Latest News from PropertyGuru https://www.propertyguru.com.sg/news-rss Latest News in PropertyGuru en-sg Copyright (c) PropertyGuru All rights reserved. 5 Fri, 29 Mar 2024 19:06:35 +0800 <![CDATA[You can now find the best mortgage deals on PropertyGuru: Introducing PropertyGuru Finance]]> https://www.propertyguru.com.sg/property-management-news/2020/3/186664/you-can-now-find-the-best-mortgage-deals-on-propertyguru-introducing-propertyguru-finance www.propertyguru.com.sg:news:186664 Thu, 12 Mar 2020 04:45:52 +0800

PropertyGuru Finance, an online mortgage marketplace that offers smart financial services. 

Do you have trouble understanding the home loan process? Then you’re not alone.

According to the PropertyGuru Consumer Sentiment Study H1 2020, only 18% of Singaporeans said that they were familiar with the home loan process.

In fact, almost 50% of respondents in the survey said they were not familiar with the paperwork required to finance their home. 2 in 5 Singaporeans were also not aware that they could refinance their home loans and reduce their monthly repayments.

To help home buyers make confident decisions with their home financing process, PropertyGuru has launched PropertyGuru Finance, an online mortgage marketplace that offers financial services such as home loan comparison rates, digital tools that help home buyers make smart financial decisions, as well as independent advisors that can offer their expertise.

Announcing the launch, Bjorn Sprengers, Chief Marketing Officer and Head of Fintech, said, “Over the years, we have learnt that the excitement of finding one’s dream home, is often lost when it comes to financing it.

“The mortgage journey is full of uncertainty, doubt and inefficiency. More often than not, the process leads people to paying more than they should. Its complexity may even cost them the opportunity to own their dream home. As market leaders, we have a responsibility to help resolve these pain-points and much like PropertyGuru helped Singaporeans find their homes online, we now use technology to improve the process of how people will finance their homes.’’

Paul Wee, Managing Director of Fintech, explains, “As Singapore’s largest property marketplace, we have access to the best rates offered by banks. Because we are independent from these financial institutions, we can offer unbiased, personalised, in-person advice during and after bank opening hours. Our loan advisors collectively have more than 100 years of experience.’’

With PropertyGuru Finance, the company extends its partnership with its clients (real estate agents). PropertyGuru will act as an agent’s ‘personal mortgage assistant’ enabling them to offer their clients (property seekers) convenient access to all best available properties and home finance options under a single roof.

Find all the home financing services you need, on one convenient platform. Start your home financing journey with PropertyGuru Finance now. 

 

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<![CDATA[Singapore not heading towards deflation]]> https://www.propertyguru.com.sg/property-management-news/2019/10/183640/singapore-not-heading-towards-deflation www.propertyguru.com.sg:news:183640 Thu, 10 Oct 2019 04:25:23 +0800 Singapore not heading towards deflation
Singapore not heading towards deflation

Despite muted price growth and market downgrades forecasts, experts at DBS expect headline inflation to recover to 1.1 percent in 2020 from a projected 0.5 percent this year.

Singapore is not moving towards deflation despite muted price growth and earlier market downgrades that caused concern regarding a negative inflation forecast for the end of 2019, reported Singapore Business Review citing DBS.

The forecast for CPI was initially lowered to 0.5 to 1.5 percent in February from the earlier forecast of one to two percent.

Another downward revision followed this in April which lowered the core inflation forecast to one to two percent from 1.5 to 2.5 percent previously.

Excluding private accommodation and transportation costs, core inflation has consistently been on a downward trend to 0.08 percent in August from 1.9 percent in December amid the lower cost of electricity due to the Open Electricity Market’s nationwide launch.

Inflation will probably remain in positive territory this year despite muted price growth over the past few months.

“Our economist expects headline inflation to recover to 1.1 percent in 2020 from a projected 0.5 percent this year. Overall, CPI and core inflation have averaged 0.6 percent year-on-year and 1.3 percent respectively in the first eight months of the year. They are likely to end the year close to the floor of their official forecast ranges,” said Philp Wee, DBS FX strategist.

As a response to the subdued inflation levels, analysts are waiting for the Monetary Authority of Singapore (MAS) to ease up monetary policy as an aid to the slowing economy.

“The fact that core inflation remains persistently below the medium-term historical average of just under two percent may persuade MAS to loosen monetary policy in its upcoming policy meeting,” said Barnabas Gan, UOB economist.

Wee, meanwhile, believes MAS will slightly adjust the Nominal Effective Exchange Rate (NEER) policy band to 0.5 percent annually from the present rate of one percent, with the mid-point and width remaining untouched.

“We do not expect the MAS to abandon the modest and gradual appreciation path for its policy band. According to our model, the SGD NEER is still fluctuating within the stronger half of its band,” he added.

While you’re here, check out HDB flats for sale in Singapore. Or, read our handy property buying guides to help you own a property.

Victor Kang, Digital Content Specialist at PropertyGuru, edited this story. To contact him about this or other stories, email victorkang@propertyguru.com.sg

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<![CDATA[MAS expected to ease monetary policy amid subdued levels of inflation]]> https://www.propertyguru.com.sg/property-management-news/2019/9/183330/mas-expected-to-ease-monetary-policy-amid-subdued-levels-of-inflation www.propertyguru.com.sg:news:183330 Wed, 25 Sep 2019 03:58:10 +0800 MAS expected to ease monetary policy amid subdued levels of inflation
MAS expected to ease monetary policy amid subdued levels of inflation

MAS is expected to lower the annual appreciation pace of the SGD NEER policy band from one percent to 0.5 percent. 

Analysts expect that against benign inflationary pressures, the Monetary Authority of Singapore (MAS) will ease monetary policy to prop up the slowing economy, reported Singapore Business Review.

In August, core inflation reached 0.8 percent at a similar pace to July although staying at a three-year low. Similarly, headline inflation only grew slightly from 0.4 percent in the past month to 0.5 percent.

This informs the expectations by analysts for the central bank to ease policy during its policy meeting by middle of October.

“The fact that core inflation remains persistently below the medium-term historical average of just under two percent may persuade MAS to loosen monetary policy in its upcoming policy meeting,” said Barnabas Gan, economist at UOB.

Echoing the same sentiment, Chua Hak Bin, analyst at Maybank Kim Eng, expects the MAS to lower the band’s slope.

“MAS may reduce the slope slightly rather than to zero, as Singapore likely escaped a technical recession in 3Q19,” he said.

MAS is expected to lower the annual appreciation pace of the SGD NEER policy band from one percent to 0.5 percent, according to DBS senior economist Irvin Seah.

“An outsized accumulated surplus of about $15.6 billion implies ample room for aggressive fiscal support for the economy. We expect a highly expansionary fiscal policy early next year,” he noted.

Looking to buy a Singapore home but not sure where to start? Get insight on the best locations for your new home with our AreaInsider Guides.

Victor Kang, Digital Content Specialist at PropertyGuru, edited this story. To contact him about this or other stories, email victorkang@propertyguru.com.sg

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<![CDATA[What is an Option to Purchase (OTP) agreement?]]> https://www.propertyguru.com.sg/property-management-news/2019/6/181042/what-is-an-option-to-purchase-otp-agreement www.propertyguru.com.sg:news:181042 Thu, 27 Jun 2019 11:26:11 +0800 What is an Option to Purchase (OTP) agreement?
What is an Option to Purchase (OTP) agreement?

An Option to Purchase agreement is a legal contract signed between a buyer and seller of a residential property, and basically gives a buyer the exclusive rights to purchase a property from a seller in the future.  

Whether if you’re buying a new property or a resale HDB, one common term that you probably hear often is OTP, or Option to Purchase. 

In Singapore, an Option to Purchase is one of the first few steps of buying a property, and comes before the sales and purchase agreement. 

But what exactly is an Option to Purchase?

In this article, you’ll learn what an Option to Purchase agreement is about.

What is an Option to Purchase agreement?

An Option to Purchase agreement is a legal contract signed between a buyer and seller of a residential property, and basically gives a buyer the exclusive rights to purchase a property from a seller in the future.  

To “reserve” the property from the seller, the buyer must first pay a small booking deposit, also known as the option fee.

In exchange, the seller cannot sell the property to another third party for a fixed period, or known as the option period, and must adhere to the pre-agreed sale price and terms. 

In order to make the Option to Purchase agreement as complete as possible, the seller can hire a property lawyer to draft the document out before sending it to the buyer.

Then, the buyer can also hire a lawyer to review the terms and make changes before signing. 

Buyers and sellers of HDB resale flats, however, must use the Option to Purchase document specified by the HDB, which you can download here.  

Note: Bear in mind that the buyer isn’t obliged to buy the property from the seller after signing an OTP agreement; rather, the buyer can contemplate whether to purchase the property while exploring other options. 

 

When is the Option to Purchase agreement signed?

Typically, the sequence is like this:

  1. The seller lists the property on a property listing website
  2. An interested buyer will view the property and negotiate the price and terms
  3. The seller will hire a lawyer draft an Option to Purchase document and send it to the seller’s lawyer for review
  4. Once both parties are agreeable to the terms, the buyer will pay the option fee to the seller, and both will sign the document. 
  5. Lastly, the Option to Purchase contract will become a legal document. An acceptance copy will also be sent to the buyer

Before the contract is signed, the buyer can request for a property inspection to ensure that everything is in tip-top condition. 

Likewise, the seller can also request to view the buyer’s bank loan approval letters if there’s a bank loan involved.

For HDB resales, both the buyer and seller must register their intent to buy and sell on HDB’s portal before obtaining the OTP. 

The buyer also has to secure the HDB housing loan first as the OTP can only be issued when there’s a valid HDB Loan Eligibility (HLE) letter from HDB. 

Once that’s done, both parties must declare the selling price to HDB, agree on the terms, and sign the OTP agreement. 

 

What are the typical terms included in an Option to Purchase agreement?


While there isn’t any one-size-fits-all OTP agreement, it should typically cover these basic things: 

  1. The option fee, or deposit, which can be between 1-10% the price of the property. For HDB resales, the fee is usually not more than $1,000 
  2. The option period, which is typically within 14 days. However, this period is negotiable and can even be up to 2 months 
  3. The details of the property being sold (purchase price, name, area, address)
  4. The details of both buyer and seller (names, IC numbers, contact numbers, addresses)
  5. What happens if the agreement expires, and whether the option fee will be forfeited
  6. Whether if the property is furnished or vacant
  7. Obligations of the buyer
  8. Obligations of the seller

Is the option fee refundable?

The option fee is usually non-refundable, so if the agreement expires, the seller will keep the option fee and is free to offer the property to someone else.

What if the buyer chooses the exercise the Option to Purchase?

If the buyer decides to exercise the Option to Purchase agreement, both parties will enter a sales and purchase agreement, and follow the terms set by the Law’s Society Conditions of 2012, which include terms like rents, profits, levies, and stamp duty. 

 

For more helpful guides like this, check out PropertyGuru.com.sg.

 

Victor Kang, Digital Content Specialist at PropertyGuru, wrote this story. To contact him about this or other stories, email victorkang@propertyguru.com.sg

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<![CDATA[Singapore’s Economic Growth Slows To 1.3% in Q1]]> https://www.propertyguru.com.sg/property-management-news/2019/4/179482/singapores-economic-growth-slows-to-1-3-in-q1 www.propertyguru.com.sg:news:179482 Mon, 15 Apr 2019 04:09:19 +0800 Singapore’s Economic Growth Slows To 1.3% in Q1
Singapore’s Economic Growth Slows To 1.3% in Q1

Specifically, the manufacturing sector contracted 1.9 percent year-on-year in Q1 2019, while the services producing industries expanded 2.1 percent year-on-year. The construction sector also recorded a 1.4 percent year-on-year increase, a reversal from the one percent decline seen in the previous quarter.

The Singapore economy expanded 1.3 percent year-on-year during the first quarter of 2019, down from the 1.9 percent growth registered in the fourth quarter of 2018, showed advance estimates by the Ministry of Trade and Industry (MTI).

On a quarter-on-quarter seasonally-adjusted annualised basis, the economy grew two percent, faster than the previous quarter’s 1.4 percent growth.

Specifically, the manufacturing sector contracted 1.9 percent year-on-year in Q1 2019, while the services producing industries expanded 2.1 percent year-on-year.

More: Singapore Fares Poorly On Tackling Inequality

The construction sector also recorded a 1.4 percent year-on-year increase, a reversal from the one percent decline seen in the previous quarter. It also marked the first quarter of positive growth for the sector following 10 consecutive quarters of decline.

“The recovery of the sector was supported by an improvement in private sector construction activities,” said MTI.

On a quarter-on-quarter seasonally-adjusted annualised basis, the sector expanded 7.8 percent, extending the 5.1 percent growth posted in the preceding quarter.

DBS senior economist Irvin Seah noted that the construction sector has finally come out of recession, reported Channel News Asia.

“Although residential construction activities remain sluggish, impetus from a healthy pipeline of infrastructure projects is gradually taking effect. Expect better showing from this sector in the coming quarters.”

Given the less rosy outlook, some economists downgraded their full year growth forecasts for the city-state.

More: Outlook 2019: Private Housing Supply In Singapore To Surge In 2019

OCBC revised its 2019 GDP growth forecast to 1.8 percent to two percent, while DBS lowered it to 2.6 percent.

“We believe the economy has reached the bottom of the current growth cycle,” said Seah. “We expect a steady pick-up in growth performance in the coming quarters, as economic outlook improves.”

This comes as a slew of policy stimulus was rolled out by China as well as a stable monetary policy by global central banks – providing the uplift in global economic conditions.

“This should bring about a significantly stronger second half compared to the first quarter for Singapore. In short, this year will likely be back-loaded,” he said.

Home buyers looking for Singapore Properties may like to visit our ListingsProject Reviews and Guides.

