Issue 118

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

CONTENTS
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How to Be a Contrarian Property Investor
Singapore Property News This Week Resale Property Transactions (August 7 August 13)

FROM THE

EDITOR

Welcome to the 118th edition of the Singapore Property Weekly. Hope you like it!

Mr. Propwise

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SINGAPORE PROPERTY WEEKLY Issue 118

How to Be a Contrarian Property Investor

By Mr. Propwise
While the term Contrarian Investor is typically used for someone who invests against the crowd in the stock market, it is also applicable for property investing. In this post we'll look at how Contrarian Property Investors think, why it makes sense to be one, and how to think like one. What is a Contrarian Investor? Wikipedia defines a Contrarian Investor as "one who attempts to profit by investing in a manner that differs from the conventional wisdom, when the consensus opinion appears to be wrong.

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SINGAPORE PROPERTY WEEKLY Issue 118 In other words, it's a way of thinking. This sort of thinking can be applied across any investible asset class. In stocks, a Contrarian Investor will buy shares when excessive pessimism about a company's prospects drives its stock price to unjustifiable lows, and sell when widespread optimism drives its stock price to unjustifiable highs. Similarly, a Contrarian Property Investor will buy property when prices have been driven down due to widespread pessimism about the economy and the market, and sell when there's overbullishness on the property market despite a large run up. The essence of being a Contrarian Investor is captured in this famous Warren Buffett quote: "We simply attempt to be fearful when others are greedy and to be greedy only
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when others are fearful." Why be a Contrarian Investor? Simply put, Contrarian Investing is the most reliable way over the long run to minimize the risks and maximize the profits of investing. Making money in investing is simple - Buy Low and Sell High. Yes, we've heard that a thousand times. But yet the majority of investors do the opposite, driven by greed during Bull Markets to buy after prices have run up (and in their mind extrapolating this increase into the infinite future), and then by fear during Bear Markets to dump the asset they had paid dearly for because everyone else is doing so. The skilled Contrarian Investor profits by placing himself on the other end of this trade, and makes money not by following the crowd but by being ahead of it.
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SINGAPORE PROPERTY WEEKLY Issue 118 The Pain of Being on the Wrong Side of the Cycle There are painful consequences to being on the wrong side of the cycle (i.e. buying at the peak and then being forced to sell at the trough). While this is bad when investing in any asset class, it is especially traumatic in property investing because of two factors: 1. The use of leverage 2. The high total price of a property Because of these two factors, a 10% fall in property prices could mean wiping out 50% of your equity due to the leverage, and years of savings due to the large dollar quantum. It's not uncommon for ten years' worth of savings to be wiped out by a bad property decision. There are many people who bought Singapore property at the peak in
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1996 just before the Asian Financial Crisis and have only just broken even after 15+ years. If we factor in inflation, interest costs and the value of lost opportunities, they've had a negative return after all these years despite the massive Bull Market in property these last few years! How to become a Contrarian Investor You should know that it's not easy being a Contrarian Investor. It is far too easy to be swept up by sentiment, whether euphoria or despair. Sentiment is contagious, and you can't escape it - you will get infected when you read the papers, watch the news, or chat over lunch with your colleagues. Being a Contrarian Investor requires a huge amount of courage. You need to believe that you're right and everyone else is wrong. You need to believe that you're the
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SINGAPORE PROPERTY WEEKLY Issue 118 (investment) genius when everyone thinks you're crazy. The question is - how do you know you're not crazy? Get on the Right Side of the Cycle I believe the answer lies in using facts and data to guide your decisions, not hearsay, rumours, opinions or gossip. understanding the property cycle will help you get on the right side of the wave, potentially adding hundreds of thousands of dollars (or more) to your net worth over a cycle, and saving you from disastrous mistakes. Property Market Timing in Action The PMCM is not some BS theory that sounds good on paper but leaves you scratching your head as to what to do next. It tells you where we are in the current cycle and guides your decisions by providing a historical context of what happened during similar parts of the cycle in the past. And I eat my own cooking. When the PMCM indicated that we were in the Late Bull stage of the property cycle in late 2011, I put my property on the market. I was asking for a fairly high (but not unreasonable) price, but due to the weak resale market
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But it's not easy to wade through the enormous amount of data out there to come up with your own investing system. A simple way to do so is to use the Property Market Cycle Model (PMCM) created by Property Market Insights (PMI) to help you time your property investing and get the BIG picture right.
Instead of being swept up by sentiment and doing the wrong thing at the wrong time,
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SINGAPORE PROPERTY WEEKLY Issue 118 (all these insights and more are provided to PMI subscribers), it took almost a year for the property to be sold. Now I've locked in my profit, and am eagerly anticipating the Bear Market. How will I know when to buy again? The PMCM will be my guide. While Contrarian Investing is not easy, and requires courage and conviction, armed with the right insights and analysis you can maximize your investment returns over the long run through multiple property cycles. By Mr. Propwise, founder of top Singapore property blog Propwise.sg, a Chartered Financial Analyst and resident real estate analyst at PropertyMarketInsights.com, a site to help property owners and investors make profitable decisions in uncertain times. Click here to learn more
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SINGAPORE PROPERTY WEEKLY Issue 118

