Property investments and your thought process

He;llo earthlings and fellow Investors,

It's been a long while since I last sat down to write something about investing in real estate. Perhaps it was you, or was it me, do you feel that the market has been a little slow in transaction volume but the price remains high, if not higher over the recent months?

Let me talk about the generic trend of Landed Property Sales in Singapore:

A recent freehold landed Listing in District 10, is going for SGD15m. The strange thing about this listing was that it had more than 50 viewers but no offer according to the owner. So what was the cause of this phenomena? Was it due to the prevailing interest rates? Or simply the lack of confidence on Landed property purchase in Singapore? Or was it due to the way it was marketed?

In my observation, the development cost of a large piece of land is very costly and often the financing becomes an issue for the individual buyer. However, if the buyer chooses not to redevelop the land, then is the land really worth the investment?

A recent analysis of the general market trend shows that landed property transaction volumes has gone down over a period of time but there are STILL healthy transactions. For e.g. a detached freehold property at Jalan Harum transacted at $32.8m in Apr 2023. Another detached freehold property at Woollerton Drive transacted at $24.4m in Apr 2023. A Sixth Avenue freehold property transacted at $26m in Mar 2023 and another freehold property transacted at $14.6m at Redwood Avenue in Mar 2023; just to name a few.

Of course, there were other transactions ranging from $3.6m to $9.3m as it also depends on the property type, actual land size, the asking price, freehold vs leasehold etc. So personally I do not think that the prevailing interest rates are stopping investors, anyways you can refinance it later too.

For other landed property districts, there were higher transacted prices too, although performance was not as hot (in volume) compared to the past years. So it is not true that buyers are not keen in Landed property purchase in Singapore.

I think the way the property is marketed is vital as you will need to bring out the attributes of the unit and present it to the potential buyer/ investor.

Hence, before you market your property, it will be advisable to find out how much your property is worth in the eyes of the investor. To do that, you have to find the granular reasons and understand the needs beyond just past data and talking about value that is unimaginable.

Next up:

What about foreign property investments for condominiums? In Thailand? In Philippines? In UK? Is bigger always better? Does spending lesser SGD on a foreign investment (due to exchange rates and market forces) provide a real guarantee for rental yield? What is the fundamental need?

Let me share a real life story of an investor / friend who bought a property in Philippines. The property was bought in 2010, and it TOP only in 2019, and only recently in 2023, he flew in to collect the Title deed. This process was very slow per his sharing, according to his account. But I am happy he got his title deed. Another friend of mine who was ex VP of an MNC, retired and migrated to the Philippines and he also shared the insights on how it is done over there. Sometimes the property manager goes missing in action and becomes uncontactable, and sometimes the unit was rented to multiple tenants at once. This friend is currently helping Singaporean investor friends manage their investment properties for a small fee.

The way it is sold and done is so different compared to Singapore. This is why I would personally not invest in foreign land, unless I operate a business there which required me to be physically present. To that point, a business owner and childhood friend of mine, bought a landed house in China at a good price back in 2020. He is based in China and therefore physically present.

Hence, fellow Singaporeans, I would say that unless you are able to grasp the culture and climate of the country you intend to invest in, it is still safer to buy Singapore properties, which is after all your home ground.

To find the value of a condominium unit, you have to understand that it is not about high PSF versus lower PSF. In my opinion, it is about the Developer, quality of the materials used, the unit's attributes and overall demand of the project. Whilst location is still a primary driver for good sales, I have seen the gains of OCR (out of central regions) exceed CCR in some instances over a similar holding period. So does it mean buying at a high price gives you more investment returns / annualized gain?

Hence, before you buy your property, it will be advisable to understand the value in the eyes of the future buyer. To do that, you have to find the product attributes, the fundamental reasons and understand the needs beyond just regional transformation and first mover advantage. Why so? Investors who are buying into the project will be your potential competitor years later.

Lastly, I would like to add that a property consultant is someone who helps the client to plan ahead, not backwards. I have seen a few cases of owners who sold their current housing without any planning, then scrambled for what is available in the market. Guess what? There are definite compromises as a result.

Albeit all of us wants to realize the gains of property and create wealth for the next investment, it is advisable to understand what is the goal of your plans. A calculated approach and affordability check is important, that is why we work with bankers to process your loans. I have also seen individuals who could not afford mortgage payments along the way and defaulted whereby their unit was put up under bank sales. This is not investment at all and you are better off keeping the money.

Hence, the reality is not everyone can upgrade their property and lifestyles. It is also true that we are not lesser people if we can't afford it. Our happiness is not hinged on properties and assets. (take note that the more properties you have, the more taxes you pay) and the more maintenance costs when you rent it out. Can everyone be a landlord? Not really.

But if you are an individual with high or ultra high net worth, then you need a strategy. You need to make your assets work just like you owning multiple businesses. I have seen businessmen create a portfolio of properties, sell some when the price was good and collectively us the money to buy another larger unit. They manage their properties as a business.

For the rest of us, who have good family combined income to afford two properties; staying in one and renting out the other is the goal. Hence, wouldn't you want to buy something that is easier to rent out? If yes, find a good consultant who you can work with and start today. Why would you risk your investment going by own research when there are proven consultants who are able to help you instead? What is the loss from your end?

Remember the golden rule: Investment is about timeline... Your timeline and no one else's. The earlier you start, the better for you.

Life is short, and Property investment is mid to long term. If you were to sell early before a stipulated timeframe, you will incur Seller's stamp duty. If you were to delay your purchase so as to time the market, prices will climb; and essentially you get to pay more for the same size later on. Is that wise at all?

I have not seen anyone who could tell the future and time the ''buy''. So earthlings and fellow Investors, your thought processes is very important.

With this final point, I am Signing out now...

Feel welcome to contact me if you need my advise or help. More knowledge can be shared with you when we meet up. After all, your success is my success.

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