Fiona Ho, Digital Content Manager at PropertyGuru, edited this story. To contact her about this or other stories, email fiona@propertyguru.com.sg

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<![CDATA[Economic growth expected to soften to 2.5%]]> https://www.propertyguru.com.sg/property-management-news/2019/2/178490/economic-growth-expected-to-soften-to-2-5 www.propertyguru.com.sg:news:178490 Thu, 28 Feb 2019 05:55:42 +0800 Economic growth expected to soften to 2.5%
Economic growth expected to soften to 2.5%

Singapore’s gross domestic product (GDP) in 2019 is expected to rise by 2.5 percent, slightly lower than the 3.2 percent economic growth recorded last year, according to the Monetary Authority of Singapore (MAS), reported the Straits Times.

Singapore’s gross domestic product (GDP) in 2019 is expected to rise by 2.5 percent, slightly lower than the 3.2 percent economic growth recorded last year, according to the Monetary Authority of Singapore (MAS), reported the Straits Times.

“This is not a bad outcome. It will bring the level of GDP closer to its potential. There is no need to stimulate the economy,” said Ravi Menon, managing director at the central bank.

More: Outlook 2019: Private Housing Supply In Singapore To Surge In 2019

He noted that Singapore’s economy performed well in 2018. However, Menon is forecasting a dip this year due to weaker external demand amidst “slower global GDP growth and the maturing of the global tech cycle”.Ravi

Consequently, he thinks that trade-related industries and the manufacturing sector will be the most affected by the softer external demand. On the other hand, the financial services segment is “likely to continue to outpace the overall economy”.

Nonetheless, the Singapore economy is “moderating towards a more sustainable pace” in accordance with the world economy, he said during the Citibank Asia Pacific Investors Conference on Wednesday (27 Feb).

Moreover, even if the GDP sees a higher drop, he thinks Singapore can cope with it. “If there is a sharper slowdown, Singapore’s healthy macroeconomic position gives it the resilience to absorb the shock.” The government also has versatility to adjust or introduce policies to mitigate the effects of a higher economic decline.

Menon said the aforementioned as Singapore’s central bank prepares to reveal its monetary policy decision in April, after the country posted its weakest year-on-year economic growth in Q4 2018. During the period, the country also saw its largest decline in factory output in over two years and the biggest drop in exports.

“What we will do (monetary policy decision in April) depends on the growth and inflation outlook then.”

MAS oversees the monetary policy by changing the Singapore dollar’s exchange rate, rather than tweaking interest rates. Last April, the central bank permitted the local currency to increase marginally for the first time in six years. Then in October 2018, it tightened monetary policy.

Home buyers looking for Singapore Properties may like to visit our ListingsProject Reviews and Guides.

 

Romesh Navaratnarajah, Senior Editor at PropertyGuru, edited this story. To contact him about this or other stories, email romesh@propertyguru.com.sg

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<![CDATA[Singapore government says Oxfam inequality index flawed]]> https://www.propertyguru.com.sg/property-management-news/2018/10/175333/singapore-government-says-oxfam-inequality-index-flawed www.propertyguru.com.sg:news:175333 Wed, 10 Oct 2018 02:25:25 +0800 Singapore government says Oxfam inequality index flawed
Singapore government says Oxfam inequality index flawed

Around 90% of Singaporeans own their own homes and no other country comes close, noted Desmond Lee, Minister for Social and Family Development. 

Instead of satisfying ideologically driven indicators, the city-state sets out to achieve real outcomes in education, health and housing, said Desmond Lee, Minister for Social and Family Development.

He said this to refute an Oxfam index, which ranked Singapore 149th out of 157 countries on efforts to reduce inequality, reported the New Paper.

More: Singapore Fares Poorly On Tackling Inequality

He noted that the Commitment to Reducing Inequality Index (CRI) assumed that high public spending and taxation reflect a commitment to combat inequality.

As such, Singapore was ranked last on progressive tax policy, which is one of the three key areas measured.

“We think it is more important to look at the outcomes achieved instead,” said Lee. “The report itself recognises this limitation.”

He explained that while the city-state imposes a low income tax burden, Singaporeans benefited more than proportionately from high quality infrastructure and social support.

In fact, 90 percent of Singaporeans have their own homes and among the poorest 10 percent of households, 84 percent are homeowners.

“No other country comes close.”

The minister also cited the city-state’s performance in international rankings for healthcare and education, such as the Programme for International Student Assessment (PISA), in responding to criticism of its relatively low level of public spending on these areas.

“That we achieved all of this with lower taxes and lower spending than most countries is to Singapore’s credit rather than discredit,” he said.

In concurring with the minister, analysts said that while Singapore is not perfect, the CRI Index failed to fully look at other efforts made to reduce inequality.

National University of Singapore economist Sumit Agarwal noted that many programmes aimed at redistributing wealth were not taken into account by the report, such as the Silver Support Scheme.

Singapore Management University law don Eugene Tan described the report’s methodology as simplistic and prescriptive.

“The report puts every country through a cookie cutter, but what works for Denmark may not be suitable for Singapore,” he said.

Can you afford a house in Singapore? Check your affordability now.

 

Romesh Navaratnarajah, Senior Editor at PropertyGuru, edited this story. To contact him about this or other stories, email romesh@propertyguru.com.sg

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<![CDATA[Singapore fares poorly on tackling inequality]]> https://www.propertyguru.com.sg/property-management-news/2018/10/175287/singapore-fares-poorly-on-tackling-inequality www.propertyguru.com.sg:news:175287 Tue, 09 Oct 2018 03:11:04 +0800

The city-state is one of the few remaining countries with no universal minimum wage, noted Oxfam.

With Singapore ranked among the bottom 10 countries globally on tackling inequality, Oxfam International has urged the city-state’s policymakers to increase social spending, strengthen labour rights and enact anti-discrimination laws, reported the Business Times.

Out of the 157 countries studied by Oxfam, Singapore was listed at 149.

More: Singapore lords over world’s most expensive cities  

The index looks at three factors – the social spending of a country on public services such as health, education and social protection.

Oxfam noted that Singapore fares poorly as its combined spending on health, education and social protection is “well-below” countries like Thailand and South Korea, which spend 50 percent of their budget in the said areas. The city-state is also one of the few remaining countries with no universal minimum wage, it added.

A look at the rate of progressive taxation, Oxfam said the republic “under-taxes” corporations and wealthy individuals. It also has no equal pay or non-discrimination laws for women.

“What’s most striking is how clearly the index shows us that combating inequality isn’t about being the wealthiest country or the one of the biggest economy,” said Matthew Martin, director at Development Finance International.

“It’s about having the political will to pass and put into practice the policies that will narrow the gap between the ultra-rich and the poor.”

Home buyers looking for Singapore Properties may like to visit our ListingsProject Reviews and Guides.

 

Romesh Navaratnarajah, Senior Editor at PropertyGuru, edited this story. To contact him about this or other stories, email romesh@propertyguru.com.sg

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<![CDATA[Singapore lords over world's most expensive cities]]> https://www.propertyguru.com.sg/property-management-news/2018/3/170417/singapore-lords-over-worlds-most-expensive-cities www.propertyguru.com.sg:news:170417 Sat, 24 Mar 2018 06:05:43 +0800

Owning a car alone in Singapore is very costly. Nattapoom V/Shutterstock

Four Asia-Pacific cities among the 10 costliest on earth, according to new EIU survey.

By Property Report

Singapore was rated the world’s most expensive city, marking five years in the top frame of the Worldwide Cost of Living Survey by the Economist Intelligence Unit (EIU).

Hong Kong, Seoul and Sydney were ranked fourth, sixth and 10th, respectively, in this year’s survey tracking prices of over 150 products and services in 133 cities as of September 2017.

Singapore was rated 16 percent more expensive than benchmark New York City, which ranked 13th priciest worldwide.

Paris took over Hong Kong’s second spot from last year. The “only euro-area city” in the top 10, the French capital “remains extremely expensive to live” in, although the cost of alcohol, transport and tobacco offer more value for money there than in other European markets, EIU analysts stated.

More: Inside one of Singapore’s strangest homes

For perspective, the average price of a bottle of wine costs USD11.90 in Paris and USD23.68 in Singapore.

The city-state also remains the most expensive place in the world to buy and own a car due to the government’s onerous ownership curbs. A private car could set a buyer back by SGD70,000 (USD53,000) in Singapore.

Prices of high-end property in the city could double by 2025, “assuming the government intervention won’t be too drastic,” according to Alex Schlaen, CEO of Panache Management which advises high net-worth individuals (HNWI) on luxury realty. 

Asian cities also stood among the cheapest in the world, with Bangalore and Karachi ranking 129th and 127th, respectively, a few notches above last-placer Damascus.   

Zurich, Oslo, Geneva, Copenhagen and Tel Aviv round out the top 10. No American city was more expensive than New York, with Los Angeles rated 14th priciest in the world and Minneapolis next at a distant 26th.  

The top 10 most expensive cities in the world, according to EIU’s Worldwide Cost of Living Survey:

1. Singapore, Singapore

2. Paris, France

3. Zurich, Switzerland

4. Hong Kong, Hong Kong

5. Oslo, Norway

6. Geneva, Switzerland

7. Seoul, South Korea

8. Copenhagen, Denmark

9. Tel Aviv, Israel

10. Sydney, Australia

 

This article was originally published on Property-Report.com. For more stories from Asia’s most trusted and enduring luxury real estate, architecture and design publication, visit Property-Report.com

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<![CDATA[How bridging loans can help en bloc sellers]]> https://www.propertyguru.com.sg/property-management-news/2018/3/170318/how-bridging-loans-can-help-en-bloc-sellers www.propertyguru.com.sg:news:170318 Tue, 20 Mar 2018 03:47:53 +0800 How bridging loans can help en bloc sellers
How bridging loans can help en bloc sellers

Outstanding bridging loans granted by banks in Singapore rose from $28.9 million in Q2 to $40.4 million in Q3 2017.

Owners of residential projects sold in the current en bloc hype are being advised to quickly secure a replacement property with the help of bridging loans, as housing prices continue to recover.

“You do not want to wait several months when prices are moving, you want to secure your new place as soon as possible,” said Bala Balamurali, director of London-based lender Market Bridge Solutions (MBS).

More: Monetising your property at retirement

MBS’ parent company Market Financial Solutions (MFS), which has been operating in the UK bridge lending business for more than 10 years, recently opened its first overseas office here to offer bridging loans for property purchases and business purposes.

Approval only takes one to two days, with the funds disbursed within three weeks, as long as the borrower meets certain requirements including compliance with local regulations. 

“We believe that the financial landscape of Singapore is suitably positioned for bridging loans, particularly in light of the exciting real estate projects we are seeing across the city,” said MFS’ chief executive Paresh Raja.

Aside from en bloc sellers, buyers of auction properties can also consider taking out this loan, given the tight timelines typically imposed by auctioneers.

According to latest data from the Monetary Authority of Singapore, outstanding bridging loans granted by banks here rose from $28.9 million in Q2 to $40.4 million in Q3 2017. 

But local banks currently don’t offer this kind of loan facility to en bloc sellers, noted Eugene Huang, head of Redbrick Mortgage.

“Due to the complexity of en bloc transactions, Singapore banks currently do not issue bridging facilities to en bloc sellers. However, we understand that some banks are exploring to grant bridging facilities for such transactions,” he said.

iCompareLoan’s chief mortgage consultant Paul Ho agrees with Huang.

“Bridging loans only address the sale of HDB or private properties and those with equity. A bank will consider lending to property sellers who are buying another property.

“The maximum loan duration is only six months. However, collective sales are not considered mainstream and banks have not dabbled into it,” said Ho.

Furthermore, this type of loan also has disadvantages, noted Huang. For instance, conveyancing fees are typically $300 to $500 higher if there is a bridging facility.

“Interest rates are charged at three percent to seven percent depending which bank you take the loan from. Some banks charge a cancellation fee. Some charge by days, while some charge by month,” he added.

Check out our Mortgage Calculator to help you determine how much you can borrow and afford on your property purchase.

 

Romesh Navaratnarajah, Senior Editor at PropertyGuru, edited this story. To contact him about this or other stories, email romesh@propertyguru.com.sg

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<![CDATA[Engaging the right agent to sell your property]]> https://www.propertyguru.com.sg/property-management-news/2018/2/169469/engaging-the-right-agent-to-sell-your-property www.propertyguru.com.sg:news:169469 Thu, 22 Feb 2018 10:00:36 +0800 Engaging the right agent to sell your property
Engaging the right agent to sell your property

Agents with good EQ can cope well with servicing consumers.

Here’s an insider’s guide to finding a suitable salesperson to handle your property transaction.

By Stuart Chng

The generation of today has grown up with and is accustomed to buying and selling many things online on their own, and it is easy to fall into the trap of assuming that buying and selling a property ourselves is as easy as buying an e-scooter off the internet.

Is it truly that simple and will there be any relevance in the role of a real estate agent today and in the future?

Despite appearing on the surface like a simple buy and sell equation, a real estate transaction comprises of many moving parts and soft and hard skill sets that are difficult to understand for a layperson.

Below, I will run through some factors (in no order of priority) that I would personally look out for when engaging an agent to sell my property. Yes, even though I am a licensed realtor, I prefer not to handle viewings of my own property and have appointed agents to represent me in the past).

1. High emotional quotient and energy level

Like it or not, we may not be the most suitable person to respond to enquiries, face prospective buyers or show off the various excellent attributes of our home and its surroundings.

Picture this: You work normal hours and, intermittently throughout each day, get interrupted with phone calls and texts asking you everything about your property, repeatedly, followed by showing evening or weekend viewings while the family goes out to play.

Most properties take a couple of months to sell. By the end of the first month, assuming you have priced your property fairly and have fair response, you might feel burnt out from handling all these activities yourself.

This will be made worse when you start wondering how long the journey you began could take and if you have no way to ascertain whether you are doing all that is necessary and correct. And this has not factored in your time and cost of advertising and opportunity cost in spending hours of research on procedures and potential pitfalls.

A real estate agent with good EQ and energy level will be able to deliver all these while maintaining composure and a pleasant disposition. They are also used to the rigours of sales and marketing, and are generally able to cope well with servicing people.

2. In-depth segment/district knowledge

A good sell-side agent must be proactive in acquiring in-depth and up to date knowledge of the area that they specialise in. A track record of success in specific districts or segments tells me how they perform when given a task to sell. They should possess knowledge of the surroundings, up-to-date transacted prices and are able to provide a reasonable benefits comparison between projects in the neighbourhood when asked to by prospective buyers.