Singapore Property This Week

Residential
BTO flat grant extensions for lower and middle-income households The government will be extending a variety of grants for lower and middle-income households to allow them to pay off their flats in 25 instead of 30 years. The Special CPF Housing Grant (SHG) for lower and lowermiddle-income first-timers will be extended from two-room and three-room flats to include four-room flats. In his annual National Day Rally speech, Prime Minister Lee Hsien Loong said that middle-income households will also benefit, while a middle-income household can get up to $20,000 more if they
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buy a new flat. Currently, the SHG is given on top of the Additional CPF Housing Grant for eligible first-timer families applying to buy a two-room or three-room standard flat in a non-mature estate. After the enhancements, homebuyers using their CPF funds to pay their loans should be able to pay off their flats in 25 years instead of 30. Hence, their income in later years can be used as their retirement savings. It was reported that although the grants would probably have no impact on the private housing market, a small percentage of people could be drawn away from the resale market given that they can now get a grant if they get a BTO flat instead.

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SINGAPORE PROPERTY WEEKLY Issue 118 Another type of grant, the Step-Up Housing Grants will be extended to families who can afford to buy only two-room flats to help them upgrade to three-room flats later, which is to ensure that every Singaporean family who is working can afford a home. PM Lee said that we could maintain the value of HDB flats over the years, with flats kept affordable for future flat buyers so that every Singaporean family who is working can afford an HDB flat. (Source: Business Times) 800 ha of land freed up for new homes An 880 ha area will be freed up for new homes, offices, factories and parks after Paya Lebar Air Base relocates to a Changi site. The land area, which is larger than Bishan or Ang Mo Kio, will provide breathing space for Singaporeans and rejuvenate a bigger area of eastern Singapore, going all the way down to
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Marina and Marina South. (Source: Business Times) Luxury homes market still under pressure The luxury homes market is reported to be under pressure on rental and price fronts. Specifically, Singapore was the only market out of nine featured in the Asia-Pacific to witness a decline in capital values. According to the latest Jones Lang LaSalle (JLL) Residential Index, values of Singapore luxury homes fell 0.6 percent quarter-on-quarter for the third consecutive quarter, and 2.1 per cent year-on-year, as the rounds of cooling measures continued to affect investor sentiment. Although price dips have been slowing in the last few quarters, the introduction of the total debt servicing ratio (TDSR) in June has brought in a degree of downside risk,
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SINGAPORE PROPERTY WEEKLY Issue 118 according to Dr Chua Yang Liang, head of research for Singapore and South-east Asia at JLL. Dr Chua said he expected capital values for luxury homes to correct a further 35 per cent in the second half of 2013. (Source: Business Times) OSIM founders GCB could set new psf price record Lim sold one in Leedon Park for $33 million. (Source: Business Times) Allgreen Properties to start River Valley condo sales Allgreen Properties is releasing its RV Residences, a seven-storey 999-year leasehold project on River Valley Road in front of Valley Park, near the proposed Great World MRT Station on the Thomson Line. After early-bird discounts, the average price is expected to be below $2,000 psf for the initial batch of units, which are expected to number 50-80. The development is expected to receive Temporary Occupation Permit in the second quarter of 2014. With 248 units, RV Residences have one-bedroom apartments to five-bedroom penthouses. Absolute prices will range from $833,000 for a 419 sq ft onebedder on the second floor. The most expensive unit, a 1,539 sq ft penthouse,
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OSIM founder Ron Sim is looking to sell his Bin Tong Park home for $117 million. If successful, he could set a new record price on a psf basis for a property in a Good Class Bungalow (GCB) area. The property is made up of two plots of freehold land together measured at 46,842 sq ft. The built-up area of Mr Sim's home is about 22,000 sq ft. Mr Sims asking price is about $2,500 psf, while the record price for a property in a GCB area currently stands at $2,110 psf, and was set last October when bungalow investor George
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SINGAPORE PROPERTY WEEKLY Issue 118 will cost about $2.8 million. The duplex unit will have five bedrooms and a study corner. The project also includes a gym, swimming pool and garden. DTZ is the project's marketing agent. Meanwhile, in Sengkang West, City Developments Ltd (CDL) had sold 289 units or 76 per cent of its 380-unit EC project Lush Acres with an average price of $785 psf. Absolute prices range from $704,000 to $1.275 million. The development includes three to five-bedroom units. Unit sizes are from 915 sq ft for a three-bedroom apartment to 1,722 sq ft for a five-bedroom apartment. it will be moving to Westgate Tower in Jurong East, CapitaLand announced that it will retain its corporate headquarters at Capital Tower in CBD. However, CapitaLand was silent on its plan for Westgate Tower, the 20-storey office block which is part of a retail-office project on a 99-year leasehold site near Jurong East MRT Station set to be completed in late 2014. CapitaLand could have occupied half of Westgate Tower. But all 320,000 sf NLA in the tower is now available. (Source: Business Times) CAG in new partnership with CapitaMalls Asia for Project Jewel Changi Airport Group (CAG) has decided to embark on a partnership with CapitaMalls Asia (CMA) for Project Jewel, after it considered bids from six local and international real estate firms.
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(Source: Business Times)

