuse it. Capital Gains are like inherited wealth: attained without discipline. You copy what others have done, and you take the next step. You can do it very young. You can make progress very fast. There is no discipline lasting many decades. There is no mastery; risks are ignored. There is no humility before nature. There is only a get-rich-quick, make a name for yourself fast philosophy. No one has any standards. They are all trying to do the same thing: to do something big, and do it fast.
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SINGAPORE PROPERTY WEEKLY Issue 112 Without discipline, something will go wrong eventually A karate master does not kill people with his bare hands. He does not lose his temper and kill his wife. The person who kills is the person who has no discipline, no restraint. And that's the power that capital gains fosters and permits. And that's why you think that to build wealth like this is simple. But it is not, and something will go wrong eventually. I question the conventional wisdom of constantly buying and selling properties (or any other assets for the matter) for capital gains. If the taxman does not get you, the market will eventually. You buy low, then sell high. Then what do you do with your profits at that point of time? Buy higher, sell lower? Its always a zero-sum game. The rich never buy and sell profitable assets. They buy and keep forever for both income and capital value. The dreamers always hope to buy and sell to make that quick buck. Go to the casino instead. In a casino, an amateur gambler makes money on the first couple of visits, only to lose even more eventually when his luck runs out. Just like a casino, we can never beat the market. This is what happens to most amateur investors who happen by chance to make money in a boom time, only to lose it all in a downturn. Real investors make the most money during the downturn of the market, and treat gains from a booming market as a bonus.

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SINGAPORE PROPERTY WEEKLY Issue 112

You want to be an investor, not a trader. You want to invest on income, not capital gains.

Capital gains should be treated only as a

bonus, and should never be a key priority in your property investment decision. By guest contributor Gerald Tay, CEO of CREI Academy Group, who exposes widely-

held property investment myths that have

proven highly ineffective in creating wealth, and prevent a comfortable retirement for the ordinary investor.

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SINGAPORE PROPERTY WEEKLY Issue 112

Property Selling Tip # 5: Completion of Sales

What if your Buyer requests to delay the Sales Completion date? The Sales Completion date is determined by both the Buyer and Seller when they enter into the Option to Purchase (OTP) contract. The date for the Completion of Sales is usually 8 to 12 weeks from the OTP date and this can vary as long as both parties agree to it upfront. So, what if one party requests to delay the Sales Completion after the OTP has been exercised? This change will have to be handled by the solicitors of both parties and you have the liberty to accept or reject the change request suggested by the Buyer.
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SINGAPORE PROPERTY WEEKLY Issue 112 In the event that you are in no hurry to complete the sales, then why not accept the change as the other party would have their reasons for such a request? You can request for some level of compensation such as interest or rent settlement via your solicitor. We have seen a case where the Seller agreed to delay the completion date and that benefited her by preventing her from putting her gain from the property transaction into the stock market right before a major correction.So be nice to people and you could be rewarded in otherways! Nevertheless, if you have an urgent need to complete the sale, you can decline the change request to prevent disruption to your plans. When considering the completion date, dont forget to give sufficient notice to the bank or be prepared to pay a penalty upon your mortgage redemption, if applicable. By Eileen Tan and Ui Wei Teck, property investors and authors of Enjoying Mid-Life Without Crisis. This tip and dozens more are from their book.

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SINGAPORE PROPERTY WEEKLY Issue 112

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SINGAPORE PROPERTY WEEKLY Issue 112

Singapore Property This Week

Residential
Condo rental yields decrease Rental yields for condominium apartments have fallen below the psychological 4 percent support level. Overall gross median rental yield for the first half of 2013 stood at 3.9 percent, compared to 4.2 percent in 2012 and 4.4 percent in 2011, according to the Singapore Real Estate Exchange. Areas which experienced the sharpest fall include Southern Islands (28.4 percent), Orchard (28 percent) and Jurong East (17.4 percent). The Southern Islands have the lowest rental yields of 1.7 percent, followed by Newton with 2.2 percent and Orchard with 2.6 percent. Rentals could be under continued pressure as a record 16,000 completions are expected this year. (Source: Business Times) Singapore is second priciest in the world for foreigners to buy homes According to property consultancy Knight Franks Global Development Insights secondquarter report, Singapore is second priciest place for foreign home buyers to buy newly built prime residential property, only after Hong Kong. The escalated costs are due to increase in associated fees and taxes, while actual property prices have dropped 3.3 percent since a year ago.

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SINGAPORE PROPERTY WEEKLY Issue 112 Regulatory measures to cool the property market in January are also another factor to cause the rise. (Source: Business Times) Commercial S-Reits may pick up According to UOB Kay Hian, interest in SReits could increase when investors realize they are growth plays, not traditional yield plays. This is thanks to potential improvements in rents, asset enhancements and acquisitions in a broader global economic recovery. Recently Reits have suffered a broad sell-down in the markets with the sharpest correction among all the yield stocks. Ten-year yields for Singapore government securities have risen from 1.4 percent to 2.7 percent from May to June, while the average yield for Reits has risen by 90 basis points. (Source: Business Times)

JP Morgan footprint

to

boost

its

real

estate

Among financial institutions with slow pace of office leasing in Singapore, JP Morgan was reported to boost its real estate footprint by 40 percent. Under a front end-back end split, it is to lease 130,000 sq ft of business park space at One@Changi City. The bank is operating out of two locations Capital Tower and One@Changi City. JP Morgans chief administrative officer for Singapore, Mr. Paul Echart said the banks long term real estate strategy needs efficient management to provide desirable work environment. (Source: Business Times)