3. Modern marketing methods and technology

Today’s choice of marketing mediums have developed towards social media marketing and a good sell-side agent would need to be well-versed in generating buyers through creating attractive content like videos, shrewd audience targeting and good copywriting. This would cast a wider net towards a larger audience and arm sellers with better bargaining power.

Also, where possible, I would prefer to work with someone who has strong team support as it means that my agent can tap on the team’s collective buyer base and reach to give me maximum marketing reach. Although team support cannot be easily observed, it can be easily measured by the additional enquiries and viewings that such a team can generate.

4. Street smarts

One often overlooked aspect of a good agent is that he/she should possess street smarts that come in the form of an astute understanding of buying behaviour and good negotiation skills. I have personally witnessed counterparts negotiate deals that could have cost their clients a hefty sum of money without realising it.

Example: Agent X, who frivolously gave away his client’s bottom price or urgency to sell without much prompting. This should have been confidential between the seller and him until an advanced stage in negotiations. Hence, chances for potentially securing a higher price would have been wasted.

5. Property wealth planning skills

After selling, it is common for clients to search for a new home or allocate funds towards an investment property. Hence, in today’s market, a good agent should be able to do more than just a simple resale financial proceeds and funds required calculations for their next purchase.

An agent with Property Wealth Planning skills will be able to provide a systematic investment roadmap for property owners, clear advice for choosing the next property and maximising financing options, and tax optimisation strategies that will help them save several thousands in expenses.

Example 1: Today, clients who have just exited an investment might be tempted to enter into a potential en bloc sale project to enjoy such a windfall in the future. With the correct advice from Property Wealth Planners, clients would be better able to navigate and avoid projects that seem en bloc-able but do not fulfil certain en bloc criteria that are unapparent to the layperson.

Example 2: Where clients are planning to accumulate a portfolio of properties but lack insights on the best options to structure their investment holdings and maximise tax savings.

These are the main factors I would look at today when appointing a seller agent to represent me. Of course, it should go without saying that the agent would need to be someone trustworthy whom I can rely on for honest feedback on marketing strategy and pricing advice throughout the journey.

Hope this helps you in your search for a suitable realtor and all the best for 2018!

 

image1

Stuart Chng

Co-Founder of Navis Living Group

Senior Associate Executive Director of OrangeTee & Tie

Stuart is a renowned team leader and personality in the real estate industry. 

He is a licensed real estate agent, team leader, industry trainer and speaker, columnist for several property newsletters and blogs and is often quoted in media interviews on 938FM, Channel 8, PropertyReport, PropertyGuru and other publications.

 

Disclaimer:

The views and opinions expressed in the article are those of the author’s and do not necessarily represent the position taken by PropertyGuru, and its employees. Information provided in this publication is general in nature and does not constitute professional financial advice. PropertyGuru will endeavour to update its publication and website as needed. However, information can change without notice, and we do not guarantee the accuracy of information in the publication or on the website, including information provided by third parties, at any particular time.
Whilst every effort has been made to ensure that the information provided is accurate, individuals must not rely on this information to make a financial or investment decision. Before making any decision, we recommend you consult a financial planner or your bank to take into account your particular financial situation and individual needs. PropertyGuru does not give any warranty as to the accuracy, reliability or completeness of information which is contained in this publication or on its website. Except insofar as any liability under statute cannot be excluded, PropertyGuru and its employees do not accept any liability for any error or omission in this publication or on its website or for any resulting loss or damage suffered by the recipient or any other person.

 

 
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<![CDATA[S’pore economy grows at fastest pace since 2014]]> https://www.propertyguru.com.sg/property-management-news/2018/2/169263/spore-economy-grows-at-fastest-pace-since-2014 www.propertyguru.com.sg:news:169263 Thu, 15 Feb 2018 02:34:50 +0800

Singapore recorded a GDP growth of 3.6% in 2017, driven by the manufacturing segment. 

Singapore’s gross domestic product (GDP) expanded by 3.6 percent year-on-year for the whole of 2017, according to latest statistics released by the Ministry of Trade and Industry (MTI) on Wednesday (February 14).

Not only is this the country’s highest economic growth since 2014, it also exceeded the 2.4 percent gain in 2016 and MTI’s forecast of 3.5 percent.

The positive performance was driven by the city-state’s manufacturing segment, which improved by 10.1 percent last year, up from the 3.7 percent uptick in 2016.

“Growth was largely driven by the electronics and precision engineering clusters, even as the biomedical manufacturing, transport engineering and general manufacturing clusters contracted,” the ministry said.

On the other hand, Singapore’s construction sector contracted by 8.4 percent in 2017, reversing the 1.9 percent growth in the previous year.

“Output in the sector was primarily weighed down by the weakness in private sector construction works, which contracted by 29.1 percent on the back of a decline in private residential and private industrial works.”

Looking ahead, MTI expects the economy to grow at a moderated pace this year, but still remain firm at slightly above the middle of its forecast range of 1.5 percent to 3.5 percent.

“However, the performance of the construction sector is likely to remain lacklustre in 2018 as the earlier weakness in construction demand, particularly from the private sector, continues to weigh on construction activities in the sector,” it added.

 

Romesh Navaratnarajah, Senior Editor at PropertyGuru, edited this story. To contact him about this or other stories, email romesh@propertyguru.com.sg

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<![CDATA[Financial planning for young couples]]> https://www.propertyguru.com.sg/property-management-news/2018/1/168436/financial-planning-for-young-couples www.propertyguru.com.sg:news:168436 Thu, 25 Jan 2018 10:00:50 +0800 Financial planning for young couples
Financial planning for young couples

Plan your finances together.

With proper planning, you can manage your finances well into retirement.

By Colin Lim

Suppose you turn 30 this year. You and your partner may well be preparing for the next stage of your lives together, i.e. tying the knot and moving into a home together.

With bills, a mortgage, as well as all other costs associated with starting a new family and building a home, it is important to stay financially prudent. A property purchase may very well be the biggest ticket item you’ll purchase in your lifetime, but with proper planning, you’ll realise that you are able to manage your finances well into retirement.

Initial payment on the property

When it comes to purchasing a property, the first train of thought that comes to mind is tackling the down payment. For the rest of this article, let’s assume that the property you’ve selected is priced at $1 million. The initial amount you and your partner would have to front is about $224,600, having taken into consideration the 20% down payment and buyer’s stamp duty.

After you have settled the down payment, the next thing you might find yourself concerned about are your monthly repayments, where you can choose between paying with your Central Provident Fund (CPF) or cash.

Monthly repayments with CPF vs cash

On one hand, the sound option might be to use your CPF to finance the monthly instalment. After all, this means you don’t have to dip as much into your hard-earned savings, and have more cash on hand that you might have considered putting into other needs, or even sink it into an insurance savings plan.

However, don’t forget should you choose to sell the property, you’ll also run into the issue of having to return the principal amount used to fund your home, plus accrued interest. Sure, this money still belongs to you since it’s returned to your CPF account, but your final cash proceeds will be largely reduced.

On the other hand, paying with cash means that while you’re paying for a mortgage with interest rates at about 1.7 percent, the savings in your CPF Ordinary Account (OA) are growing at 2.5 percent, which is a much higher rate than deposit rates across the board. This, multiplied by a 25-year tenure, and the amount of savings in your CPF for your retirement would easily proliferate as compared to if you had used the money in your CPF OA to pay for your mortgage.

Outstanding loan at age 55

Upon turning 55, you can start withdrawing your CPF savings as long as you have set aside the Basic Retirement Sum (BRS) with a property pledged in your Retirement Account. Given that the retirement sum increases every year, the BRS in 25 years’ time would be at an estimate of about $148,000.

If you are 30 today, that’s 25 years from now. If you have been paying an interest rate of about 1.7 percent per annum on your mortgage, your outstanding loan by then would be at about $167,000. Here’s where you’ll notice the difference between having utilised your CPF or not. The folowing table will serve to illustrate both scenarios.

Funds and Gains

Should you and your partner choose to sell the property at age 55, the amounts above would give you a rough estimate of your collective retirement sum. With this amount, you can purchase a retirement home and then keep the rest of the money for retirement.

Mortgages vs. other loans

With the consideration of a property out of the way, you should also think about other loan products that you might eventually need, be it a renovation loan, a car loan, or even a personal loan.

As of January 2018, mortgages are still considered to be in a relatively low interest rate environment. Aside from that, when you pit mortgages against other lending facilities offered by banks, you’re faced with varied methods of calculating interest rates as well as penalties when you redeem your loan before it reaches its maturity.

Financial planning is never a one-off process

As you progress to subsequent stages of your life, priorities are bound to change and you may find yourself having to re-look at your financial portfolio time and again. Therefore, it is important to start planning while you’re still young and time is on your side!

CaptureDisclaimer:

The views and opinions expressed in the article are those of the author’s and do not necessarily represent the position taken by PropertyGuru, and its employees. Information provided in this publication is general in nature and does not constitute professional financial advice. PropertyGuru will endeavour to update its publication and website as needed. However, information can change without notice, and we do not guarantee the accuracy of information in the publication or on the website, including information provided by third parties, at any particular time.
Whilst every effort has been made to ensure that the information provided is accurate, individuals must not rely on this information to make a financial or investment decision. Before making any decision, we recommend you consult a financial planner or your bank to take into account your particular financial situation and individual needs. PropertyGuru does not give any warranty as to the accuracy, reliability or completeness of information which is contained in this publication or on its website. Except insofar as any liability under statute cannot be excluded, PropertyGuru and its employees do not accept any liability for any error or omission in this publication or on its website or for any resulting loss or damage suffered by the recipient or any other person.
 
  The PropertyGuru News & Views   This article was first published in the print version PropertyGuru News & Views. Download PDFs of full print issues or read more stories now!
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<![CDATA[Bankers caution home buyers on impact of higher interest rates]]> https://www.propertyguru.com.sg/property-management-news/2018/1/168004/bankers-caution-home-buyers-on-impact-of-higher-interest-rates www.propertyguru.com.sg:news:168004 Tue, 16 Jan 2018 03:02:44 +0800 Bankers caution home buyers on impact of higher interest rates
Bankers caution home buyers on impact of higher interest rates

Banks in Singapore have been raising interest rates for home loan packages since the start of 2018.

Bankers have warned buyers, especially those eyeing investment properties, to assess the impact of higher interest rates before they make a decision, reported the Business Times.

This comes as banks have been raising interest rates for fixed and floating home loan packages by 10 to 30 basis points since the start of 2018.

DBS Bank, for instance, now charges 1.95 percent a year for each of the three years for its three-year fixed rate package, while UOB charges 2.05 percent for each of the three years for its three-year fixed rate package.

OCBC Bank has increased its two-year fixed rate package to 1.85 percent a year for each of the two years, while its third-year rate now stands at 1.90 percent, which is made up of its home rate – presently at one percent – plus 0.90 percent.

“Rising interest rates may curb the rise in property prices here, but it may not be enough to hurt property prices too badly on its own – especially if there are other positive drivers like a strong economy, a healthy job market and good wage growth,” explained Vasu Menon, vice-president and senior investment strategist at OCBC Bank.

But with the weak rental market, Menon noted that a rising interest rate may raise the burden of servicing mortgages while reducing the appeal of investment properties.

“The ability to service the mortgage on an investment property depends on how easily the property can be rented out and the state of the rental market, which seems weak at the moment.”

As such, unless an owner easily rents out his property, he may either end up slashing rentals to secure a tenant or own a property that remains vacant for a long period of time, added Menon.

“A combination of rising interest rates, lower rentals and prospects of a longer vacancy period, raises the risk of loan defaults among individuals that have investment properties.”

 

Romesh Navaratnarajah, Senior Editor at PropertyGuru, edited this story. To contact him about this or other stories, email romesh@propertyguru.com.sg

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<![CDATA[Getting started on property investing]]> https://www.propertyguru.com.sg/property-management-news/2017/12/167010/getting-started-on-property-investing www.propertyguru.com.sg:news:167010 Wed, 20 Dec 2017 20:00:34 +0800 Getting started on property investing
Getting started on property investing

Professional property wealth planning advice can improve investment returns and lower costs.

Increase your probability of success by applying these considerations to your next investment.

By Stuart Chng

Since the beginning of 2017, we have witnessed a robust return of both institutional and retail investors into the Singapore property market. It is no surprise that after four years of muted action following government cooling efforts and where many investors ventured abroad, that this pent-up appetite has returned with a vengeance. 

For a new investor, it is crucial to understand the reasons why you place your hard-earned dollars into property instead of other investments. 

The property market, as with any other markets, is cyclical in nature. But of greater interest to the individual investor is to realise that Singapore’s property market has one of the best long term returns on equity performance out of most investment instruments available. And that has to do largely with the strength of the Singapore dollar, the availability of high leverage, and the attraction of Singapore to the international audience, not just as a region to invest in, but as an asset class on its own. 

As a Singaporean and an avid market observer, I have always stressed to my friends that they must invest and remain vested locally, despite the beckoning of overseas properties. 

Chief among the reasons are that they would be better protected against inflation, which is just as certain as death and taxes, and will be able to see their wealth grow steadily over time through the compound effects of inflation (akin to interest) on their real estate. As Albert Einstein once said: “Compound interest is the eighth wonder of the world. He who understands it, earns it. He who doesn’t, pays it.” 

In this article, I will focus on the fundamentals for those who are beginning their journey. 

Before you embark on searching for your investment property, it is important to have gone through this checklist below.

  1. Finances

Prior to looking at any property, you should speak to a property wealth planner about your finances to understand the initial cash/Central Provident Fund (CPF) outlay required. Having an experienced third party do an assessment would help you prevent costly beginner mistakes that could seriously hamper your journey to financial freedom. A responsible property wealth planner would help you assess the minimum cash and CPF required for the down payment, buyer stamp duties, legal fees and miscellaneous costs, as well as advise you on an investment road map for the best acquisition strategy as you progress along and acquire more properties. 

  1. Loan eligibility

The current Total Debt Servicing Ratio (TDSR) framework makes it especially important for investors to check on their maximum loan eligibility so that there are no nasty surprises after placing a deposit. In this case, speaking to a mortgage banker should be one of your priorities early on. 

