I always received this enquiry whenever I meet new or referral clients. And I can also understand why this has always been the NUMBER 1 question in everyone’s mind.
Question: “Which Condo Is Good For Investment In Singapore”
Honestly, I personally feel that this should not be the first and number one concern. In fact, a right property investment requires to analyse many factors like a person’s financial standing, how long an investor is able to hold onto this property, the property entry price, the capital gain margin and etc
And base on my past experiences, assisting many of my clients to upgrade their HDBs to progress with their property investments, i would like to take this opportunity to share in this article on the current property market situation and how one can spot an investment property with good potential upside
Current Property Market Situation
In this era of property cooling measures, a lot of people are sitting at the sidelines and are preferring to wait. This is the appropriate response that the government will want.
Many are waiting to take action – seemingly “waiting” for some new ruling that will upset the market conditions and will finally push people over the edge to buy. It seems like plenty are waiting to take action.
Or so it seems.
Some are probably even waiting for developers to drop their prices.
But the truth is this, even while cooling measures like TDSR & ABSD still exists – the property market is still moving & humming ahead.
4 years has passed since 2013 – when the cooling measures were first implemented – it seems there is general acceptance that this is the new normal.
There is news of an uptick in prices of private property.
Even property developers themselves have accepted that the cooling measures applied by the government will not be removed.
There seems to be much more positive sentiment in these recent months – with predictions coming in that private property prices are set to rise in 2018 and beyond.
There is actually an opportunity-in-the-making currently at this point
There are pockets of opportunity where it is possible to make good gains in the property market – provided you understand what is going on and are able to take action quickly.
In this blog post, I like to share some strategies to spot a good property purchase that has strong potential to appreciate in value. This is especially for those who have been on the sidelines for awhile and are concerned with making the wrong property choice.
But first a disclaimer
I will be honest. No one can really point out any properties that is guaranteed to make money. This is because no one is able to predict the future. This applies for me as well – I am in no position to claim I know best.
However being a property agent, I can see first-hand what is going on. Handling transactions everyday and being on the ground with homeowners, investors, tenants and landlords – I do have some sense of what is going on with the property market.
3 Key Factors For Spotting A Property With Great Potential Upside
To ensure that your property purchase will not be a regret for you in the years to come, there are 3 key factors you have to keep in mind.
- Entry Price
- Selling Price
- Holding Power
I have seen people who bought an investment property at a good entry price but yet lost money because they sold at the wrong time.
I have also seen people who bought their investment property at a higher price but yet still made a profit because they sold at the right time.
So do remember that your holding power is key as well.
But first, you will need to open your eyes & ears to be mindful of the news that is coming out – both the explicit and implicit meanings.
How To Spot An “Opportunity-In-The Making”
There are 2 proper steps to this.
Step 1: Watch out for “Tell Tale Signs”
Imagine you are going to be outside for the whole day and its about to rain. What are the Tell Tale Signs to know that it is going to rain? The sky is getting dark or you see lightning and hear thunder. Hence with these tell-tale signs, you would quickly look out for potential shelter areas or even choose to carry an umbrella.
So what are the Tell Tale Signs that indicate that property market will be on the upward trend?
There are 2 ways to observe this:
1) Increase in resale transactions
You can see the considerable increase of the Resale Transaction Volume in 2017 – now as we enter the 4th year of cooling measures.
Why is there an increase in Private Property Resale Transactions?
This is a clear indicator that buyers’ interest are starting to pick up. They are starting to enter the property market.
2) Developer’s growing demand for land
There is a clear indication that the average number of bids during land sales has increased as compared to the first half of both 2016 and 2015.
What is more significant is the increase in premiums that the developers are willing to pay for the land. Compare the first half of 2017 which is 29% as compared to 13% in Second half of 2016, -4% for first half of 2016 and -3% in second half of 2015.
It is a clear indication that developers are willing to pay millions or even billions for the land and construction cost and this shows the confidence of the developers
With both increasing Buyers’ Interest and Developers’ Confidence – these are excellent “Tell Tale Signs” of the property market upward trend.
Step 2: Which development is the right property investment?
Lets take a look at Park Place Residences that was launched in the beginning of 2017. This project is a mixed development that is situated very near to Paya Lebar MRT Station.
It is also surrounded by many prominent shopping centres like One KM Mall, Paya Lebar Square and the newly revamped Singapore Post Centre.
And because of these conveniences, can you guess what was the selling price in terms of per square feet?
It was sold at at a staggering average psf of $17xx psf to $19xx psf.
Looking at #10-25 – this unit was sold on 31 March 2017. A 3 bedroom size of 1163 sqft that cost $1702 psf, and sold at $1,978,999 – almost $2 million dollars.
Now lets focus on another project which is just 1 MRT stop away at Aljunied MRT (closer to the city).
There is another new launch condo development which is within walking distance to Aljunied MRT. However there is no nearby shopping centres around.
Guess what is the selling price in terms of PSF?
$13xx psf to $14xx psf.
When we compare the PSF difference between this particular Aljunied development and Park Place Residences – there is a huge gap and price difference of $400+ psf.
(Take note I am comparing with March 2017 transactions)
This is potential opportunity that you can take advantage of.
Are there other more similar potential opportunities that exist currently? Yes, there are others still available – however like any solid investments, there are limited units available.
Also with the developers anticipating a price increase of 5%-10% next year, the time to take action might be limited.
However, despite all these positive sentiment that is taking place, it is still highly essential that you go through a detailed financial assessment to ensure that you know what options are open to you.
At the same time, do consider the needs and goals of your family – especially if you intend to purchase a property for your own stay. If you have questions, please feel free to arrange a no-obligation appointment to discuss further.