Hedges Park Condominium

Today I visited the above condo show flat. It will be torn down next month and is almost fully sold with a few units left.

The remaining units are those on the lower floor. I picked #03-27 of about 1,076 square foot.

The developer is offering a 10% discount and the price is $957,060. The condo will TOP in about 2 years.

While I like the various themes and the many pools, I personally don't like the location.

This is a 99 year leasehold property. Most likely I believe the developer wants the plot back after 99 years. Most of the older development around that area such as Ballota is freehold.

In case you are not aware, the stroy goes like this. Hong Leong bought a very big piece of land here many many years ago and started dividing the area into smaller plots. It started to launch condos in this area using names of the flowers, starting with Azalea, then Ballota, then Carissa, Dahlia, Elderwise, Ferreria, G (can't remember the name) followed by Hedges... Some of the earlier launches are freehold condos.

Happy show flat visiting. :P

Sennett Residence

We visited the Sennette Residence this morning. Sennett Residence is right beside the Potong Pasir MRT station and in my view, the location is pretty good. I think it is an area with "potential".

It is two stops away from the City Square residences which i bought in 2005. My post documenting my property investing journey in City Square was here. There will be an upcoming shopping mall right opposite Sennett Residence and i thought this location will be perfect in the sense that it will be near a big shopping mall, just like City Square and should have no issues attracting tenants to the project.

I have to tell you that this is only the second day of the launch and there are many pair of shoes outside the show flat. I have to say the cooling measures are not apparent at all and I believe many of them are investors (definitely don't look like first time buyers to me).

As of this morning, more than 200 units are sold (out of 332 units) and that is pretty impressive for day 2 of the launch and it is by Tuan Sing (not exactly a big boy developer but listed on the SGX).

Here comes the best part. Most of the good units that meet my criteria which I "will consider" are sold out. The next best 3 bed room apartment on level 12 (#12-11) of 1,077 square foot facing the landed properties is selling for $1,729,000. That works out to be $1,605 psf! Frankly, i might as well go back to District 10 and buy D Leedon whose prices have since dropped below $1,300 psf for certain units but a last check with D Leedon agent indicate that those "value for money" units on the lower floors are now sold out. They are left with the higher floor units. (#33-21 of 1216 sf at D Leedon is now asking for $2.022m and #29-36 of 635 sq ft is asking for $1.253m)

Anyway, i guess Senett Residence was "hot" with investors because they belong to the "shoe box" categories where many units are actually quite small and the actual quantum is more "palatable" since a 50% down-payment is required for 2nd time buyers. 

I enquired the price of a one bed room "in red box below". 

As you can see, that works out to be $1,582 psf. Based on the $921,000 net purchase price, i have to fork out about 3% in stamp duties and another 7% ABSD which means another $92,100 to the price. That will push the small one bedroom apartment to $1.013 million, which to me, is crazy prices to pay.

Second time buyers will also need to set aside a minimum $69,500 in your CPF account before you can utilize the "excess" money in the CPF.

Anyway, i decided to wait since i don't have a "naked position" in the market and perhaps the price will fall to a support zone which i am more comfortable with in 2015.

The Car bubble has burst?

The government must have read my blog post on 13 Jan 2013 where i spoke about the foaming car market and that car loan should not be extended against the COEs. :oP

The new measures are truly more drastic than the previous car curbs from Feb 1995 to Jan 2003 and took the market by "surprise" where the loans are now limited to 50%-60% of the car's purchase price and the loan can only be limited to a maximum tenure of 5 years.

"Singapore's central bank said the tenures of motor vehicle loans will be capped at five years, with the maximum motor vehicle loan amount pegged to 50 or 60 per cent of the vehicle's purchase price, depending on the Open Market Value. These financing restrictions, however, do not apply to commercial vehicles and motorcycles."

 I once spoke to a second hand car dealer and there are basically "two" types of car buyers. They either take little loan or max out the loan and MAS is probably trying to "protect" the second type of buyers to prevent them from over-extending themselves.

I think this new measure is timely and will probably be one that will "burst" the car bubble. Perhaps we can see some sanity returning to the car prices soon? ... let see how the COE prices will react in March and in the coming months. The COE price chart is below :) Will COE prices finally head back to the $50k mark?

Don't have a naked position in the property market!

After Round 7 was introduced, i received even better offers from the agent of D'Leedon. The developer is offering up to 10% and 15% "Chinese New Year" discount on the units. No more funny "tiered" discounts which i first mentioned in my blog post on 3 Jan 2013.