  1. Manner of holding

For investors who already own an HDB flat or private home and are acquiring their second property, a property wealth planner can advise you on the various options available to optimise tax savings (which can be significant) and qualify you for more funding options. This is especially important for those who intend to grow their portfolio of properties and would require access to higher leverage and lower costs. 

  1. Investment goal and horizon

Having a clear idea of your investment goal horizon helps you filter the segments in which you should focus on. 

Examples

– Are you investing in properties to provide a consistent source of passive income? In this case, focus on areas with low vacancy rates and a high tenant catchment pool. 

– Are you investing in properties short term to ride the market trend? In this case, are you financially prepared to hold on in case a black swan event occurs? 

– Are you investing in properties with en bloc potential? In this case, are you well advised on which properties have genuine potential? Not all old properties have en bloc-ability. 

After going through the above points, the following are factors that have served me and my clients well in the past as an investment criteria checklist. 

  1. Capital growth potential 

One of the indicators of a good property is how it performs relative to the price index of its district. For example, if a particular project has appreciated more than its district in the past one year, it could indicate higher buying demand that is a result of various factors such as distance to amenities, quality and maintenance, design and facilities, etc. 

  1. Rental yields

Good rental returns are indicative of a sought-after project. It is important to note that despite being in the same vicinity, there are projects that suffer from high vacancy rates and low rentals even when their neighbour enjoys the opposite. Thorough research is critical to making a good judgement call on the investment grading of a project. Study the rental data not just in the project you are interested in but also in the neighbouring projects to uncover any discrepancies. It could help you find better investments as well. 

  1. Growth story

Infrastructure investments is one of the common reasons why real estate flourishes in certain areas. This happens everywhere in the world and more recently onshore, we can look at values of Sengkang, Punggol and Jurong as examples of how infrastructure investments have impacted property prices. If the area you are investing in has a massive growth story fuelling it, there is a good chance you will enjoy the fruits in the years to come. Do take note though that thorough research is still necessary, and it is imprudent to invest in just anything just because they are located in growth areas. 

  1. Below market value

Where possible, investors should look out for properties below market value so as to begin their investment journeys with what we call “built-in profits”. Granted, it is not always possible or easy to find such properties as they are usually snapped up quickly. It is, however, a good guiding principle to consider before you make any decision on a property. At worst, the one you decide on should be at fair market value and at best, below market value. 

As a rule of thumb, the more factors above that your property fulfils, the better its investment potential. I would akin it to this analogy. If it fulfils just one out of four factors, there is a 25 percent chance of it being a good investment. If it fulfils three out of four factors, you have a 75 percent chance of it being a good investment. And so on.

Property investment is a team sport and i highly recommend that investors assemble a team consisting of mortgage specialists and property wealth planners to advise them. The collective wisdom and insights will help you prevent costly mistakes and blind spots in your judgement which could take years to unravel.

All the best and i wish you a successful investment journey ahead.

 

image1

Stuart Chng

Co-Founder of Navis Living Group

Senior Associate Executive Director of OrangeTee & Tie

Stuart is a renowned team leader and personality in the real estate industry. 

He is a licensed real estate agent, team leader, industry trainer and speaker, columnist for several property newsletters and blogs and is often quoted in media interviews on 938FM, Channel 8, PropertyReport, PropertyGuru and other publications.

 

Disclaimer:

The views and opinions expressed in the article are those of the author’s and do not necessarily represent the position taken by PropertyGuru, and its employees. Information provided in this publication is general in nature and does not constitute professional financial advice. PropertyGuru will endeavour to update its publication and website as needed. However, information can change without notice, and we do not guarantee the accuracy of information in the publication or on the website, including information provided by third parties, at any particular time.
Whilst every effort has been made to ensure that the information provided is accurate, individuals must not rely on this information to make a financial or investment decision. Before making any decision, we recommend you consult a financial planner or your bank to take into account your particular financial situation and individual needs. PropertyGuru does not give any warranty as to the accuracy, reliability or completeness of information which is contained in this publication or on its website. Except insofar as any liability under statute cannot be excluded, PropertyGuru and its employees do not accept any liability for any error or omission in this publication or on its website or for any resulting loss or damage suffered by the recipient or any other person.
]]>
<![CDATA[2017 in review: Easing of cooling measures, agency mergers and en bloc fever]]> https://www.propertyguru.com.sg/property-management-news/2017/11/165418/2017-in-review www.propertyguru.com.sg:news:165418 Thu, 23 Nov 2017 10:00:19 +0800 2017 in review: Easing of cooling measures, agency mergers and en bloc fever
2017 in review: Easing of cooling measures, agency mergers and en bloc fever

The PropNex and DWG merger in June formed Singapore’s largest property agency. (Photo: Jianwei Huang)

A look back at some of the key property highlights of the year.

By Eugene Huang

2017 has no doubt been an eventful year for the local real estate scene. At a glance, it’s clear that the market is on its way to a swift recovery over various areas. In the past year alone, we’ve seen the relaxation of the cooling measures, the merger of various real estate agencies, and of course, who could miss out en bloc fever!

Indeed, these are exciting times for the market. With less than 100 days till we usher in the new year, let’s look at some of the highlights of 2017.

Relaxation of cooling measures

Back in March 2017, three government bodies (Ministry of Finance, Ministry of National Development and the Monetary Authority of Singapore) released a joint statement on changes to the existing cooling measures. Specifically:

TDSR

Based on feedback received by borrowers, the Total Debt Servicing Ratio (TDSR) has restricted some of them on the flexibility of monetising their properties during their golden years. Thus, the TDSR framework no longer applies to mortgage equity withdrawal loans, as long as the loan-to-value ratio does not exceed 50 percent.

SSD

The Seller’s Stamp Duty (SSD), which was originally introduced to curb speculation on properties, has also been eased, from a four-year period to three years.

ACD

With additional conveyance duties (ACD) being applied to property-holding entities, stamp duties were effectively imposed on owners who transfer equity interest to other parties, going through the same process as though the properties were bought or sold directly.

En bloc frenzy

 At the time of publication, there have already been 16 developments that have undergone collective sales this year, with many others in the pipeline.

The total value of collective sales in 2017 has hit the $6.2 billion mark, and the numbers are expected to keep growing. The once-slumping property market is now said to be on a turnaround, unequivocally with such numbers. En bloc fever is expected to keep up over the next few months, and this will generate more buzz in the residential market.

Rise of PPI

In October, the Urban Redevelopment Authority (URA) released the Q3 2017 real estate statistics, which recorded a 0.7 percent growth in the private residential market.

These results are a depiction of recovery for the private residential market – one that has been a long time coming. Aside from the Property Price Index (PPI), the rental index also witnessed no change – a notable improvement from the constant decline that the market has been so used to seeing since Q3 2013.

Foreign buyers and investors

Purchases made by foreigners in H1 2017 have seen a 48 percent increase year-on-year, with a 32 percent increase by PRs during the same period. Majority of buyers are nationals hailing from China, Malaysia, India, Indonesia and America, with most of these purchases ranging from $500,000 to $1.5 million.

Buyers aside, Chinese property developers have also been especially assertive in acquiring land, be it via government land sales or collective sales. Market watchers are expecting Chinese developers to keep up with such aggression, especially so in Singapore’s market with its current recovery.

Merger of real estate agencies

2017 also saw the merger of several real estate agencies. In a nutshell, one of the main reasons for the mergers would be the need to capitalise on economies of scale. The emerging trend of Proptech (i.e. real estate technology) in the industry is a likely threat posed to estate agencies, thus prompting them to combine forces.

While the agencies each have their own reasons for the mergers, this is also an indication that the market is preparing for changes in technological advances.

Interest rate war

When it comes to mortgages, war has broken out between three banks – DBS, UOB and HSBC. September 2017 saw both UOB and HSBC pit against DBS, vying to offer the lowest three-year fixed-rate mortgage packages at 1.68 percent. This was largely due to the blip in interest rates, together with the foreseeable increase of interest rates by the US Federal Reserve in the near future.

Transactions of private homes are at its highest since 2013; naturally, the increase of residential property sales propels the demand for mortgage loans as well. Thus, this war of interest rates is shaping up to be extremely competitive.

A report by the central bank stated that Q2 2017 reported a 58.9 percent increase in bridging loan limits granted, as well as an increase of $3 billion in limits granted for outstanding home loans.

Moving forward

2017 has been a vibrant year for the real estate scene. With market watchers labelling this as a period of ‘rapid recovery’, this trend is likely to keep up through 2018 as well. At the same time, with so much talk about Proptech, we’re likely to expect bigger changes to the community with this promising trend.

Even as we near the end of 2017, the thrill we have been experiencing the past 12 months now seem to be but a mere prelude of the bustle we’ll be expecting come 2018.

 

Eugene Huang CTA

 

Disclaimer:
The views and opinions expressed in the article are those of the author’s and do not necessarily represent the position taken by PropertyGuru, and its employees. Information provided in this publication is general in nature and does not constitute professional financial advice. PropertyGuru will endeavour to update its publication and website as needed. However, information can change without notice, and we do not guarantee the accuracy of information in the publication or on the website, including information provided by third parties, at any particular time.
Whilst every effort has been made to ensure that the information provided is accurate, individuals must not rely on this information to make a financial or investment decision. Before making any decision, we recommend you consult a financial planner or your bank to take into account your particular financial situation and individual needs. PropertyGuru does not give any warranty as to the accuracy, reliability or completeness of information which is contained in this publication or on its website. Except insofar as any liability under statute cannot be excluded, PropertyGuru and its employees do not accept any liability for any error or omission in this publication or on its website or for any resulting loss or damage suffered by the recipient or any other person.
 
  The PropertyGuru News & Views   This article was first published in the print version PropertyGuru News & Views. Download PDFs of full print issues or read more stories now!
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<![CDATA[Tanjong Pagar: A district to live in]]> https://www.propertyguru.com.sg/property-management-news/2017/11/164479/tanjong-pagar-a-district-to-live-in www.propertyguru.com.sg:news:164479 Thu, 09 Nov 2017 03:19:14 +0800 Tanjong Pagar: A district to live in
Tanjong Pagar: A district to live in

Those who want to live close to the Central Business District (CBD) or within the city need not look further than district two.

Among the imposing developments in Tanjong Pagar and Anson Road that dominate the skyline, there are some true gems to be found in this area.

Waterfront development in the soon-to-be former Tanjong Pagar Container Terminal

On August 2013, Prime Minister (PM) Lee Hsien Loong outlined plans during his speech at the National Day Rally regarding the redevelopment of the Greater Southern Waterfront. This includes the present day Tanjong Pagar Container Terminal.

In a press release following the the PM’s speech, the Urban Redevelopment Authority (URA) revealed that 1,000 hectares (ha) of land is expected to be used for waterfront living purposes.

Under the plan, the City Terminals and Pasir Panjang will be relocated to Tuas. This will free up 325 and 600 ha of waterfront land respectively. The first set of berths at Tuas Port has an operational due date of 10-years, while the City Terminals will be relocated completely by 2027.

The plan to move all the city ports to Tuas has generated a lot of buzz among buyers and sellers in and around district two where the present terminals are located. Many expect a potential spike in property prices, especially since after the announcement of intent to develop a new waterfront living ecosystem that currently is seen only at places like Labrador Park and Harbourfront through developments such as Caribbean by the Bay and Reflections at Keppel Bay.

In a Straits Times article dated August 14 2017, it was reported that the PSA have begun advance preparations by moving all 500 employees from the Tanjong Pagar Terminal to the new Pasir Panjang Terminal. Already, it has dismantled some of its tower cranes to make way for the new Greater Southern Waterfront area. The redevelopment encompassed around 80 ha.

Analysts who spoke to The Straits Times expressed optimism that the government might allow for some land to be released sooner than expected. For this to happen, it is dependent on market conditions and land availability.

Others appear less sanguine. Mr. Desmond Sim of CBRE Research thinks that it might be too early to tell as it is going to be a large project, and since there will be greater price elasticity he does not expect the government to rush in and trigger plans for the waterfront area. Sim added that the state planners would stand to gain if the land is vacated before the lease runs out.

How are prices and rental yield?

In a sample of 10 developments in district two, monthly rental prices on a per dollar sq ft. basis range from SGD3.51 psf for International Plaza along Anson Road to a high of SGD7.15 psf for newer developments like Skysuites also at Anson. The following graph shows the median prices and rental yields for these sampled developments.

Source: URA, PropertyGuru

Source: URA, PropertyGuru

It is interesting to note that International Plaza, due to its age, and perhaps also its’ lesser known status is the most affordable in terms of median prices. Moreover, the rental yield is around 4%, which stands out and close to the 5.0% rental yield seen at Icon, a newer development completed in 2007.

Looking at historical transaction prices at International Plaza

Prices are fairly distributed throughout the past 10 years from as low as SGD405 psf in March 2007 – a year before the Global Financial Crisis (GFC) – to as high as SGD1,316 in November 2013 after the last round of property cooling measures introduced in 2H2013.

Source: URA, PropertyGuru

Source: URA, PropertyGuru

There was a total of 112 units transacted for the past 10-years since mid-January 2007. This year alone, there were three units transacted at close to SGD900 to SGD1,000 psf which is quite a bargain, but comes with a caveat that the development has a 99-year leasehold with about 58 to 60 years left in said lease. As such, there could be some difficulties in obtaining financing with less than the mandatory number of years remaining in the land tenure.

Icon scores the highest transaction volumes

Icon, a 99-year leasehold development close to Keppel Road, Tanjong Pagar and Cantonment Road is considered the most heavily transacted development in terms of volume of units moved (812) in the past 10-years since 2007. This year alone till September 2017, there are 33 units transacted. The transacted prices ranged from SGD1,381 psf to SGD1,841 psf. 

Looking at the price trends for Icon

Looking at the price trends for Icon, prices are shown to have risen initially from around SGD800 to SGD1,000 psf to the current SGD1,600 psf to SGD1,800 psf. The latest pricing has stagnated for some time since 2012.

Source: URA, PropertyGuru

Source: URA, PropertyGuru

Another possible difference in pricing could be attributable to the age of the development. Icon was completed in 2007, whereas Skysuites @ Anson was completed in 2014. There could be a difference in preferences for some investors who may be looking for newer developments.

