Issue 130

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

CONTENTS
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The 4 Fundamental Rules of
Property Investment Singapore Property News This Week Resale Property Transactions (October 30 November 5)

FROM THE

EDITOR

Welcome to the 130th edition of the Singapore Property Weekly. Hope you like it!

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SINGAPORE PROPERTY WEEKLY Issue 130

The 4 Fundamental Rules of Property Investment

By Gerald Tay (guest contributor) In any investments, and especially in property due to its highly illiquid nature, there are four fundamental rules of property investment ordinary investors must to adhere to if they want to be successful: 1. You Must Preserve Your Capital (the ability to at least preserve the initial investment capital without losing it), 2. Money Must Be in Constant Velocity (generating immediate returns) 3. You Must Be In Control (YOU Control the investment, not the other way around) 4. Never Invest in Something You Dont Understand Well
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SINGAPORE PROPERTY WEEKLY Issue 130 These are the four rules I followed religiously ever since embarking on my property investment journey 10 years ago, and these crucial rules have helped cushion my property investments in the ups and downs of the market over the years. These rules are not entirely created by me, but they have always been used by successful investors and entrepreneurs whom I have had the privilege to learn from. One of them is my late wealthy grandfather who had built a multi-million dollar business and property empire by simply adhering to these four fundamental investment rules. When an investor tries to find those investments that will give them the best possible returns on their investment capital, they will often absent-mindedly ignore the potential downsides of the investment and economy. Greed and arrogance will cause them to pursue investments that promise so called high returns that look good on the surface with unsubstantiated claims of potential high rental yields or capital gains that the properties or investment can fetch. Take for example, buying overseas property in exhibitions and property seminars. Smart overseas property marketers know greed and ignorance always sells, and they know how to use it to prey on unsuspecting investors who may be completely ignorant of the market, especially in an overseas market which one may be unfamiliar with.

Rule 1: You Must Preserve Your Capital

Sounds logical and simple enough, yet many gullible investors forget this rule when greed, arrogance, ignorance and a gambling streak arise.

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SINGAPORE PROPERTY WEEKLY Issue 130 Greed has foreshadowed fundamentals. Most of the time, the investor does not realise it unknowingly, and we all know that greed will always lead to dire financial consequences. If you want to do well in any investment, you must possess some basic business knowledge. Knowing how to differentiate between a winning investment and a losing investment takes many years of experience, humble learning and a basic understanding of reading a simple business financial statement. The problem with most amateur investors is that they cannot even manage their own personal finances properly, or to distinguish what an asset and liability is. Rule 2: Money Must Be in Constant Velocity If the investment does NOT give immediate returns today, its not an investment. Any investment bought on future price gains and yield is gambling! For example, buying a property off-the-plan only to see completion four years later is more of a consumer choice than an investment choice. If you have an obese bank account with many other income producing assets, I say sure, go ahead and speculate on some off-the-plan property projects or other investments that will ripen years down the road. You can afford to wait and play the game patiently.

