Issue 190

Copyright 2011-2014 www.Propwise.sg. All Rights Reserved.

CONTENTS
p2

FROM THE

EDITOR

When is the Right Time to Enter the

Welcome to the 190th edition of the

Singapore Property Weekly.

Property Market?

Hope you like it!

p13

Singapore Property News This Week

p18

Resale Property Transactions

Mr. Propwise

(December 24 December 30 )

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SINGAPORE PROPERTY WEEKLY Issue 190

When is the Right Time to Enter the Property Market?

By Gerald Tay (guest contributor)
This the key question on everyones mind
today: When is it a good time to re-enter the
property market as prices continue on their
downward spiral?

This aims to provide an overview of the

Singapore Private Residential Property
Market and allow investors, buyers and
sellers to:
1. Form their own view of when to buy and
sell
2. Understand the historical property market
trends
3. Manage risks rather than predict an
unknown future
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SINGAPORE PROPERTY WEEKLY Issue 190

4. Make
better
decisions

property

investment

I am a property investor, not a property

consultant, analysis or expert. Like many
savvy investors, I dont predict the unknown
future, rather I manage my risks with current
and available information.
The charts and tables are based on public
information collected and collated from
various sources, including:

Urban Redevelopment Authority, URA

Monetary Authority of Singapore, MAS

Singapore Statistics, Singstat

PropertyMarketInsights.com, PMI

SingaporePropertyCycle.com.sg

Back to Contents

Notes for readers:

The charts show market trends of the

Singapore private property residential
market over a 38 year period (from 1975
to 2013)

Over a 38-year period, the compounded

annual inflation rate was close to 2%.

The Real Returns on an investment

measures not how much you can buy
with the money you get out of the
investment, but how much more you can
buy with the money you have after taking
consumer
price
inflation
into
consideration.

It would be meaningless if our property

prices hardly beat the increase in inflation
and stayed the same after long years of
mortgage payments and other costs.

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SINGAPORE PROPERTY WEEKLY Issue 190

Firstly, a quick look at historical market
trends.
Singapore Private Residential Property
Price Index (1975 2014)

and high economic growth rates in excess

of 7%.

Note how the sheer climb for each peak

became shorter over the maturing years.

Property Market Cycle - A Pattern of Bulls

and Bears

Note the period from1983 to 1996. This

section forms a shelf that dropped off
precipitously.
It corresponded
with
Singapore joining the ranks of the worlds
richest nations with rapid industrialisation

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Note an obvious pattern of bulls and

bears from 1996 to 2014.
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SINGAPORE PROPERTY WEEKLY Issue 190

Note a bowl-shaped curve from 2000 to

2008. For some Generation X property
buyers like myself (born 1965 to 1976),
we owe our first real estate wealth to this
period of the property cycle.
I started my research on the Singapore
Property Market in 2001(Early Bear) and
bought my first property in 2003(Late
Bear)

to capitalise on opportunities than those who

are less prepared (remember the fable of
The Ant and the Grasshopper).
Private Residential Property Price Index
(1975 2013)
Property Returns at Different Buy-Periods
Peak to Peak

Investors Tip of the Day:

As according to PropertyMarketInsights.com
were in the Early Bear period currently, I
strongly urge ordinary investors who are
serious to enter/re-enter the property market
to kick-start their property and financial
education today, rather than wait till the Early
or LateBull stages of the Property Market
Cycle to do so.

When it does, youll be in a stronger position

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Even though periods from year 2000 to

2013 gives a positive real return of 1% or
less, a buyers risk/returns trade-offs are
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SINGAPORE PROPERTY WEEKLY Issue 190

unjustifiable if they are buying at or close

to the market peak. Taking on such
substantial risks in property is poorly
rewarded.

rescued from becoming porkchops. Tons of

printed money were injected by world
governments into the worldwide financial
system immediately after the crisis.

Real property growth has evidently

declined with each new peak over the last
38 years, dropping drastically from
14.18% in the early growth years to an
insignificant 0.68% in a maturing market.

We may just run out of financial rescue

options in the years ahead. And you dont get
lucky twice!

Unfortunately, well expect most buyers

who enter at or close to the peak of
2013Q3 to face negative Real Returns on
their property values for a very long time.

The property market recovered extremely

quickly after the 2009 Global Financial
Crisis.

Bottom to Peak

A Warning for Buyers

For most of the lucky buyers who bought
during the peak period of 2007/8, they were
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For the last 38 years entering from close

to or at the bottom of the market,
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SINGAPORE PROPERTY WEEKLY Issue 190

a buyers Real Returns have diminished

from high double-digit grow thin the early
years to single-digit today. In the future,
this growth rate may further decline to low
single-digits due to mature economic and
market conditions.

properties to give 0% to 3%Real Return

seven if I bought them low. Rental Yield is my
main investment consideration, but if property
price does grow beyond my conservative
figures, Ill simply take the extra capital gains
as bonus.