The third possibility could be price competition.

The sheer volume of transactions at above 800 plus units, along with other developments like the upcoming Wallich Residence at Tanjong Pagar Centre which has yet to officially launch. This, along with developments like Lumiere present the investors with plenty of choices. For new entrants into the property market with no outstanding loan obligations and reasonably good credit history, developments like International Plaza where most units are priced under SGD1,000 psf are potential considerations.

As for those who can afford to pay for higher quality housing, a high rental yield, and a ready tenant pool, there are some merits in choosing Icon, especially since the development is a few steps from Tanjong Pagar MRT station and therefore, the city centre.

Potential tenants, including expatriates or those who have plans to take up short-term leasing arrangements, Icon has some advantages for visitors looking for reasonably priced accommodation on a short-term basis, and still be situated within surrounding attractions like The Singapore Flyer, Orchard Road Shopping Centre, and Marina Bay.

Although the short-term leasing arrangements are still being regulated under existing URA rules, investors continue to have options on the table if the government decides to relax some of the short-term leasing regulations. In these situations, investors have flexibilities in deciding how to maximise the yields and occupancies of their units being leased.

Not forgetting Spottiswoode area

With much of the discussion centred on 99-year leasehold developments around the Tanjong Pagar area, it is sometimes difficult to refocus on the benefits offered in the Spottiswoode estate, located near the old Tanjong Pagar Railway Terminal.       

In the sample of developments shown above, three Spottiswoode developments that may be worth checking out were highlighted. These three developments are Spottiswoode 18, Spottiswoode Residences, and Spottiswoode Suites.

All three are freehold. All three also have high transaction turnover despite their distance from the nearest MRT station. Spottiswoode 18 has 255 sales transactions recorded since 2011, while Spottiswoode Suites has 164 transactions since 2013. This leaves the most heavily transacted development in the area – Spottiswoode Residence – which has 350 units sold, of which seven transactions were recorded as far back as September 2017.

Infrastructure developments around the Spottiswoode area

Investors and residents who prefer to be close to an MRT station while living in the Spottiswoode area need only wait a few more years as construction work to fully connect the existing Circle Line is expected to begin in 2018. According to a Straits Times article dated April 13 2017, advance preparatory works to close off the Circle Line loop have begun with tenders for civil works expected to be awarded by end 2017. Construction therefore should start in the first half of 2018. The entire construction works is expected to be completed by 2025 with three stations; Keppel, Cantonment, and Prince Edward.

Though inconveniences, construction noises, and dust are part of the inevitable short-term issues, residents and investors need to think long-term as there will be benefits to accrue in the future.

How are price trends at Spottiswoode Residence?

Since 2010 when it first launched, prices have ranged from SGD1,327 psf to SGD2,394 psf.

Source: URA, PropertyGuru

Source: URA, PropertyGuru

If these prices are compared to Anson/Tanjong Pagar where most of the 99-year leasehold developments are located, there could be some compelling value especially for newer developments like 76 Shenton which was completed in 2014 and fetched around a median of SGD1,892 psf.

Investors with HDB addresses are turning their sights to Spottiswoode developments

Other than Spottiswoode Residences, which has the highest transaction turnover among the other two freehold developments (Spottiswoode 18 and Spottiswoode Suites), there have also been more investors with HDB addresses vying for units in Spottiswoode 18 (completed 2014). Admittedly, Spottiswoode Suites was only completed this year (2017), and therefore its’ transaction volume is still building up.

According to the six-year data sampled for Spottiswoode 18, there were 125 transactions with HDB addresses recorded to date as of September 2017. This compares to 52 transactions to date since 2013. In contrast, there were 102 transactions with HDB addresses to date since 2010 for Spottiswoode Residence.

As one may notice, Spottiswoode 18, though completed a year later than Spottiswoode Residence, is highly sought after by investors with HDB addresses. There could be some reasons, namely pricing. Spottiswoode 18 is priced at a median of SGD880,500 compared to Spottiswoode Residence (median price of SGD1.59M), and Spottiswoode Suites (median price of SGD1.24M). The absolute price difference is an influencing factor that will affect upgraders’ decision since the land tenure between all three is the same.

Apart from pricing, the median rental yield at Spottiswoode 18 is also slightly higher at 3.4% per annum compared to 3.2% per annum at Spottiswoode Residence. There is no rental yield data recorded for Spottiswoode Suites as it was just completed this year (2017). Although the median rental yields differ by a mere 0.2%, however over the long-term, it’s possible that it will be an edge when investors are doing their planning, especially for those with HDB addresses who prefer to keep their existing flats, and rent out their units to for rental income.

How is value creation seen in developments in district two?

With all these information, and statistics, investors might be wondering if it is still worth considering putting one’s dollars in district two.

As outlined earlier in the beginning of the article on the government’s plans for Tanjong Pagar, the terminals will be moving to Tuas in 2027 to make way for various waterfront lifestyle developments. Construction works to close off the loop connecting the existing Circle Line MRT network are expected to begin next year.

Therefore, investors and residents have some potential sights to look forward to if they choose to invest in properties around the area that could appreciate in the long-run, or to hold onto to the investment with the view that it has all the attributes found in city living, yet not too far from work places and recreation.

 

 

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<![CDATA[DBS launches largest banking API developer platform]]> https://www.propertyguru.com.sg/property-management-news/2017/11/164075/dbs-launches-largest-banking-api-developer-platform www.propertyguru.com.sg:news:164075 Fri, 03 Nov 2017 04:55:17 +0800 DBS launches largest banking API developer platform
DBS launches largest banking API developer platform

DBS Bank has launched the world’s largest banking application programming interface (API) developer platform.

DBS expects the API platform to boost its lead in creating innovative as well as customer-centric experiences by making available a vast array of APIs for other corporates, brands, fintechs and software developers to plug into.

It revealed that there are 155 APIs at launch for Singapore across over 20 categories such as rewards, real-time payments, PayLah! and fund transfers.

“More categories will be added in response to demand,” it said.

More than 50 companies, such as McDonald’s, AIG, PropertyGuru, MSIG, Activpass, Homage, soCash and FoodPanda, have already hopped into the platform.

McDonald’s, for instance, introduced the convenience of PayLah! to its McDelivery customer base, while PropertyGuru allowed its customers to get an instant affordability assessment.

“In Singapore, PropertyGuru helps more than five million people every month to find a home. We constantly deliver on our mission to empower property seekers to make confident property decisions and are very excited to partner with DBS and launch Singapore’s first home loan affordability check,” said Vivek Kumar, Director of Product (Consumer) Technology at PropertyGuru Group.

“Property seekers, while browsing for property options, now have real-time access to their home loan affordability making their search process extremely effective.”

Interested parties can register at www.dbs.com/dbsdevelopers where they will be given tools to connect in a development sandbox.

 

This article was edited by Keshia Faculin.

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<![CDATA[Marina Bay: A district one should watch]]> https://www.propertyguru.com.sg/property-management-news/2017/11/163909/marina-bay-a-district-one-should-watch www.propertyguru.com.sg:news:163909 Wed, 01 Nov 2017 08:29:07 +0800 Marina Bay: A district one should watch
Marina Bay: A district one should watch

Mention district one in Singapore and images of a place busy with officer workers during the days spring to mind. But nighttime, weekends and public holidays, the relentless traffic of the work days slow to a crawl rendering district one into something akin to a ghost town; at least in the imagination of one unfamiliar with the district.

In truth, there are many vibrant and exciting things that happen in downtown Marina Bay area than just business. And there’s more to it than simply being the financial district.

By night, Marine Bay’s skyline is illuminated by light shows courtesy of the super trees at Gardens by The Bay. Festival seasons like the Mooncake Festival, the Chingay Parade, and the Hong Bao Show during Lunar New Year, also imbues the Bay with a jolt of energy.

But for people who’d rather a calming and peaceful time, merely look out from the top floors of any skyscraper or hotel and a vast view of the sea and the Indonesian Riau Islands await on the horizon.

Such things make living in the district tempting. So, comes then the million-dollar question; how much does it cost to live in district one?

As is the first step in all property purchases, the inaugural thing to do is to determine whether the property is for personal or investment purposes. Second, there is a need to identify the costs associated with living near or in the city itself. The price to pay for city living is a stark difference from living in the heartlands.

To ascertain if such a move is possible, here are some of the median resale prices, rentals, and yields in district one, starting with an overview of the median resale prices from a sample of properties located in the area.

Source: URA, PropertyGuru

Source: URA, PropertyGuru

Looking at the sale prices on a per square foot (psf) basis, Emerald Garden appears to be priced lower than most other developments in district one. To understand this better, here is a brief retelling of the history of its’ development.

Emerald Garden development specifications

Located near Club Street where nightlife is constantly active, comes the rare 999-year leasehold development named Emerald Garden. It was completed in 1998 by Lum Chang Holdings Limited. The 11-storey development of 265 units have rooms that range from studios measuring around 721 sqft. to 4-bedroom units as large as 1,990 sqft. There are a few common condominium facilities including gymnasium room, a swimming pool.

The development is located across Cross Street, with accessibility to the Central Business District (CBD), and nearby Chinatown. Its location is convenient for people who already work in the CBD area and would therefore live close by, in the city.

Its long tenure, closeness to the CBD and nightlife makes it a development that isn’t just attractive for locals, but expatriates as well, provided they’re not averse to the loud music during the weekends and the human traffic on Friday nights.

Emerald Garden’s historical price

With the price psf ranging from SGD1,000 to SGD1,900, prices have largely stabilized around SGD1,500 psf to SGD1,600 psf for the past 10-years. Compared to other newer developments like Marina Bay Suites or the soon-to-be completed Marina One Residences, if the age of the property is not a concern, then Emerald Garden is a good consideration.

Source: URA, PropertyGuru

Source: URA, PropertyGuru

In addition, it is also a decent entry point for aspiring buyers who are looking for value-added properties to invest in. And at 999-years, the development is as good as a freehold, and therefore presents some advantage when compared to the 99-year leasehold developments centered around Marina Bay.

However, a potential disadvantage could be its height of only 11-storeys. Its relative shortness may not grant the skyscraper type views as is the wont of many other buildings in Marina Bay. Investors also need to consider other factors like loud music and accessibility, among others whether the property is for their own stay or investment.

How are the listing prices for Emerald Garden?

A check of the asking prices on PropertyGuru showed them starting at SGD1.85M or SGD1,735 psf for a 2-bedroom unit measuring around 1,000 sqft. to SGD2.5M, or close to $1,900 psf for a 3-bedroom unit measuring about 1,300 sqft. Depending on the type of furnishing, units are naturally priced higher with full furnishing included. The median transaction price for the last 10-years works out to SGD1.53M.

For the 2-bedroom unit with an asking price of SGD1.85M or SGD1,735 psf, it is fully furnished and located on the ground floor spanning around 1,066 sqft. Ground floor units could appeal to investors who aren’t bothered with the lack of a view and instead prefer more efficient access to the facilities nearby like the swimming pool and gymnasium.

Monthly rent prices at Emerald Garden

To get an idea on what is a comparable monthly rental price on a psf basis for 2-bedroom types located on the lower floors, there is a fully furnished low floor unit listed with a monthly rental of SGD3.78 psf. The unit is fully furnished as well. The median monthly rental for units in Emerald Garden for the past 10-years is around SGD4.19 psf.

Although the monthly listing rental price of SGD3.78 psf presents some value as it is priced with around a 10% discount from the median monthly rental price, one is advised not to jump in immediately and should instead view the apartment, and enquire about matters like ownership details, history of the unit, and any repairs done so far, among others. The last thing an investor would want is to deal with plumbing or heavy repairs- related issues.

How do Marina Bay area transaction prices fare?

Moving on to the Marina Bay area, one of the first developments built is The Sail @ Marina Bay. The development is priced competitively at a median of SGD1,936. When it was developed and completed in 2008 by City Development Limited (CDL), it was touted as the only residential development fronting Marina Bay that offered residents complete views of the bay area and the sea depending on the type of facing.

At 70 floors with 1,111 units the 99-year leasehold development is ideal for investors seeking quality homes with good views as well as space to entertain friends and relatives; a boon during special events like National Day, New Years’, and Formula One (F1) races.

Source: URA, PropertyGuru

Source: URA, PropertyGuru

During the past 10-years from 2007 till date as of September 2017, transaction prices range from SGD1,146 psf to SGD3,499 psf. The SGD3,499 psf pricing was seen on 29 Sept 2011 when a 56th floor unit with floor area measuring 1,033 sqft. was transacted at the equivalent of SGD3.62M.

The unit was first purchased on March 2007 for SGD2.18M or SGD2,049 psf before the global financial crisis in 2008. The owner of the original sale profited a good return of 70.7% return in the space of three years.

Fast forward to 2017, there were about 38 transactions till date as of September 2017 compared to 30 transactions in 2016. The 2017 transacted prices range between SGD1.579 psf and SGD2,323 psf. The highest transacted in 2017 was traced to an 1,851 sqft., 4-bedroom unit on the 19th floor. The unit was a brand-new apartment that was bought in March 2017 at SGD1,998 psf.

Looking closer at the 2017 transactions data, we also noted one unit on the fourteenth storey in one of the blocks was sold at a loss of close to 13.1%. The 893 sqft. unit located on the 14th storey was sold off recently in late July 2017 for close to SGD1.5M (SGD1,673 psf) compared to what was bought in end July 2012 for SGD1.72M or SGD1,925 psf.

However, when compared to the original transaction back in early August 2007, that same unit was bought for SGD1.43M (SGD1,599 psf), so the gain works out to be approximately 4.6%.

Property rental yields in District One

Investors seeking for investment properties and are considering district one developments, the following chart provides an overview of the historical median price psf, and the rental yields.

Source: URA, PropertyGuru

Source: URA, PropertyGuru(Note: No rental yields available for Marina One Residences as if is still under development)

Looking at the chart above, we note that The Sail @ Marina Bay offers the highest median rental yield at 3.6%. The average monthly median rental at The Sail is about SGD5.77 psf. This is the second highest median monthly rental as compared to Marina Bay Residences’ monthly median rental price of SGD6.02 psf.

