For property investment in Singapore, there exists various “rules” that seems to guide certain decisions.

These “rules” came about due to certain “beliefs” that might have been passed down or whispered around in the past.

Are These “Rules” Still Relevant Today?

In this era of disruption – situations change very fast. What worked in the past no longer works currently.

For property agents, buying inches of classifieds listings worked 10 years ago. Now agents post their listings online in FB and PropertyGuru if we want to get viewing enquiries.

Classifieds has become so thin and light. It used to be the heaviest and thickest part of the newspaper.

The Classifieds section have become irrelevant, obsolete and outdated.

Are You Updated…or Outdated?

I am going to break some long-held cherished beliefs that some people might have.

In the face of these new facts, how are you going to respond?

Remember, it is human nature to resist at first.

For the readers of this blog, I am going to present to you THREE probably outdated property investment beliefs.

Investment Belief #1: Freehold Property in Singapore Is Better Than Leasehold

With the 99-year leasehold debate, surely Singapore freehold properties HAS to better than leasehold?

How can you even say this investment belief is outdated? It is still relevant!

I can hear the cries in your head even as you read this.

But I walk the ground everyday, I see transactions everyday, I have access to premium data that most normal people do not have.

Let’s take a look at Bartley Ridge – a 99-year leasehold condo development – and its 2018 transactions.

Bartley Ridge (Leasehold) – 2018 Transactions

Barley Ridge PSF Pricing Trendline

Let’s compare that to the nearby Oasis Gardens – a freehold development.

Oasis Gardens (Freehold) – PSF Trendline

You can see the PSF pricing has gone down for this freehold development.

There is not much transactions available because when owners bought at higher prices, nobody want to lose money by selling at lower prices.

But the trendline is obvious – it depreciates slightly and becomes quite stagnant.

If you are looking at a property investment in the very LONG term – a freehold property might still prove to be better.

But if you are looking at a mid-term period of between 3 years to 8 years period, perhaps a new 99-year leasehold property might be a better choice.

Investment Belief #2: Buying Near MRT Is Better

You will always hear people say – buying at a location that is near an MRT is a very good choice.

Personally, I agree – being located nearby an MRT station is usually always a plus point.

But I have encountered examples where this is NOT always the case.

The Quartz (near MRT) vs Riversails

Below are the Riversails’s most recent transactions:

Riversail 2018 Transactions (Further away from MRT)

Riversails PSF Trendline

Let’s take a look at the Quartz PSF trendline.

Take note the Quartz is located nearby Buangkok MRT station.

The Quartz PSF Trendline (Near MRT station)

So, it is not true that for ALL cases that being located nearby an MRT station is a better and safer choice. Location is not a sure-win guarantee that you will make money.

Other factors that one might has to consider in this case are:

• entry price of the property investment
• which particular product to buy (when there exists quite a few alternatives in the same vicinity)

Investment Belief #3: The Next Door Resale Condo Is So Much Cheaper

I recently met up with a couple who had a few questions regarding the property resale market.

Let’s look at the resale property price index.

2013 was the last highest price index.

During that period, J Gateway was launched in June 2013 with an average PSF of $1650 PSF.

Seriously, when I saw the prices then – I was very shocked. I felt it was way too high.

At the same time, it was launched RIGHT BEFORE the 2013 cooling measures was applied.

This meant J Gateway was launched and sold at its most expensive prices.

Let’s look at the most recent transactions of J-Gateway.

J-Gateway Most Recent 2018 Transactions

You can see that units at J-Gateway has been sold at as high as $19XX PSF.

In fact, some J-Gateway transactions are reporting profits of between $100K to $200K.

J Gateway PSF Trendline

You can observe how J Gateway’s prices has appreciated over the past 5 years.

Back when J-Gateway was first launched, the other alternative choice was to look at Caspian as a resale choice.

Caspian was a very popular choice for people who are looking to buy a west-side property.

Let’s look at Caspian’s PSF trendline:

Caspian PSF Trendline

In 2013, the Caspian was at $11XX PSF versus J-Gateway’s launch price of $14XX – $16XX PSF.

It would have been very easy to make a choice – just buy Caspian instead! It was 2 stations away and would provide immediate rental returns.

Let’s assume you collected a generous nett rental income of $1500 a month after deducting all the various costs.

J-Gateway is still under construction while Caspian is ready to move in.

$1500 X 3 years of rental at Caspian is only $54K.

This is much lesser compared to the potential 6-figure profits you would have gotten from J-Gateway.

In the end… a J-Gateway property investment would have still made more profit.

Bear in mind, J-Gateway was selling at its highest peak prices in 2013.

And yet, there is still a wide gap in the appreciation and gains of both investments.

Conclusion

The truth is none of us have a perfect understanding of the property market in Singapore. But as we gain more knowledge and insights, we need to be able to be willing to adapt and change.

This includes being humble enough to allow some space to be wrong.

You might be thinking – “Gary – aren’t you being biased by siding with the newer property?”

Well, what I shared above is not without context.

It is actually very easy for me to say that the newer properties are performing much better compared to the older properties – I have seen many different examples of such transactions everyday.

You can say I am biased – but it is impossible for me to ignore all these data and examples that slowly erodes all these “rules” that we have made. 

I also have to say that the risk of buying a newer one is so much lower as long as you know which property to buy.

From one perspective, these rules are not 100% wrong. We can take it as a general guideline.

However, if you are looking at a property in terms of investment and making a plan to exit during its highest possible peak price – will all these rules still be relevant?

J-Gateway was an example when people bought it at the highest possible peak price – breaking another unwritten rule of “never enter the property market at the peak price”!

In fact, the TDSR cooling measures was introduced on 29 June 2013 – the day before J-Gateway was launched on 30 June 2013.

And yet in 2018, transactions at J Gateway hit another new peak.

Singaporeans’ buying behaviour has changed a lot over the last few years.

I can sense the preference for newer properties. There is a lot less interest for older properties. Unfortunately, it results in the older properties being relegated to second choice – not sought after.

There are more examples of how the property market doesn’t conform to various rules and guidelines we come to expect.

Concerned about how your own internal biases might be clouding your own judgement and thoughts regarding the property market?

If you are looking to enter the property market and wish to seek further clarity, I invite you to seek a detailed financial assessment session with me.