Commercial CapitaLand could have strata sales at Westgate Tower

Contrary to its announcement a year ago that

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SINGAPORE PROPERTY WEEKLY Issue 118 Project Jewel is the development of a multiuse complex that will link Terminals 1, 2 and 3 when it is built by 2018. Its request for proposal (RFP) had started in July last year. The process closed this January, and participants were notified of the outcome on April 16. The finalisation of plans and the exploration of a joint-venture partnership is expected to be completed by the end of 2013. 2002, with a built-up gross floor area of about 327,574.70 sf, and is a JTC Corp leasehold estate of 30+29 years' tenure starting from April 16, 2001. (Source: Business Times)

(Source: Business Times)

Sabana Reit to buy Chai Chee property Sobana Reit is planning to buy a sevenstorey light industrial building with two basement storeys in Chai Chee from Advanced Micro Devices for $59.5 million. The property is located at 508 Chai Chee Lane off Bedok North Road and Bedok North Avenue 1. It had been completed on Dec 2,

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SINGAPORE PROPERTY WEEKLY Issue 118

Non-Landed Residential Resale Property Transactions for the Week of Aug 7 Aug 13
Postal District 1 3 3 4 9 9 10 10 11 11 11 12 12 15 15 15 15 16 17 17 Area (sqft) THE CLIFT 527 THE METROPOLITAN CONDOMINIUM 721 REGENCY SUITES 980 THE RESIDENCES AT W SINGAPORE SENTOSA COVE 1,658 LEONIE STUDIO 936 CAIRNHILL PLAZA 2,293 ASTRID MEADOWS 3,800 HOLLAND PEAK 1,313 PARK INFINIA AT WEE NAM 1,421 28 SHELFORD 840 WATTEN HILL 2,626 THE TIER 495 THE ARTE 1,399 THE MAKENA 926 HERITAGE EAST 495 COSTA RHU 1,345 FORTUNE SPRING 2,390 THE TANAMERA 947 FERRARIA PARK CONDOMINIUM 936 CHANGI GARDEN 1,475 Project Name Transacted Price ($) 1,250,000 1,261,750 1,630,000 4,518,648 1,800,000 4,200,000 7,000,000 1,800,000 2,760,000 1,308,000 3,480,000 800,000 1,982,000 1,338,000 710,000 1,550,000 1,828,000 873,000 950,000 1,050,000 Price Tenure ($ psf) 2,370 99 1,750 99 1,664 FH 2,726 99 1,922 99 1,832 FH 1,842 FH 1,371 FH 1,943 FH 1,558 FH 1,325 FH 1,616 FH 1,416 FH 1,445 FH 1,434 FH 1,152 99 765 FH 922 99 1,014 FH 712 FH
Postal District 18 18 19 19 19 21 22 22 27 28 Area (sqft) 1,023 1,356 710 1,173 1,023 1,927 1,227 1,281 1,001 1,098 Transacted Price ($) 1,020,000 1,330,000 810,000 1,230,000 840,000 1,640,000 1,275,000 1,080,000 992,000 1,100,000 Price Tenure ($ psf) 997 99 981 FH 1,140 99 1,048 99 821 99 851 99 1,039 99 843 99 991 FH 1,002 FH

Project Name SAVANNAH CONDOPARK RIS GRANDEUR CHUAN PARK CHUAN PARK EVERGREEN PARK PINE GROVE PARC OASIS PARC VISTA THE SENSORIA SERENITY 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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