Looking at the latest rental listings as of October 18, 2017, there is a 1-bedroom unit listed four weeks ago at a monthly rentof SGD17.27 psf. This is far higher than the historical monthly rental prices, especially for a 1-bedroom unit.  However, there could be some justification for it as the apartment is fully furnished.

How investors and renters can capitalise on their returns in District One

Investors who are looking for developments with stunning views of Marina Bay, along with the accessibility, convenience, stable talent pools, and property rental yields among others, have several options with 99-year leasehold tenures.

Given the comparison choices including price, transaction volumes, and a strong tenant pool, it’s safe to suggest that The Sail @ Marina Bay offers the highest median rental yield of 3.6% when compared to the rest of the properties sampled.

However, sellers do need to take note of the falling inflow of foreigners recently, as this may translate to falling yields in order reflect the existing supply situation.

 

 

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<![CDATA[Tough, but not impossible to retire happy in Singapore]]> https://www.propertyguru.com.sg/property-management-news/2017/10/163532/tough-but-not-impossible-to-retire-happy-in-singapore www.propertyguru.com.sg:news:163532 Thu, 26 Oct 2017 10:02:27 +0800

A 2016 survey found that 82 percent of Singaporeans are worried about growing old.  

Most Singaporeans are worried about growing old and maintaining their standard of living once they stop working. But experts point out that starting early to save for retirement and investing wisely are key to building a nest egg.   

By Romesh Navaratnarajah

Singaporean property consultant Mr Kamal (not his real name) works in Malaysia and shuttles between Kuala Lumpur and Singapore every month to care for his elderly mother who lives alone in a flat in Jurong.

Life is tough for the 41-year-old who feels that the cost of living here is much higher than in Malaysia.

His main concern about growing old in Singapore is financial security, and whether he will still have a roof over his head once he retires.  

“Some elderly people are often left to fend for themselves by selling tissue paper and working as cleaners just to maintain a standard of living,” he told PropertyGuru. 

His concerns mirror those of most Singaporeans, according to the results of a survey carried out last year by NTUC Income and the Lien Foundation. 

The study which polled 998 respondents between the ages of 30 and 75 found that 82 percent of them are concerned about ageing in Singapore.   

Among their top fears is financial preparedness, with respondents citing a fear of “running out of savings” and the inability to afford healthcare and medical expenses. 

Cash is king 

Experts we spoke to agree that it’s very hard to retire comfortably in Singapore due to the high living standards.

“There have been many reports, articles and calculations done that suggest that you would easily need about $1 million in cash, minimally, to be able to retire comfortably and maintain the same lifestyle as compared to when you were still working,” said Eugene Huang, Director at Redbrick Mortgage Advisory.  

“You would also have to put into consideration the medical bills that you may chalk up eventually due to old age.” 

Despite this, he noted that there are several measures put in place by the Central Provident Fund (CPF) Board to help Singaporeans plan for retirement. 

These include being able to withdraw your CPF savings upon turning 55, the Retirement Sum Scheme, and CPF Lifelong Income for the Elderly (CPF LIFE) Scheme. 

Huang explained that the Retirement Sum Scheme allows CPF members to receive a monthly payout until the savings in the Retirement Account balance is depleted, whereas CPF LIFE supplies members with a life-long monthly payout. Started in 2009, all Singapore citizens and permanent residents (PRs) born from 1958 onwards automatically join CPF LIFE. 

No safety net 

While this is helpful in many cases, iCompareLoan chief mortgage consultant Paul Ho reckons there is no safety net for retirees who are not rich. 

He believes that Singaporeans cannot rely solely on the government for help, and should instead start planning for their retirement as soon as possible by setting aside 10 to 20 percent of their monthly income for insurance and savings. 

“Medical insurance is to help you put a ceiling on your medical bills,” said Ho, adding that medical costs have become “so expensive” due in part to the rise of medical tourism and costly medical equipment. 

He also pointed out that public hospitals sometimes have an insufficient number of beds or operating theatres, hence for those who are severely ill, they may have no choice but to go to private hospitals. 

family finances

Younger Singaporeans should start planning for their retirement now, say experts.

Save and invest 

Separately, having a savings plan will allow you to accumulate sufficient cash to buy your first property, Ho said. Any excess cash should be put into medium and long-term investments that generate a higher return. 

His advice for young Singaporeans is to not rely on their day job as their only source of income. “Younger couples must have the energy and drive to think outside the box, innovate and start their own business. Be hungry and passionate. Develop an alternative source of income, either passive income or active income that you can rely on. 

“If your passive income exceeds your expenses, then you can already retire as you are financially free. Hence, young couples must be able to defer their enjoyment, reduce expenses and build an income stream.” 

Huang suggests either relying on properties for retirement or minimising the use of CPF for property purchases. 

The purchase of an investment property would either be for capital appreciation, should you choose to sell the property, or rental yield, which will provide a rental income stream. 

Another option would be to refinance and cash out on your property by borrowing against the value of your property to secure additional cash for your retirement needs, said Huang. 

This was further supported by the government’s announcement in March on the relaxation of the Total Debt Servicing Ratio framework to equity loans with loan-to-value ratios of 50 percent and below. 

“This means that you could have access to an additional lump sum of cash. With this amount, you could put it through other investment methods to grow it,” said Huang. 

Keep your savings in CPF 

He also warned home buyers against unnecessarily using their CPF savings to purchase an HDB flat as problems will arise when they decide to sell the property due to CPF accrued interest. 

“Essentially, whatever amount you take out of your CPF savings would have to be returned with compounded interest. The government introduced the CPF to ensure that all Singapore citizens and PRs would have a sufficient amount for retirement, so whatever that was taken out prior to retirement would have to be refunded into the account,” he noted. 

“Additionally, the interest rate payable on an HDB loan is 2.6 percent, compared to the interest rates offered by the banks, which have been consistently below two percent. Even though this is not part of your cash on hand, it is still your money, and you are losing out on your retirement savings interest, which is a much higher interest rate compared to the savings in your bank account.” 

Grow old with dignity 

Looking ahead, Mr Kamal hopes that the government will put policies in place to ensure that Singaporeans grow old with dignity and “do not have to wipe tables or sell tissue paper”.  

“They have contributed to Singapore’s nation-building and deserve to be looked after via social welfare for the elderly. Cut the bureaucracy by not always having to check if they have an income or show they are really poor to be deserving of help,” he said.  

Ho wants the medical safety net to be enhanced for all Singaporeans so nobody becomes bankrupt due to illness or is denied treatment on the grounds of cost.  

In addition, taxes for the rich could be raised together with the amount of government subsidies handed out to lower income groups, he said.  

One suggestion is for a portion of the Government Land Sales proceeds, which goes into the reserves, to be distributed to low-income senior citizens in the form of food vouchers, cash top-ups or free public transportation. 

Aside from the CPF scheme, Huang noted that the government has come up with other policies to benefit seniors such as the Lease Buyback Scheme, which allows elderly homeowners to sell the tail end of their flat’s 99-year lease back to the HDB, the Pioneer Generation Package and the Senior Citizen Concession Card. 

“By recognising the needs of our ageing population, be it through affordable healthcare, financial security or even elderly employment, it will provide our seniors with the opportunities to stay active and remain healthy, both mentally and physically,” he said. 

4 ways to save money for retirement

 

 
  The PropertyGuru News & Views   This article was first published in the print version PropertyGuru News & Views. Download PDFs of full print issues or read more stories now!
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<![CDATA[Monetising your property at retirement]]> https://www.propertyguru.com.sg/property-management-news/2017/10/163435/monetising-your-property-at-retirement www.propertyguru.com.sg:news:163435 Thu, 26 Oct 2017 10:00:21 +0800 Monetising your property at retirement
Monetising your property at retirement

Owning more than one property is a good way to prepare for retirement as it provides you with a nest egg, more flexibility and a regular passive income.

Properties are an excellent investment vehicle for retirement. Find out how you can create passive income and free up equity from your home.

By Stuart Chng  

For many people, building wealth steadily and preparing for a comfortable retirement are the two most important financial goals in their lives. As a greying nation, this topic has become more commonly discussed in recent years and is set to be an even more important topic in the future.    

 Whether you are living in an HDB flat, condominium or landed property, there are several ways that you can utilise your home equity saved up over the years to provide for a comfortable retirement.  

In this article, we explore what options are available to different segments of homeowners. For an HDB flat owner, there are three ways to unlock equity for retirement needs.  

1. HDB Lease Buyback Scheme (LBS)

Goal 

This scheme helps flat owners to receive a stream of income in their retirement years while continuing to live in their properties.  

How it works   

Owners sell part of their flat’s lease back to the Housing Board in return for proceeds that helps them top up their CPF Retirement Account to purchase a CPF Life Plan, which pays them a monthly income for life.  

Conditions 

This scheme is available to owners of four-room flats or smaller who have met their Minimum Occupation Period (MOP) and are at least 64 years of age with no other properties. At least one of the owners must be a Singaporean and monthly gross household incomes must not exceed $12,000. The minimum tenure remaining must be at least 20 years. (Other terms and conditions apply).

2. Silver Housing Bonus (SHB) Scheme

Goal 

Elderly lower-income households get to unlock equity in their homes to provide them a retirement income by down-sizing.

How it works 

Owners get to enjoy up to $20,000 in cash when they sell their property and utilise part of their sales proceeds to top up their CPF Retirement Account and join a CPF Life Plan that pays them an income for life.  

Conditions  

 Owners must be at least 55 years of age, met the MOP, have a monthly gross household income of less than $12,000, not own any other properties and purchase a flat not larger than three rooms. (Other terms and conditions apply). 

3. Renting out rooms for regular income

Retirees whose children have left the nest can monetise their properties through renting out rooms in their flats. This provides them with a stable and regular income that can provide for a basic quality of life in their later years. A four-room flat owner would usually be able to rent out two bedrooms for an average of $400 each while occupying the master bedroom for themselves. For retirees who have the option to live with their children, renting out their entire flat would usually yield at least $1,600 to $2,000 per month.  

Options for private homeowners 

Private homeowners whose property annual values do not exceed $13,000 get to enjoy the same Silver Housing Bonus benefits if they fulfil the criteria as mentioned above in the second point.   

For owners with higher value private properties, they may choose to unlock equity in their homes through equity loans or private banking facilities.  

Equity loans 

Equity loans are loans that are taken out when a property has appreciated in value or has its loans paid down partially or fully over time. The beauty of such loans is that they are similar in cost to a mortgage loan (at present writing, 1.4 percent), and have tenures extending to 75 years of the borrower’s age or 35 years in maximum tenure. This provides retirees with a low-cost source of funds that can be deployed to defensive retirement investing strategies to yield higher returns. Take note that banks will have credit checks in place before granting you the loan.  

For example, by topping up one’s CPF, one can enjoy up to 3.5 percent risk-free returns from our Ordinary Account and up to 5.0 percent from our Special Account. Retirees above 55 can even enjoy up to 6.0 percent returns. Despite the common gripes we are used to reading about CPF, the truth is few investments are available to the masses that can provide such high returns whether the global economy does well or not.  

Private banking 

Private banks offer numerous ways to monetise properties that allows high-net-worth clients to collateralise their fully paid properties for funds. The options available to such clients vary greatly between straightforward revolving interest loans to complex ones that involve foreign currencies and carry trades. 

For example, investing in a higher yielding foreign currency of 5.0 percent while borrowing at 1.0 percent interest rates and maintaining minimum float. The nett positive carry provides good returns while still allowing clients to utilise most funds for other yield-accretive investments.  

In summary, over my years of advising clients on property matters, a common thread exists. Those who have upgraded their properties during their most active work years or have invested in more than one property have more options available to them during their retirement years.  

Inflation is as certain as death and taxes. The “fortunate” event that has occurred for those who have invested in properties is that the pace of real estate inflation has thus far exceeded the pace of inflation in healthcare, education, food and transportation. This wealth accumulation effect has hence helped many of them hedge against rising costs and provide them greater freedom and flexibility in the later years of their lives. 

 

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Stuart Chng

Co-Founder of Navis Living Group

Senior Associate Executive Director of OrangeTee & Tie

Stuart is a renowned team leader and personality in the real estate industry. 

He is a licensed real estate agent, team leader, industry trainer and speaker, columnist for several property newsletters and blogs and is often quoted in media interviews on 938FM, Channel 8, PropertyReport, PropertyGuru and other publications.

 

Disclaimer:

The views and opinions expressed in the article are those of the author’s and do not necessarily represent the position taken by PropertyGuru, and its employees. Information provided in this publication is general in nature and does not constitute professional financial advice. PropertyGuru will endeavour to update its publication and website as needed. However, information can change without notice, and we do not guarantee the accuracy of information in the publication or on the website, including information provided by third parties, at any particular time.
Whilst every effort has been made to ensure that the information provided is accurate, individuals must not rely on this information to make a financial or investment decision. Before making any decision, we recommend you consult a financial planner or your bank to take into account your particular financial situation and individual needs. PropertyGuru does not give any warranty as to the accuracy, reliability or completeness of information which is contained in this publication or on its website. Except insofar as any liability under statute cannot be excluded, PropertyGuru and its employees do not accept any liability for any error or omission in this publication or on its website or for any resulting loss or damage suffered by the recipient or any other person.

 

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<![CDATA[Planning for retirement]]> https://www.propertyguru.com.sg/property-management-news/2017/10/163511/planning-for-retirement www.propertyguru.com.sg:news:163511 Thu, 26 Oct 2017 10:00:09 +0800

Save now and enjoy life later.

Many Singaporeans aspire to live comfortably after retiring, but to achieve that dream, one should consider the four factors below.

1) Savings plan

In Singapore, part of the contributions that go into a person’s Central Provident Fund (CPF) are meant for retirement savings. However, it is not advisable to entirely depend on it. For example, financial experts advise people to set aside at least 10 percent of their take-home pay. The younger you start saving, the more you’ll have in the future.

2) Other income

After retiring, you will no longer receive an income. Given that your savings could run out while you’re still alive, experts recommend investing in other income streams, such as businesses, bonds, equities, unit trusts and even newly founded companies. But a word of caution: research first before investing your hard-earned cash as each has different yields and risks.