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SINGAPORE PROPERTY WEEKLY Issue 112 AusGroup sold fabrication facilities for $39.4m AusGroup has sold its Singapore fabrication facilities at 36 Tuas Road for $39.4 million to Boustead Trustees Pte Ltd in a sale-andleaseback deal. The deal allowed AusGroup to leaseback the property with no impact on its operations of providing clients with high quality fabrication and machining services in timely delivery. The property has an area of 30,000 sq meters, with large enclosed fabrication facility, machine shop and staging areas. It has a JTC lease for 30 years starting in May 6, 1995. (Source: Business Times)

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SINGAPORE PROPERTY WEEKLY Issue 112

Non-Landed Residential Resale Property Transactions for the Week of Jun 26 Jul 2
Postal District 3 4 5 5 5 5 5 8 8 9 9 9 9 9 9 9 9 9 9 9 10 10 10 10 Area (sqft) 1,227 893 1,615 969 807 904 904 1,292 1,066 624 1,593 1,593 872 441 2,702 1,324 3,100 969 1,604 1,163 2,013 560 700 1,948 Transacted Price ($) 2,150,000 1,550,000 2,550,000 1,250,000 931,000 990,000 880,000 1,860,000 1,360,000 2,300,000 5,285,000 4,798,000 2,280,000 1,150,000 6,484,800 2,730,000 4,950,000 1,530,000 2,380,000 1,700,000 3,980,000 1,070,000 1,300,000 3,300,000 Price Tenure ($ psf) 1,752 FH 1,735 99 1,579 99 1,290 99 1,153 99 1,095 99 973 99 1,440 FH 1,276 FH 3,684 FH 3,317 FH 3,012 FH 2,615 FH 2,606 FH 2,400 FH 2,062 FH 1,597 999 1,579 FH 1,484 999 1,462 FH 1,977 FH 1,912 FH 1,858 FH 1,694 FH Postal District 10 11 11 14 14 14 14 15 15 15 15 15 15 15 16 16 16 17 18 18 19 19 20 20 Area (sqft) 1,744 936 2,820 1,453 1,216 1,270 1,292 1,259 990 1,389 1,119 1,528 1,356 1,636 1,389 1,206 1,615 1,001 990 3,078 1,421 1,163 1,453 1,615 Transacted Price ($) 2,725,000 1,830,000 4,940,000 1,635,000 1,220,000 1,070,000 1,020,000 1,880,000 1,300,000 1,575,000 1,250,000 1,650,000 1,100,000 1,200,000 1,438,000 1,140,000 1,500,000 970,000 770,000 2,050,000 1,100,000 900,000 1,375,000 1,450,000 Price Tenure ($ psf) 1,563 FH 1,954 99 1,752 FH 1,125 FH 1,003 FH 842 99 790 FH 1,493 FH 1,313 99 1,134 FH 1,117 FH 1,079 99 811 FH 733 99 1,036 FH 946 99 929 99 969 FH 778 99 666 FH 774 99 774 99 946 99 898 99

Project Name TWIN REGENCY CARIBBEAN AT KEPPEL BAY ONE-NORTH RESIDENCES HERITAGE VIEW REGENT PARK REGENT PARK VISTA PARK MERA SPRINGS MERA SPRINGS SCOTTS SQUARE HILLTOPS HILLTOPS THE PATERSON EDGE ILLUMINAIRE ON DEVONSHIRE GRANGE INFINITE THE COSMOPOLITAN ASPEN HEIGHTS SOPHIA 98 ASPEN HEIGHTS PARC CENTENNIAL PARVIS STUDIO 3 STEVENS LOFT ONE ROBIN

Project Name MONTVIEW SOLEIL @ SINARAN SKY@ELEVEN LE CRESCENDO STARVILLE THE ALCOVE COSY LODGE ONE AMBER COSTA RHU BUTTERWORTH 33 AQUENE MANDARIN GARDEN CONDOMINIUM TORIE MANSIONS NEPTUNE COURT CHANGI COURT AQUARIUS BY THE PARK EAST MEADOWS CARISSA PARK CONDOMINIUM MELVILLE PARK RIS GRANDEUR RIVERVALE CREST REGENTVILLE BRADDELL VIEW BRADDELL VIEW

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SINGAPORE PROPERTY WEEKLY Issue 112

Postal District 21 21 21 22 22 22 22 23 23 23 23 23 23 26 Area (sqft) 1,399 1,798 1,873 1,087 1,076 1,259 1,044 1,281 1,259 1,195 1,916 1,356 1,119 1,066 Transacted Price ($) 1,450,000 1,680,000 1,720,000 1,150,000 1,120,000 1,180,000 960,000 1,450,000 1,390,000 1,150,000 1,780,000 1,130,000 920,000 950,000 Price Tenure ($ psf) 1,036 FH 935 99 918 99 1,058 99 1,041 99 937 99 919 99 1,132 FH 1,104 99 963 99 929 FH 833 99 822 99 891 99

Project Name BUKIT REGENCY MAYFAIR GARDENS BEAUTY WORLD CENTRE THE CENTRIS PARC OASIS PARC VISTA PARC VISTA THE DAIRY FARM MI CASA HILLVIEW REGENCY MERALODGE NORTHVALE PARKVIEW APARTMENTS SEASONS PARK

NOTE: This data only covers non-landed residential resale property transactions with caveats lodged with the Singapore Land Authority. Typically, caveats are lodged at least 2-3 weeks after a purchaser signs an OTP, hence the lagged nature of the data.

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