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SINGAPORE PROPERTY WEEKLY Issue 130 However, for the ordinary investor, where time is of crucial importance in growing wealth, who has yet to secure his retirement funds, and has no passive income from zero assets nor a million dollars in the bank account today, trapping your limited capital resources for four years or more with zero returns in the period (not to mention the potential downside and economic changes that might happen in four years time) can prevent you from seizing other potential opportunities to grow that wealth earlier. Rule 3: You Must Be in Control Its called the control of money. The rich get richer, while the poor get poorer because the rich understands the importance of having control in any investment. They control the money, sufficiently protecting their downside. They control the investment and the returns they want through managing income cash flow and expenses. Holding Power is NOT a protection of downside: Never mind, my downside protection is if the property cannot be rented out or fetch the price I want, I can always stay in it or use it myself. Its the same as saying if I fail to woo the girl I like, I can still hope to win her heart back with more flowers and expensive gifts. There are plenty of other good choices around. Dump the losing property and move on. Holding power is for people who have already made their wealth, and not for ordinary investors who have very limited capital resources for more productive uses in other opportunities. Property developers take their initial investment back within five years by selling units to property buyers as soon as they can.
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SINGAPORE PROPERTY WEEKLY Issue 130 Banks (and even loan sharks) take back their money lent to borrowers in the form of immediate monthly loan re-payments as interest income. love to do it as it gives them an adrenalin high and a strong sense of satisfaction (high returns), but he/she does not view it as risky because they follow a set of strict rules, proper system, proper safety techniques and constant training to minimise those risk associated with mountain climbing. The untrained ones like us, however, will view mountain climbing as a very risky investment. The point is this: If you do not know what you are doing, it is considered risky. And surprisingly, most untrained investors (arrogant and ignorant) think they know what they are doing. Focus on ONE key investment area you know very well, before even considering venturing into the next. Focus, NOT diversify! Diversification is for those with no control and do not know what they are doing.
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The middle class becomes poorer because their one and only Get Wealthy strategy is to buy off-the-plan-properties and have mutual funds for retirement plans. There is no control here. The only people in control are the property developers, the economy and the fund managers themselves.
Rule 4: Never invest in Something You Dont Understand Well You dont know what you dont know. We need to understand Risk Vs Risky. All investments come with risk, but not all are risky if you know what you are doing. A professional mountain climber knows he/she faces risk when doing this sport, and they
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SINGAPORE PROPERTY WEEKLY Issue 130 David Beckam, the famous professional football star, does not say he will diversify playing professionally into other sports like golf (and hope to become another Tiger Woods) simply because his managers tell him there is a danger of tearing his leg ligament just by playing soccer alone. Yes he plays golf but thats a hobby he can afford and not a career. most small-time ordinary retail investors have very little or no knowledge of how the commercial and industrial sector works, yet they invest on hopes of returns (if any). The investment dynamics and structure of the commercial and industrial property sector is completely different from that of residential homes. Implement Strict Personal Criteria and System Investment

Luciano Pavarotti, the famous opera singer does not diversify into singing rock songs, because there are fewer opera listeners and rock is more popular.
Take commercial and industrial property investment for example. With massive cooling measures on residential property sector, many unwitting home-buyers have gone into the commercial and industrial sector. Being only residential buyers for their own homes,

Do you have a personal investment system with a strict set of investment criteria? I follow all four of the fundamental rules strictly and if an investment does not meet just one of those rules, I do not invest at all. All my property investments are low risk, high returns (returns which meet my criteria according to my personal goals) because I understand them very well,
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SINGAPORE PROPERTY WEEKLY Issue 130 they fit my strict personal criteria and system, and they adhere strictly to the 4 Rules of Investment. You need to have constant training, ground experience and implement a set of rules and system catered specifically to your own needs and life priorities and most importantly, follow them without fail! I have my own set of strict investment system and criteria, and I follow them. If a particular investment does not meet any of my set criteria, I do not invest, no matter how promising the returns are. Having a personal investment philosophy would also help tremendously. Having first evaluated these goals will help determine ones preferred investment returns, to preserve or grow ones wealth, and what sort of investments should you invest in. As Sun Tses Art of War says, Knowing yourself and knowing your enemy is the key to winning all battles. Follow strictly your rules of engagement for any investments. The investment can either be your dearest friend or it can be your deadly enemy. You decide. By guest contributor Gerald Tay, CEO of CREI Academy Group, who exposes widelyheld 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 130

Singapore Property This Week

Residential
Duo Residences receives good interest During the first phase of sales at Duo Residences, the 99-year leasehold development at Ophir-Rochor Road, more than 1,000 cheques were submitted. The project is a joint collaboration of Temasek Holdings and KhazanahNasional. Apartments at the development start from $2,214 psf for a studio apartment of about 420 sqft in size, while prices of one-bedders of 538 sqft start at $2,045 psf. Two-bedroom units of at least 807sqft in size are priced at $1,983 psf. The property is a few-minute drive from

TiongBahru, VivoCity, Orchard Road, MBS, the CBD and Sentosa.