A 3 bedroom unit on #22-17 (1227 square foot) is now going for $1,786,190. The developer has definitely become very 'sincere' overnight in cutting prices to move units.

I had a blog post in September where i mentioned not to sell your flat if you can and that a close relative of mine has sold his flat in anticipation of a drop in price. Well, as an update, this relative of mine couldn't take it any more as he see the prices moving away and finally bought a studio unit (635 square foot) for $1.288m at D'Leedon on 29 December 2012 only to see developer cutting prices two weeks later when Round 7 was enforced. 

I think the simple takeaway is this: Don't have a naked position in the property market.

There is a Chinese saying "衣食住行", meaning that a roof over your head (a place to stay) besides clothing and food is a basic necessity. I guess once you loses your roof, you probably will lose your head as well and start thinking and behaving irrationally. 

I had a reunion dinner with my ex-colleagues two Fridays ago where one of them thanked me for advising her not to sell her executive condo in 2010. She had wanted to cash out because she thought the prices was high and wanted to rent a place near a good primary school for her eldest son. She is also expecting a price correction. I remembered telling her back then, "don't do it because you only have one property and you can never catch the top and the bottom". With the benefit of hindsight, if she has sold in 2010, she will probably be paying rental for 2 years and suffer the heartache of seeing the prices of her executive condo setting new records in 2012.  

After thanking me, she went on to say, "well, i have just sold my condo at record price in December, what would you advise me to do next?" She has just sold her executive condo in Chua Chu Kang area where she has stayed for the last 13 years. I think she will probably get back around $1.2m in proceeds and that it has been fully paid for. 

She then asked me "Should i....

(1) Rent a place and wait for prices to drop or

(2) Buy 2 new properties with the cash received or 

(3) Buy one property now and buy another one a few years later.

What would you advise her? I will leave that for your thoughts. Feel free to comment, especially if you are thinking of taking a "naked" positing in the property market as well.  :) 

Round 7 - Finally its here and the car is foaming as well.

When i first wrote about the Round 6 in Oct last year, i mentioned that more government measures is likely if price spiral out of control.

In Nov 12, when i was analyzing Q3 prices, i mentioned a bubble forming in the industrial zone and that cooling measures round 7,8,9 and 10 are on its way.

On my blog post on D Leedon on Jan 3rd, i said the government will probably need to step in again. 

Well, here you go. On Jan 11, the government introduced one of its most "comprehensive" property cooling measures, covering HDB, ECs, Industrial units and Condominiums with effect from 12th Jan.

Deputy Prime Minister and Minister for Finance Mr Tharman Shanmugaratnam said: "The reality we face is that interest rates are extraordinarily low, globally and in Singapore, and continue to add fuel to our property market. We have to take this further round of measures now, to check recent market trends and avoid a more serious correction in prices further down the road."

Will it work this time? Frankly your guess is as good as mine. 

In my post on 24 Nov 2012, i mentioned that you need another global financial crisis for prices to retreat. My view remained the same. The prices will not fall unless we see a sharp drop in the stock market due to company failures. Only a drastic fall in investors sentiments will we see a meaningful correction. Alternatively, you need a dramatic increase in borrowing costs (i.e. interest rates) but I don't see that happening soon either.

Will Round 7 will be effective in killing off the investors' demand, especially those who already owned one property? My gut feel is "Don't Count on it". The government has not plugged one loophole in preventing current one home owners from getting more "loan" out of their first property to pay the down payment for the second property but it may dampen sentiments in a "knee-jerk" reaction.

The Car is foaming as well!

Not only are we seeing bubbling record prices in property, we can witness that in COE prices where Cat A prices hit a record high of $92,100.With BMW and Mercedes trying to game the "CAT A" category and a falling quota, it is no wonder that Cat A prices are where they are right now! In my view, the government should not allowed loans to be "borrowed" against the COEs. It just doesn't make sense and a car bubble is foaming right now....if the government don't stop that, the prices will cross the $100k soon and that will exceed the value of my entire SRS portfolio as of 31 Dec 2012? It's pretty crazy.

D' Leedon

I went to view the D'Leedon showflat at Farrer road on Sunday. It was the site of the previous HUDC enbloc. As you know, Singapore property prices ended 2012 with a big bang and at record prices. The news article is here.