3) Lifestyle needs 

Our daily expenses are ultimately based on our lifestyle. It’s nice to go on week-long vacations to other countries and stay in five-star hotels. But splurge on these frequently and you’ll go broke in no time. No one wants to end up becoming a bankrupt and homeless retiree. So instead of satisfying your wants, focus first on your basic needs such as food, clothing, shelter, utilities and medical bills.

4) Healthcare costs

Under the Retirement and Re-employment Act (RRA), you need to be at least 62-years-old in order to retire. At this age, people are more susceptible to illnesses and serious health issues, hence, it’s imperative that would-be retirees factor in higher healthcare costs when planning their retirement budget. This is important considering that 32 percent of Singaporeans are unsure how much money they need to save for healthcare post-retirement, while 38 percent are worried about their medical expenses after leaving the workforce.

 

 
  The PropertyGuru News & Views   This article was first published in the print version PropertyGuru News & Views. Download PDFs of full print issues or read more stories now!
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<![CDATA[10,000 BTO flats to get smart shower devices]]> https://www.propertyguru.com.sg/property-management-news/2017/10/162301/10000-bto-flats-to-get-smart-shower-devices www.propertyguru.com.sg:news:162301 Tue, 10 Oct 2017 05:00:04 +0800 10,000 BTO flats to get smart shower devices
10,000 BTO flats to get smart shower devices
The smart shower device meant to provide households with real-time feedback on their water consumption. (Photo: Amphiro)
 

About 10,000 Build-to-Order (BTO) flats will be installed with smart shower devices starting in Q1 2018, announced the Public Utilities Board (PUB) on Monday (9 October).

These devices will provide households with real time feedback on their water consumption, enabling them to save water by adjusting their usage and helps in achieving Singapore’s water conservation goals.

“Showering typically comprises 29 percent of a household’s monthly water consumption.

“Our trials for smart shower devices with real-time feedback, amongst the first of its kind in Asia, showed that households can save up to 20 percent of their usage for showers,” said Michael Toh, PUB’s Director of Water Supply (Network).

In fact, an NUS-PUB behaviour study showed that the use of such devices can help conserve around five litres of water per person per day. Overall, this can help families save about three percent in their monthly water bill.

Pursuant to this, PUB has appointed two firms to supply and deliver smart shower devices, namely Amphiro AG as well as Smart and Blue. The former’s devices feature a panel display of real-time water consumption in numbers, while that for Smart and Blue utilises colour codes at the showerhead to indicate different consumption levels, with darker ones signifying greater water usage. Both companies’ devices also enable users to set their own water saving goals and lets them track their consumption history.

 

This article was edited by Keshia Faculin.

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<![CDATA[880,000 HDB households to get U-Save rebate in Oct]]> https://www.propertyguru.com.sg/property-management-news/2017/10/161725/880000-hdb-households-to-get-u-save-rebate-in-oct www.propertyguru.com.sg:news:161725 Tue, 03 Oct 2017 04:04:34 +0800

Eligible families will receive GST Vouchers – Utilities-Save (U-Save) rebate to help HDB households

About 880,000 households living in HDB flats here will get the next instalment of the GST Voucher – Utilities-Save (U-Save) rebate this month, announced the Ministry on Finance on Monday (2 October).

Depending on the flat type, each qualified Singaporean household will receive a rebate of between $55 and $95 in October 2017. Including the rebates to be handed out in January and April 2018, the total annual rebates will reach $220 to $380.

Expected to cost $265 million annually starting from July 2017, the quarterly U-Save rebate helps HDB households offset part of their utility bills, effectively reducing overall household expenses. It is one of the three components under the government’s permanent GST Voucher scheme.  

“Annually, the U-Save rebate has enabled households in one- and two-room HDB flats to receive support equivalent to about three to four months of their utility bills on average. Those living in three- and four-room flats receive support equivalent to about one to two months of their utility bills,” said the ministry.

Meanwhile, households whose members own more than one property are not qualified to receive U-Save rebates.

 

This article was edited by Keshia Faculin.

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<![CDATA[9 things to consider when buying property in Malaysia]]> https://www.propertyguru.com.sg/property-management-news/2017/9/160932/9-things-to-consider-when-buying-property-in-malaysia www.propertyguru.com.sg:news:160932 Thu, 21 Sep 2017 09:00:50 +0800 9 things to consider when buying property in Malaysia
9 things to consider when buying property in Malaysia

You could buy a landed property across the causeway at roughly the same price as an apartment in Singapore.

Given the comparatively high home prices in Singapore, it is understandable that many Singaporeans have, over the years, turned their heads to investing overseas. Nevertheless, buying a property in Singapore can be very overwhelming; let alone buying it in a foreign country like Malaysia. Here are some tips that could help.  

By Justin Koh

Back in 2016, I bought my first property in Danga Bay, Johor Bahru, and it was after the Malaysian government introduced a Goods and Services Tax (GST) of six percent. I viewed five properties before I made up my mind on the current property, which cost me about RM420,000 (S$135,136).

To me, Malaysia is a truly great location to buy property, either for investment or even own stay. While Singapore’s real estate market has high entry barriers for foreign investors, Malaysia’s property market is very open to foreign investments. The Ringgit is also relatively weak in relation to many currencies now.

Whether you are planning to buy property in Malaysia for investment or for your own stay, you can find plenty of good reasons to get started in. As such, I have organised the below information to help foreign investors who are interested in buying a property in Malaysia.

1. Choose a strategic location

Choose popular areas in Malaysia such as Kuala Lumpur, Johor Bahru or Penang. Observe if the population in the area that you want to buy is in on an upward trend. The bigger the population, the better chance of you getting a higher return from your property investment. With a large population, there will be more activities to support the population, including malls, restaurants and supermarkets.

Other than that, choose a location that has convenient access to transportation and communication infrastructure. Plans for the Kuala Lumpur–Singapore High Speed Rail (HSR) are officially underway, and operations are expected to begin by 31 December 2026.

2. How to find a property in Malaysia?

Through an agent. The estate agent fees are charged between two and three percent of the property purchase price. Fees can be paid by the seller, or among the buyer and the seller, depending on the agreement you strike with each individual seller. For first-time buyers, a specialist agent might be recommended to help give advice and feedback within the local market. However, there is a fee to pay for this service, so please make sure you understand what you’ll get for your money, as both the packages and prices are varied.

To avoid frauds and scams, you may want to find a realtor who is registered with The Malaysian Institute of Estate Agents (equivalent to the Council for Estate Agencies in Singapore). Choosing a correct agent who holds this membership should make sure you don’t fall into the trap of any scammers.

There are many sources to find a place to buy in Malaysia such as via online portals. Reliable websites to find real estate to buy such as Property Guru Malaysia, a local search portal that allows you to search properties by regions or even by a particular agent you would want to work with. The “Malaysia My Second Home” (MM2H) retirement visa has a website that includes a list of registered agents who cover the entire country dealing with arriving expats.

3. Buy landed or condominium?

If you are a first-time buyer, you should always think about purchasing a landed property instead of an apartment or condominium. Though the prices for landed properties are usually higher than a high-rise apartment unit, but with the benefit of individual title for each property, it can be available immediately. On the other hand, the strata title for an apartment or a condominium is always delayed and this can jeopardise you in getting financing for your property. Having the individual title prepared when you purchase a landed property can speed up your home loan approval procedure, without waiting.

4. Choose under-development or completed property?

Buying an under-development project means getting a brand-new property when you receive the keys. Developers often give freebies like free stamp duty, free legal fees, rebates and others. A combination of free stamp duty and legal fees basically reduce transaction costs. Coupled with low down payment schemes, the initial upfront costs can be pretty low. It’s one of the cheapest options to purchase a property.

Resale properties are not always old and run-down. In fact, you should be able to find some newly completed properties. The benefit is that you will be able to see the actual unit before you commit to purchasing it that includes the proper layout, quality of furnishing, who are your neighbours, residents of the development, nearby amenities and more. After the transaction is completed, you will be able to rent out the unit and secure income from the property immediately.

 5. Reputable developer

Look out for developers with good track record, who are committed to delivering developments on time and with quality. When looking for a house, especially if it is a new sale and you are a first-time home buyer, the track record and trustworthiness of the developer selling the property is very important. Making a wrong decision to buy a house from a less reputable developer can have horrible consequences.

6. Minimum purchase price

There is a minimum purchase price for foreign buyers who wish to own real estate in Malaysia. In most states, such as Kuala Lumpur, Sarawak, Sabah and Johor, the property must cost at least RM1 million (S$321,800). In Selangor, this figure stands at RM2 million (S$643,600) and likewise for Penang if you are buying property on the island. If you are buying property on mainland Penang, the minimum price is at RM1 million. 

However, the MM2H scheme allows foreigners to live in Malaysia and in certain states to buy property there for lower prices. In Sabah, Kelantan and Malacca, for instance, foreign MM2H participants need to spend a minimum of only RM500,000 (S$160,888) on a property, instead of the minimum other foreigners must spend. The amount in Perak and Sarawak is even lower, at RM350,000 (S$112,622) and RM300,000 (S$96,538) respectively.

7. Choose a property based on your finances

Buying a home is a big decision and is one of the biggest ticket items a person will purchase in a lifetime. Buyers who purchase based on emotions often find themselves in debt after such a huge ticket purchase. Also, usually the case – the buyer would have already paid the non-refundable deposit. To prevent such unwarranted distresses, it’s recommended for buyers to first get an in-principle-approval from the bank before deciding on a property.

As buying a house is a huge financial decision, a buyer must think of all aspects which include the added responsibility and the finances. Find out the monthly repayment you can comfortably afford and target on properties and location to fit your price range.

8. Taking up a loan in Malaysia or Singapore?

MYR financing for Malaysian properties can be obtained from Malaysia-based banks. Interest rates for housing loans in Malaysia are usually quoted as a percentage below the Base Rate (BR). For example, if the current BR rate is 4.0 percent, the interest rate on a ‘BR + 0.5 percent’ loan would be 4.45 percent.

Singapore-based banks currently only offer SGD financing for Malaysian properties. The Singapore lenders charge a margin of between 2.5 and 3.0 percent on top of the 3M SIBOR, which makes the effective rate to range between 3.6 and 4.1 percent, assuming 3M SIBOR is at 1.1 percent.

Singapore-based banks lending in SGD typically finance between 70 to 80 percent of the property, while Malaysia-based banks grant up to 85 percent financing for foreigners and up to 90 percent for locals, making the initial down payment more affordable at 10 percent of the property price.

Depending on where you are based, it can make sense to finance the property either in SGD or MYR. Suppose you are based in Singapore, it may be more convenient to take up a loan in SGD, as you would be able to pay for the monthly instalments without having to make a telegraphic transfer.

On the other hand, if you are based in Malaysia, you might prefer to borrow in MYR instead. This is especially so if the subject property is an investment property, and the rental income will be in the same currency as the monthly instalments on the loan. That said, however, when taking up a loan from a Malaysia lender, you would be required to open a deposit account and maintain it monthly.

Aside from country of residence, another possible consideration could be the currency exchange rate between both countries. Given today’s circumstances, if an investor believes that MYR will continue to weaken against the SGD, it will likely be cheaper for them in the long run as the same amount of SGD would convert to a higher amount of MYR. Hence, it might also make more sense to borrow in MYR.

9. Engage an independent mortgage advisor

Find a good mortgage advisor who works with all the banks and compare all banking property loan products, to ensure you get the best housing loan offers available. Before applying for a home loan, ensure you have a clean financial record to prevent hiccups. Clear any outstanding debt with credit cards, personal loans and consolidate your debt. In Malaysia, you can also check your credit report at the Central Credit Reference Information System (CCRIS) and in Singapore, you can buy your report online.

Take all things into consideration

When it comes to buying a home, you may hear that everyone shares a different story with you. Seek professional advice from experts, such as trustworthy and dependable property agents and other property owners. Do not make your home-buying decisions based on market rumours and unproven trends without first doing your own study.

Research is extremely important when buying a property. When we talk about buying a property, the first cost that comes to mind is always the initial down payment. Aside from the down payment, there are other entry costs such as legal fees, stamp duty, valuation fees and the real estate agent’s fee which are equally important, but usually overlooked. 

As Iskandar Johor, one of Malaysia’s hotspots for foreign property investors, moves into its 11th year of an aspiring 20-year plan, anxieties over an excess supply of homes and the sustainability of the area remain. However, the region continues to appeal to investors, home seekers and students from Singapore. There are several high-profile residential projects that will be completed in 2018 (or earlier), including Country Garden’s Danga Bay and R&F’s Princess Cove.

Other than those who buy solely for the sake of investing, Malaysia is definitely a destination worth considering to settle down during one’s golden years. After all, it ranks sixth on The World’s Top 10 Retirement Havens – a retirement index produced by International Living.

With all these factors in mind, investors should be able to make a well-informed decision. However, that’s not to say that it would be the end-all solution; the property market is constantly subjected to fluctuations. It is crucial for investors to keep a close eye on the current market conditions, and continue to make the necessary adjustments to ensure the most gains on their investments.

Justin Koh profile

Disclaimer:
The views and opinions expressed in the article are those of the author’s and do not necessarily represent the position taken by PropertyGuru, and its employees. Information provided in this publication is general in nature and does not constitute professional financial advice. PropertyGuru will endeavour to update its publication and website as needed. However, information can change without notice, and we do not guarantee the accuracy of information in the publication or on the website, including information provided by third parties, at any particular time.
Whilst every effort has been made to ensure that the information provided is accurate, individuals must not rely on this information to make a financial or investment decision. Before making any decision, we recommend you consult a financial planner or your bank to take into account your particular financial situation and individual needs. PropertyGuru does not give any warranty as to the accuracy, reliability or completeness of information which is contained in this publication or on its website. Except insofar as any liability under statute cannot be excluded, PropertyGuru and its employees do not accept any liability for any error or omission in this publication or on its website or for any resulting loss or damage suffered by the recipient or any other person.