(Source: Business Times) National Development Minister sees light for Singapore property market At Parliament on November 12, National Development MinisterKhaw Boon Wan was asked by Member of Parliament Christopher de Souza about what can be done to ensure a predictable regulatory regime to regulate foreign ownership in Singapore's property market in order to create sustainable property prices. Minister Khaw said he was seeing light at the end of the tunnel to achieve a

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SINGAPORE PROPERTY WEEKLY Issue 130 sustainable Singapore property market, with the cooling measures creating the intended effect of dampening foreign demand and reducing speculation. The proportion of purchases by foreign in Singapore private housing market has decreased since 2011 from 17 percent in 2011 to only 7 percent in Q3, 2013. The number of purchases by foreigners has also decreased from about 1,400 per quarter to 330 in Q3, 2013. In addition, subsales, a proportion of private housing transactions and a gauge of level of speculative activity in the property market, fell from 7.6 percent in 2011 to 4.6 percent in Q3, 2013. Minister Khaw said that only citizens are now allowed to buy new HDB flats and provided grants to purchase resale HDB flats, and almost all landed housing can only be purchased by Singaporeans. (Source: Business Times)
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Singapore property market to correct in 2015 or 2016 According to presentations at the 20th Singapore Economic Roundtable Forum, one of several medium-term challenges and risks confronting the Singapore economy in the future is that the property market could correct substantially in 2015 or 2016 as higher interest rates are expected to coincide with large increase in housing supply. Other challenges mentioned at the forum include over-leveraging in certain household segments, lower cost-competitiveness and obstacles to productivity growth. The forum was organised by the Institute of Policy Studies and The Business Times, and is held twice a year under the Chatham House Rule which participants agree to keep each other's views anonymous to promote frank debate.

(Source: Business Times)

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SINGAPORE PROPERTY WEEKLY Issue 130 CITY Developments Ltd raises red flags on private housing Following its 10.4 percent year-on-year drop in Q3 net earnings to $120.6 million, City Developments Ltd (CDL) has raised red flags on the Singapore private housing market. CDL said that although developers are cutting their prices in existing and new projects and willing to take lower profit margins, land prices are continuing to increase. In addition, non-traditional developers, especially foreign construction companies, are entering state tenders by bidding aggressively to secure land, and at the same time sacrifice their profit margins on construction. This has led to many developers to form joint venture to bid for land and then cause successful bid prices to differ widely among different sites, which would need careful study from the government. (Source: Business Times) Singapore banks could withstand even 50% property price plunge According to the stress tests carried out by the International Monetary Fund (IMF) and the Monetary Authority of Singapore (MAS), Singapore banks will be able to withstand even a 50 percent plunge in property prices over the next two years. It was also found that Singapores financial system is highly developed, well regulated and supervised, with financial-soundness indicators for the big three domestic banks remained strong during the global and European crises. However, the risk which Singapore property sector could pose to financial stability is that property prices were already above their 2008 peak,

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SINGAPORE PROPERTY WEEKLY Issue 130 and that the rapid growth of credit and real estate prices could exacerbate aggregate sensitivity to macroeconomic shocks and interest-rate cycles. Private homes November said to rebound in

(Source: Business Times)

Singapore Land sells 150 units at Alex Residences 150 out of 200 units released in Alex Residences were already sold on November 13 by Singapore Land with the average price of $1,650 psf. The popular units are one, two and three-bedroom units to owner-occupiers and potential investors. The Residences condominium is located near MRT station and has 429 units, and is a short distance from Chatsworth Park Good Class Bungalow Area, a wet market, a food centre, restaurants and cafes.

Developers' sales of private homes are expected to rebound this month, with 468 units sold out of 540 units released at the 660-unit Duo Residencesat an average price of $2,000 psf. Earlier, Singapore Land had sold 150 units at Alex Residences, while later this month, GuocoLand is expected to release Clermont Residence in TanjongPagar at a price above $3,000 psf. Sales of private homes had fallen 19 percent in October to only 1,009 units from 1,246 units in September. The October's figure itself was about half of the 1,949 units year-onyear.Savills Singapore predicts of about 1,400 to 1,500 unit sales this month. (Source: Business Times)

(Source: Business Times)

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SINGAPORE PROPERTY WEEKLY Issue 130 New global property measurement standard to be ready in 2014 A new global property measurement standard tostandardise the way valuation is conducted around the world could be ready in June 2014 the earliest, following the formation of the first International Property Measurement Standards Coalition (IPMSC).The draft of this first standard targeting office space is being finalized, and will likely be sent out for consultation in January 2014 before being sent back for approval in June or July 2014. According to Mr. Michael Newey, president of the Royal Institution of Chartered Surveyors (Rics), In theory, if you are valuing a building here in Singapore, and you're valuing a building in Hong Kong, and one in London or Sydney, it's the same methodology. The problem is that properties are measured in hugely different ways around the world. For example, floor space in Spain would include
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outdoor swimming pools, while in the Middle East it would include the hypothetical maximum number of floors that can be built on existing foundations.