In the future, I conservatively estimate a

range of 3% to 5% in Real Return seven if
buyers do enter at or close to the bottom
of the market. And likely negative Real
Returns for buyers who enter at or close
to the peak of the market.

However, going in and out of market is simply

foolish, even though you may realise capital
profits. If the worlds greatest investor Warren
Buffet does not, why should you?

Peak to Bottom

The next time you hear someone says the

property market has historically registered
double-digit price growth, refer him/her to
these trends and question which period
he/she is referring to, and also ask, From
the bottom? or From the Peak?

Wisdom for Investors

To be conservative, I always project my

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SINGAPORE PROPERTY WEEKLY Issue 190

Other than 2000Q2 to 2004Q1, a period

which was just recovering from Asian
financial crisis and subsequently hit by
dot-com burst and SARS crisis, the rest of
the periods registered an annualized
double-digits percentage decline in
property prices from peak to bottom.
Many buyers who entered at or close to
the peak experienced gruesome losses in
these unfortunate periods.
The latest market crisis of 2008Q2 to
2009Q2 registered the largest price
decline since 1983.

Buyers Kopi Topic-of-the-Day

Many people believe that prudent financial
regulations and government measures will
provide better stability to the property market.
But the Global Financial Crisis of 2009

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experienced a steeper and larger price

decline than during the 1997 Asian Financial
Crisis within a very short period of just four
quarters.
In coming years, if another crisis hits our
shores, compounded with an over-supply
situation, are we currently expecting the worst
in property prices?

Is property really a good Mid to Long

Term investment and hedge against
inflation?
From the two tables below, the answer greatly
depends on whether a buyer enters at or
close to the bottom or peak of the market.
Both tables show Real Returns of buyers who
enter a peak property market and holds on to
the next peak, which takes between 5 to 17
years.

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SINGAPORE PROPERTY WEEKLY Issue 190

Mid-Term Holding (Less than 10 years)

Property can be a negative hedge against

inflation even after holding for the mid-tolong term if a buyer enters at or close to
the market peak.

From 1996 onwards, only two out of five

periods result in property acting as a
positive hedge against inflation even after
a mid-to-long term holding period.

A buyer who bought into the peak market

of 1996, held a depreciating property with
negative Real Returns in 2013, even after
17 years.

All other periods showed poor or negative

Real Returns for buyers who enter at or
close to the peak of the market, except for
the 13-year period from 1983Q4 to
1996Q2, and 38-year period 1975Q1 to
2013Q3.

Long-Term Holdings (10 years and above)

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SINGAPORE PROPERTY WEEKLY Issue 190

We see tremendous property price growth

which corresponds with Singapores early
rapid growth years, especially period
1975to 1996.

same rate as in the past.

Properties have negative cash flows and
low rental yields

Frequently Asked Questions

Net Rental Yields are below the inflation

rate.

What are the significant red-flags to

indicate when the property market is
peaking?

Low interest rates and higher consumer

price inflation.

Buyers buying at inflated or recordbreaking prices:

Professional investors stay out of the

market. Owner-occupiers and speculative
investors remain core buyers.

Owner-occupiers being scared of prices

rising beyond their affordability so they
buy a property for more than what it is
worth.
Owner Occupiers buying lower price
quantum units at high PSFs due to
perceived affordability.

Speculators bank on prices rising at the

Back to Contents

Property
cooling
measures
are
implemented to curb further property price
increases.
What are the significant hints to indicate
when the property market is bottoming?
Owner-occupiers are unwilling to buy and
force prices down further.
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SINGAPORE PROPERTY WEEKLY Issue 190

After
significant
declines.

double-digit

price

Low but positive yields even as property

prices fall further (rent is static but price is
volatile)
Removal of property cooling measures.
Peaking interest rates and low consumer
price inflation.
Property has a bad name and buying
property is now considered a stupid thing
to do.
The lower end of the market plummets
due to lack of interest.
Repossessions are higher than theyve
ever been.
Professional investors, like vultures,
watch property prices on a daily basis to
see when the price falls to a level that will
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put money in their pocket.