I thought this was one of the few condo that are still exhibiting "good value" under current market conditions. If you ask me to buy ECO (district 16) at $1,300 to $1,400 psf or the Sky Habitat (district 20) at $1,500 to $1,600 psf or Foreseque Residence at $1,100 to $1,200 psf (district 23), i would rather buy a unit of D Leedon at around $1,400 psf (after 8% discount), which is in District 10 and within 1km of good primary school like Nanyang Primary.

However, to get to $1,398 psf, the units on sale are typically bigger (around 1,400 square foot) and on the lower floors (below 12th floors) out of a height of 36 floors. And you will need to check off the criteria that will allow you to receive around 6%-8% discount off the listing price. Personally i don't like the gimmicks of "tiered discounts". If you ask me to buy something now, I would probably get an investment unit at D'Leedon if the smaller ones (around 1,000-1,200 square foot) are selling below $1,400 psf on the higher floors. hahaha.... A small unit on level 25 with a size of 635 square foot was sold for $1.3m that weekend. That translate into a psf of more than $2,000. 

If you are wondering why SC Global wants to privatize itself, that is because its still has many high end condos not sold yet and it is going to run foul of its deadline and have to pay for extension charges. The news is here. As such, many developers will want to avoid this predicament and try to move units by lowering its prices and that is probably one reason why the developer of D'Leedon is giving out discounts now to 'move the units' as it is a huge development with more than 1,600 units and as of Nov, still 60% unsold based on www.squarefoot.com.sg (see graph below). 

I will probably give it a miss and play the waiting game with developers who are facing the pressure to slash prices. If the prices continue to edge upwards, the government will probably need to step in again.  

Happy investing.  

My Property Journey Rewind - 2011 & 2012

I will quickly summarize my property investment journey in the last 2 years and that will bring me up till today. It was a case of doing nothing but moving into the house which I bought in 2010.

The house offered more space for everyone and the desire to go out on weekends actually diminished. Everyone has their favorite corner to hide, including the maid who also got her own room finally.

If you have green fingers, you will definitely enjoy having your own little garden but unfortunately, the green genes from my dad didn't pass down to me. Maintenance is higher due to the higher utilities bills but you don't have to pay the maintenance fee charged by condo and enjoy "free parking". Downside is no swimming facilities unless you build your own lap pool which will then increase the maintenance bills.

As mentioned in my earlier post, the prices of landed housing shot up significantly only in the last 2 years, much better than the condos and apartments. A house in original condition near my street recently transacted at more than $980 psf, indicating a healthy increase from my initial purchase price. This incident taught me a lesson that being a "value" investor is rewarding. I have shared with you previously that I bought a landed because I couldn't find value in condos back then.  I think it is similar to all investments in stocks and shares as well except that property is a highly levered play and it is more rewarding if you managed to catch the right cycle.

I had originally wanted to do an "interest arbitrage" purchase of another property by taking out the "equity value" in 2012, but decided not to proceed even though the bank has granted in principle approval to disburse money to my account to "refinance my loan". I couldn't bring myself to buy at current sky high prices even though the monthly rental income is able to cover the mortgage loans.

I recently went to take a look at Heron Bay (which Minister Khaw blogged about) and Riversails. Under the current market context, both offered good value if you can get it below $860 psf. Personally I prefer Heron Bay's location and designs but it is an executive condo which I wouldn't have qualified anyway.  Riversails is a tad too cluttered for me. (Not that I am seriously considering).

It was pretty funny because at one glance of the brochure, I pointed out the blocks that I want to buy. (3 different stacks). The agent at Riversails told me that those stacks were not released by the developer yet.  It is always the case where developer only release the choice blocks after they managed to sell the "poorer facing" blocks at attractive prices. They will then release the choice blocks at a premium pricing.

I have shared with you previously the things to look out for in selecting a unit within a condo. The same rules apply. Select a unit that faces the pool or garden or one with an unblocked view facing out but make sure it is not facing the evening sun. I prefer higher floors as well.

Happy property hunting and that brings an "end" to the various installments of my property journey. The various installments are below for your ease of reference.

Part 1.
Part 2.
Part 3.
Part 4.
Part 5.
Part 6.
Part 7.

Part 8.

I will continue to share my property journey and my thoughts as it progress. Hope you have find these experiences useful for your own use. 

Oh yes, i promise to share with you the support level to look out for. I think the strong support zone is between 160-180 but there should be plenty of buying interest if price starts to hit the 180-200 zone. I would "visualize" that if prices fall to 180-200 will be a good time to start hunting for a landed property and 160-180 for a condominium. "Unfortunately" for prices to crash to that level, you will need another global financial crisis and i don't see that coming in the next 4 quarters.