(Source: Business Times)

Commercial Havelock hotel site gets highest bid of $30 million

Despite a shorter tenure and the need for parts of the original building to be conserved, a plum hotel site at Havelock Road has drawn the highest bid of 30.09 million or $1,303.24 psfppr out of nine valid bids. This highest bid is 6.6 percent higher than the second highest bid of $28.09 million or $1,216.62 psfppr from OoiTeckHin. Analysts had previously expected the winning bid at only between $920 and $980 psfppr. (Source: Business Times)
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SINGAPORE PROPERTY WEEKLY Issue 130 All vacated City space at Millenia Tower taken up All of the 143,000 sqft under Citi's lease at Millenia Tower expiring next month have been taken up, showing a strong demand for secondary office space.Citi started to vacate the space earlier this year and completed its exit from the building in July, marking the final leg of the group's four-phase departure from Millenia Tower and the next-door Centennial Tower that began in 2011.Citi had occupied a total of 440,000 sqft in the two buildings, but it moved to Asia Square Tower 1 in 2011.

(Source: Business Times)

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SINGAPORE PROPERTY WEEKLY Issue 130

Non-Landed Residential Resale Property Transactions for the Week of Oct 30 Nov 5

Postal District 3 3 5 9 9 9 10 10 10 10 10 10 10 11 11 14 14 15 15 15 15 15 15 16

Project Name QUEENS PEARL BANK APARTMENT THE INFINITI ORCHARD TOWERS GRANGE HEIGHTS GAMBIER COURT GARDENVILLE THE MONTANA THE MONTANA THE TESSARINA KELLOCK LODGE DUCHESS CREST THE SIERRA PAVILION 11 CHANCERY COURT STARVILLE SIMS MEADOWS ARTHUR 118 POSHGROVE EAST SPRING @ KATONG OCEAN PARK COTE D'AZUR LAGUNA PARK CASA MERAH

Area Transacted Price Tenure (sqft) Price ($) ($ psf) 915 1,330,000 1,454 99 1,324 1,118,780 845 99 926 1,150,000 1,242 FH 1,970 3,000,000 1,523 FH 3,025 4,100,000 1,356 FH 1,163 1,560,000 1,342 99 1,582 3,200,000 2,022 FH 592 1,156,090 1,953 FH 1,141 2,108,100 1,848 FH 1,324 2,130,000 1,609 FH 893 1,250,000 1,399 FH 1,593 2,050,000 1,287 99 1,141 1,460,000 1,280 947 958 1,580,000 1,649 FH 926 1,220,000 1,318 99 1,270 1,265,000 996 FH 1,066 986,000 925 FH 926 1,440,000 1,556 FH 1,238 1,750,000 1,414 FH 1,593 2,150,000 1,350 FH 1,410 1,875,000 1,330 FH 1,302 1,680,000 1,290 99 1,453 1,300,000 895 99 1,227 1,480,000 1,206 99

Postal District 16 16 17 18 19 19 19 21 21 21 23 23 23 25 26 27 28

Project Name THE CALYPSO THE CLEARWATER RIZ HAVEN SAVANNAH CONDOPARK THE QUARTZ RIO VISTA CHILTERN PARK ASTOR GREEN SPRINGDALE CONDOMINIUM BUKIT REGENCY PARK NATURA HILLVIEW HEIGHTS GUILIN VIEW ROSEWOOD BULLION PARK YISHUN SAPPHIRE SUNRISE GARDENS

Area Transacted Price Tenure (sqft) Price ($) ($ psf) 2,120 2,130,000 1,004 FH 1,195 1,171,100 980 99 570 680,000 1,192 946 1,023 1,000,000 978 99 1,044 1,100,000 1,054 99 1,249 1,190,000 953 99 1,249 1,150,000 921 99 1,066 1,340,000 1,257 99 1,076 1,230,000 1,143 999 1,539 1,600,000 1,039 FH 1,012 1,400,000 1,384 FH 1,668 1,830,000 1,097 FH 1,528 1,380,000 903 99 1,173 980,000 835 99 1,238 1,323,800 1,069 FH 1,206 880,000 730 99 1,862 1,460,000 784 99

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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