Professional investors start bidding wars
(some are cheeky and do not care if they
offer 20% below what seller is asking!)
When is it time to enter/re-enter the
property market?
Cooling measures will stay on for a long time.
So sit tight and wait patiently for further
correction. Historically, expect a 20% fall in
prices before well see the bottom of the
market.
Say bye-bye to the high growth years
Its 2015. Todays smart phones are the size
of our palms and getting smaller. In the
1980s, mobile phones were the size of onelitre water bottles, and not smart!
Technology evolves quickly and so do the
markets.
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SINGAPORE PROPERTY WEEKLY Issue 190

It certainly does not take an expert economist
to know the high growth years of our parents
generation are gone.
Im no expert and neither do I try to be one.
All I did was to use logic to value my
investments, rather than follow the crowd and
listen to experts whose investments
contribute little their net worth.

empowering retail property investors with

smarter investing philosophy and strategies.
He is a full-time investor with over 13 years of
solid experience in building his wealth
through Property Investment and is financially
wealthy today.

If you believe a projected 6.9 million future

population and addition of MRT lines will fuel
general property price growth till 2030, you
are short sighted. Buyers who buy areaspecific opportunities at close to or at the
bottom of the market will profit. Buyers who
buy at future prices in over-hyped areas will
see poor returns.
By guest contributor Gerald Tay, who is the
founder and coach at CREI Academy Group
Pte Ltd, an organization dedicated to
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SINGAPORE PROPERTY WEEKLY Issue 190

Singapore Property This Week

Residential
December 2014 HDB resale prices lowest
in the past 41 months
The HDB resale prices in December 2014 are
the lowest in 41 months. HDB resale prices
had fallen 0.4 percent in December from the
previous month while resale volume also fell
by 4.1 percent to 1,295 units. Market experts
believe that stricter mortgage servicing ratio
limits had affected demand for resale HDB
flats. According to the Business Times, fourroom and five-room flats had led the fall in
HDB resale prices, falling by 0.7 percent and
0.3 percent respectively. Ong Kah Seng from
RST Research believes that supply for HDB
resale flats increased as more owners had
Back to Contents

wanted to upgrade to private homes or

executive condos. Nicholas Mak from SLP
International added that an increase in buildto-order flats had also affected demand for
HDB resale flats. Nonetheless, HDB resale
volumes in December increased by 28
percent year-on-year.
(Source: Business Times)
$20 million allocated to upgrading projects
in 9 private estates

The Ministry of National Development (MND)

will be allocating $20 million to upgrade 9
private estates. Under the Estate Upgrading
Programme (EUP), upgrading works will be
made to improve the living environment of
older estates.
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SINGAPORE PROPERTY WEEKLY Issue 190

Clover Estate, Lentor Estate, Thomson Faber
Island Gardens, Toh Tuck Estate, Meng
Suan/ Springleaf Estate, Happy Gardens,
Sea Breeze Garden, Toh Estate and Jalan
Merbok,
Jalan
Layang-Layang,
Jalan
Kakatua, Jalan Selating, Jalan Rajawali and
Shamah Terrace Estate are among the 9
private estates that would undergo upgrading.
More than 4,800 households will be impacted
by this cycle of EUP and the EUP project is
expected to be completed in three to four
years.
(Source: Business Times)
Singapore imposes one of the highest
property taxes on foreign investors
According to a report by Knight Frank,
Singapore imposes one of the highest
property taxes on foreign investors. Market
experts believe that investors may be
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attracted to countries such as South Korea,

Thailand, Malaysia and Cambodia, as they
have more relaxed tax regimes. Nicholas Holt
from Knight Frank said that taxes have been
imposed to cap growth in the property
market. Particularly in Singapore, cooling
measures were implemented to keep prices
in check. These measures include the
imposition of higher taxes for foreigners. For
example, foreign investors are subjected to
an additional 15 percent buyers stamp duty.
According to the Business Times, property
prices had fallen by 4 percent in 2014,
following the implementation of the cooling
measures.
(Source: Business Times)
Duxton flat changed hands for $918,000
A five-room unit at the Pinnacle@Duxton has
changed hands for $918,000.
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SINGAPORE PROPERTY WEEKLY Issue 190

The 106 sqm flat is located on the fifth floor of
the housing development. This is the second
Duxton unit that was sold, following the end of
a 5-year occupation period for home owners
at the Duxton. According to the Straits Times,
a four-room flat on a higher level had
previously fetched a price of $900,000.
(Source: Business Times)
Commercial
Industrial building at Geylang on sale
A light industrial building that is located at
Lorong 23 Geylang has been put up for sale.
According to Colliers International, the 60year-leasehold building has an indicative
price of $115 million and it will receive its
temporary occupation permit (TOP) by the
end of Q1 this year. However, the building is
not permitted to be strata-subdivided for sale
in the first 10 years upon receiving its TOP.
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The 67,944 sq ft site consists of seven stories

and its total provisional strata floor area is
about 237,000 sq ft. Tan Boon Leong from
Collier International believes that the building
will appeal to institutional investors because it
has a longer tenure as compared to most
sites offered under the government land sales
programme. Furthermore, the site is expected
to appeal to tenants who are ineligible for JTC
sites as it is not under the purview of JTC,
said Tan.
(Source: Business Times)
Colliers: Retail rents expected to stabilise
in 2015
Colliers International predicts that rental
growth will remain flat this year. According to
Colliers, rental growth for prime ground floor
retail space in Orchard Road will fluctuate
between -1 percent and 1 percent in 2015.
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SINGAPORE PROPERTY WEEKLY Issue 190

Similarly, retail rents in other areas such as in
the suburban regions, are expected to
fluctuate by just 2 percent. Nonetheless,
Colliers predicts that there will be a moderate
increase in rents of retail spaces located in
niche and diverse areas such as in the
heartlands. According to the Business Times,
the average monthly gross rent of prime retail
space in Orchard Road had fallen by 0.8
percent to $36.17 psf in Q4 last year. Yet, the
average monthly gross rent of prime retail
space in regional centres had increased by
1.1 percent to $33.83 psf in Q4 last year.
Market experts believe that labour shortages
and higher operating costs have weighed on
tenants abilities to afford a higher rent. Due
to a reduction in retail activities in Orchard
Road, the rental premium that prime retail
space in Orchard Road had commanded over
similar spaces in the regional centres have
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fallen from 9 percent to 6.9 percent, said

Colliers.
(Source: Business Times)

Q3 2014 occupancy costs increases by

14.6% year-on-year
According to CBRE, the rate of growth in
prime office occupancy costs in Q3 2014 had
increased to US$112.91 psf per year in
Singapore. This was a 14.6 percent year-onyear increase in occupancy cost. CBRE
added that this increase in cost is likely to be
due to higher monthly rents in prime
locations. Moray Armstrong from CBRE said
that as new supply for office spaces is
expected to shrink by H2 of 2016, office rental
growth is expected to surge. Globally, prime
office occupancy costs had also increased by
2.5 percent year-on-year in Q3 2014.

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SINGAPORE PROPERTY WEEKLY Issue 190

The Asia-Pacific region saw a 2.8 percent
increase in occupancy costs while America
experienced a 4.1 percent increase in costs.
Richard Barkham from CBRE predicts that
this trend will persist this year.

However, other market experts have said that

the site had been priced highly, because they
believe that such a site should have
commanded a price below $2,000 psf.
(Source: Business Times)

(Source: Business Times)

6 shophouses at Peck Seah Street sold for
$42.8 million

A row of six shophouses at Peck Seah Street

have sold for $42.8 million or $2,155 psf. The
total gross floor area of the six shophouses is
$19,860 sq ft and the shophouses have lease
tenures of about 78 years left. Under the
Chinatown (Tanjong Pagar) Conservation
Area, in URAs Master Plan 2014, the site had
been zoned for commercial use. According to
Sammi Lim from CBRE, the site was sold for
a price that was in line with the market value.

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SINGAPORE PROPERTY WEEKLY Issue 190

Non-Landed Residential Resale Property Transactions for the Week of Dec 24 Dec 30

Postal
District
1
3
9
10
11
11
12
15
15
16
16
16
18
19
20
21
22
22
27

Project Name
THE SAIL @ MARINA BAY
QUEENS
VISIONCREST
THE TOMLINSON
NEWTON SUITES
HILLCREST PARK
THE ARTE
THE ESTA
THE GRANDIFLORA
OPTIMA @ TANAH MERAH
BREEZE BY THE EAST
THE BAYSHORE
EASTPOINT GREEN
KOVAN MELODY
CLOVER BY THE PARK
HILLVIEW GREEN
PARC OASIS
THE MAYFAIR
YISHUN EMERALD

Area Transacted Price

Tenure
(sqft) Price ($) ($ psf)
99
678 1,188,000 1,752
99
1,195 1,480,000 1,239
FH
1,206 2,290,000 1,900
FH
2,368 5,000,000 2,111
FH
1,238 2,350,000 1,898
FH
1,152 1,518,000 1,318
FH
1,625 2,130,000 1,310
FH
1,130 1,670,000 1,478
FH
1,033 1,118,000 1,082
99
1,302 1,660,000 1,275
FH
2,045 2,230,000 1,090
99
1,238 1,150,000
929
99
958
808,000
843
99
1,410 1,496,000 1,061
99
1,292 1,570,000 1,215
999
1,905 1,830,000
961
99
1,076 1,000,000
929
99
1,163 895,000
770
99
1,184 900,000
760

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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