 

 
  The PropertyGuru News & Views   This article was first published in the print version PropertyGuru News & Views. Download PDFs of full print issues or read more stories now!
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<![CDATA[More Singapore banks offering 3-year fixed-rate mortgages]]> https://www.propertyguru.com.sg/property-management-news/2017/9/160198/more-singapore-banks-offering-3-year-fixed-rate-mortgages www.propertyguru.com.sg:news:160198 Mon, 11 Sep 2017 03:16:15 +0800 More Singapore banks offering 3-year fixed-rate mortgages
More Singapore banks offering 3-year fixed-rate mortgages

Four banks are now offering this type of mortgage following the recent drop in interest rates.

In a bid to take advantage of Singapore’s recovering property market, four lenders here are now offering three-year fixed-rate home loans, reported the Business Times.

Last week, HSBC and United Overseas Bank (UOB) started offering this type of mortgage following the recent drop in interest rates.

SEE ALSO: Booming property market to benefit Singapore’s 3 major banks

In fact, the three-month Singapore interbank offered rate (SIBOR), which is a benchmark used for pricing mortgages here, has declined from a year high of 1.13717 percent in July to 1.12283 percent at present.

As a result, HSBC and UOB have entered a market segment that has been occupied by DBS Bank and Bank of China (BOC). The two new players and DBS Bank each offer three-year housing loans with a fixed interest rate of 1.68 percent per annum, while that from BOC comes with a rate of 1.48 percent, 1.58 percent and 1.68 percent for the first, second and third year respectively.

On the other hand, OCBC Bank has not yet joined the fray, but it is offering a two-year housing loan with a fixed rate of 2.38 percent per annum.

“When it comes to fixed rates, most lenders will have a two-year fixed-rate package, but in recent years, only less than a handful would dangle a low fixed-rate term of three years due to the higher costs involved in hedging interest rates for a longer period with an improving global outlook,” said MortgageWise.sg executive director Darren Goh.

“For homeowners, with more lenders joining the fray to offer competitive fixed rates, it keeps the incumbents in check which leads to more choices and lower interest for everyone.”

However, he believes that the latest fixed-rate mortgage war could end if the US Federal Reserve decides to reduce its US$4.5 trillion bonds in a scheduled meeting this month.

“We think that is when the market will start to see some real upward pressure on the dollar and 10-year yields, with interest rates going north within three to six months of such bond sale actions.”

“Homeowners should make use of this window of opportunity now to lock down fixed rates especially for the longer fixed term,” Goh noted.

 

Romesh Navaratnarajah, Senior Editor at PropertyGuru, edited this story. To contact him about this or other stories, email romesh@propertyguru.com.sg

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<![CDATA[Singapore’s economic growth to remain at 2.5%, survey]]> https://www.propertyguru.com.sg/property-management-news/2017/9/160069/singapores-economic-growth-to-remain-at-2-5-survey www.propertyguru.com.sg:news:160069 Thu, 07 Sep 2017 04:13:56 +0800

Analysts expect the Singapore economy to grow by 2.5 percent this year, unchanged from their previous forecast, according to a Monetary Authority of Singapore (MAS) survey.

For Q3 2017, gross domestic product (GDP) is expected to increase by 3.1 percent.

The quarterly survey of economists showed that the Singapore economy expanded by 2.9 percent in Q2 2017, up from the median forecast of 2.7 percent in the June survey.

The 21 respondents expect the manufacturing sector to post the highest growth rate this year at 6.6 percent, an improvement from the five percent growth forecasted previously.

However, they have slashed their growth forecast for the construction sector, which is predicted to contract by 4.2 percent, compared to the 0.2 percent growth expected previously.

Inflation is predicted to stand at 0.8 percent this year, down from the 0.9 percent forecasted previously. Core inflation, on the other hand, is predicted to stand at 1.6 percent, a slight increase from the 1.5 percent forecasted in June.

“As for the labour market, the respondents expect the unemployment rate to be 2.2 percent at year-end, lower than the previous survey,” said the report.

“For 2018, the respondents’ median expectation is for GDP growth to reach 2.5 percent.” Inflation is projected to stand at 1.4 percent and core inflation at 1.6 percent.

Meanwhile, 47 percent of the respondents cited “geopolitical uncertainty such as the North Korean stand-off” as a possible threat to the economy.

“A similar number view global trade protectionism as a potential hindrance to growth. A possible slowdown in Chinese economic activity was also a concern, for 41 percent of respondents,” revealed the survey.

 

 

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<![CDATA[Problems solved by FinTech]]> https://www.propertyguru.com.sg/property-management-news/2017/8/159062/problems-solved-by-fintech www.propertyguru.com.sg:news:159062 Thu, 24 Aug 2017 07:00:55 +0800

More businesses are going cashless, especially in China where merchants now accept WeChat payment.

Technological innovation and automation continues to change the way we work, live and play. FinTech is one example of how technology is helping to solve problems in the finance sector.

By Paul Ho

What is FinTech? To qualify as a FinTech company, you must be able to satisfy the following requirements of the financial industry: –

• Quicker
• More accurate
• Safer (using cryptography or other security systems)
• Cheaper (lesser administrative chores)
• Provide greater convenience (such as mobility)
• More transparency
• Consolidate and aggregate across
many different platforms

China leads the world as a FinTech hub. Many Chinese nationals do not carry cash anymore, and even insurance can be bought on your mobile phone.

Problems faced by the financial sector

The Monetary Authority of Singapore (MAS) has identified 100 problem statements arising from these main areas: –

Know your customer (KYC) / Identity authentication
• Authenticating digital documents, authentication methods, etc. RegTech
• Addressing compliance and regulatory technology for compliance management Trade finance
• Addressing the lack of awareness of trade and credit products, multilaterally verified contracts, and difficulty in digital supply chain finance

Crowdfunding companies with credit scoring and underwriting analysis abilities such as Moolahsense, CoAssets, Ricco Capital (provisional license), Invoice Interchange and many more will fill this gap in trade financing.

Insurance
• Problems relating to insurance claims processing to dynamic pricing of insurance products to contracts and underwriting

Financial literacy

Financial inclusion / SMEs
• Problems relating to inclusion of unbanked customers and SMEs through lowering cost of micro services, credit and underwriting, mobile payment, etc.

Customer engagement
• Financial data analysis
• Financial analysis for home buyers
• Aggregated plus customised loyalty rewards
• Aggregated news for investment, financial statements, personal finance, savings platform
• Mobile banking for the visually impaired
• Customer data analytics tool
• Mobile tax refund
• Innovative digital banking

Payment
• Problems relating to enabling seamless payment, computing capability to devices within financial services for better financial decision making, digital cheques, API gateway for connectivity to different payment platforms, efficient settlement, cashless, payment for low-value transaction, seamless season parking fee payments, enhanced mobile wallet, automated payment engine, cross-platform payments

Portfolio management
• This pertains to the funds management industry with problems from FX accuracy, NAV accuracy, investment advice, neutral platforms, smart portfolio construction, etc.

Capital markets
• Problems centre around efficient payment settlement, transaction and trade settlement, etc.

General
• Problems relating to tailored and automated training, automated operational performance reports (dashboards), compliance testing, automated translation, automated reports formatting, layered data encryption (for cybersecurity), unique transaction identification recognised for OTC and online and safe data sharing

What do consumers dealing with innovative FinTech companies do?

CardUp

It allows users to use credit cards to make payment on rent, Management Corporation Strata Title (MCST) fees and bigger ticket regular payments in return to earn airmiles. They tie up with credit cards to offer benefits to consumers. They are not really disruptive, but nonetheless solve some needs identified in MAS’ top 100 problem statements in the customer engagement space on aggregating consumer’s spending. Potentially this company also has ambitions in the eWallet space to address needs for online payments.

There are many such start-ups and they aim to capture a big slice of the big-ticket items “payment” transaction flow and in doing so, capture a percentage of the payment flowing through.

GrabPay

Grab started as a ride hailing application, taking a cut from matching drivers with consumers. Of late, Grab has indicated that their focus is on payment. Hence GrabPay will become a player in the FinTech payment space. With their reach, they will probably use GrabPay to automate and aggregate all personal spending and perhaps to generate reporting solving certain aspects of financial literacy problem statements.

iCompareLoan.com

iCompareLoan.com is Singapore’s leading mortgage broker and a loan comparison finance portal. It provides tools for consumers to find out more about themselves (financial literacy), such as Total Debt Servicing Ratio (TDSR) analysis, mortgage insurance premium estimate, retirement planning premium estimate, car affordability analysis, equity-term-loan estimate, etc. This site provides “financial analysis for home buyers” under customer engagement, to help customers to make informed decisions.

iCompareLoan automates the application process for consumers, fulfilling the “KYC / Identity authentication” space.

Singapore’s first and only cloud-based home loan report platform automates mortgage planning analysis. This helps property agents to service their property buyers professionally and close deals faster and do listings presentation. It also helps financial advisors to provide mortgage planning and to improve efficiency by generating automated home loan reports.

What does the future hold for FinTech?

Companies should continue to incrementally automate problems around workflows or system flow.

FinTech (blockchain) can complement or disrupt banks to become the creator of credit, the aggregator and distributor of capital.

Blockchain can become the technology behind e-wallets without the need for expensive accounting and back-end operations. It can bring about peer-to-peer lending with social network verification for a low default rate, bypassing the banks.

Paul Ho is the founder of www.iCompareLoan.com

Disclaimer:
The views and opinions expressed in the article are those of the author’s and do not necessarily represent the position taken by PropertyGuru, and its employees. Information provided in this publication is general in nature and does not constitute professional financial advice. PropertyGuru will endeavour to update its publication and website as needed. However, information can change without notice, and we do not guarantee the accuracy of information in the publication or on the website, including information provided by third parties, at any particular time.
Whilst every effort has been made to ensure that the information provided is accurate, individuals must not rely on this information to make a financial or investment decision. Before making any decision, we recommend you consult a financial planner or your bank to take into account your particular financial situation and individual needs. PropertyGuru does not give any warranty as to the accuracy, reliability or completeness of information which is contained in this publication or on its website. Except insofar as any liability under statute cannot be excluded, PropertyGuru and its employees do not accept any liability for any error or omission in this publication or on its website or for any resulting loss or damage suffered by the recipient or any other person.

 

 

The PropertyGuru News & Views This article was first published in the print version PropertyGuru News & Views. Download PDFs of full print issues or read more stories now!
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<![CDATA[Booming property market to benefit Singapore’s 3 major banks]]> https://www.propertyguru.com.sg/property-management-news/2017/7/157095/booming-property-market-to-benefit-singapores-3-major-banks www.propertyguru.com.sg:news:157095 Thu, 27 Jul 2017 02:14:43 +0800

 

After fighting stresses from the struggling oil and gas sector last year, Singapore’s three largest banks – United Overseas Bank (UOB), Oversea-Chinese Banking Corp (OCBC) and DBS Group Holdings – are expected to gain from the booming property market, reported CNBC.

This comes as the increased buying activity in the city-state boosted demand for housing loans, which account for 15 to 20 percent of the said banks’ total loans, based on the estimates of Jeremy Teong, analyst at Phillip Securities Research.

In fact, data from Credit Bureau Singapore showed that mortgage loan applications increased by 20 percent quarter-on-quarter in Q1 2017 as private housing transaction grew to a near four-year high in Q1 2017.

“Given the significant weight of [the housing loans] segment, the Singapore banks will benefit from a stronger Singapore mortgage system loans growth,” said Teong.

However, the tight competition in the lending space could limit the margins of banks from the robust domestic property sector, noted Maybank Kim Eng analyst Ng Li Hiang.

“There is usually a two to three month lag between mortgage applications and mortgage disbursements … We envisage an improvement in housing loan growth in the next few quarters,” said Ng. “(But) banks are prepared to tighten pricing to attract new borrowers, potentially limiting the upside to earnings.”

And while banks may have difficulty matching the “remarkably strong” performance registered in the first quarter, which was buoyed by gains in trading and wealth management income, the relatively low comparison base from last year may help all three banks to post net profit growth in Q2 2017, said analysts.

 

This article was edited by Denise Djong.

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<![CDATA[A wish list for National Day]]> https://www.propertyguru.com.sg/property-management-news/2017/7/156667/a-wish-list-for-national-day www.propertyguru.com.sg:news:156667 Fri, 21 Jul 2017 00:30:24 +0800

More clarity is needed on whether we own our HDB flats.

This year Singapore turns 52. As the Prime Minister’s annual National Day Rally approaches, we take this time to reflect, not just what we can do for our country, but what our country can do for us.

By Eugene Huang

When it comes to real estate in Singapore, we are influenced by laws, regulations and policies that the government has put in place. While this has paved the way towards a fair, sustainable and efficient marketplace, there are still certain concerns or enhancements we wish the government would consider:

What happens when the 99-year lease runs short?

Colloquially coined as the “99- year time bomb”, those of us staying in a HDB flat would probably have wondered what would happen at the end of the lease tagged to our homes.

Many argue that flat owners do not actually “own” the flats. Instead, we are all tenants of our HDB flats, which means that we would have to return our flats to the Housing Board at the end of the 99-year lease. In other words, a HDB flat is of no value by the time it hits the end of its lease.

While we have witnessed flats in older estates being selected for the Selective En-bloc Redevelopment Scheme (SERS), National Development Minister Lawrence Wong mentioned earlier this year that not all old HDB flats will undergo SERS.

To date, there has not been any record of any HDB development that has reached the end of its time. So far, the government has always stepped in and used SERS to help rehouse residents as well as provide compensation.

The statement by the Minister has left many feeling uncertain over the fate of their homes. Hopefully, the government will be able to shed light on this and give more clarity as to what will happen when the 99-year lease of HDB flats run short.

Coping with declining rents, rising interest rates

Mortgages became very cheap because of the Global Financial Crisis in 2008, as the US dropped interest rates drastically to help stimulate its economy. This in turn influenced the Singapore Interbank Offered Rate (SIBOR) to decline in a similar manner, making mortgages very affordable.

The tide has since turned and the US Federal Reserve is now seeking to head off rising inflation with a series of interest rate hikes. This has become a growing concern with homeowners and property investors alike, as mortgage interest rates are predicted to double over the next couple of years.

With overhanging supply and weak rental demand, property investors must brace themselves for mortgage payments much higher than what their tenants will pay in rent. We cross our fingers and pray these investors have sufficient liquidity to hold out for a sustained period of negative cash flow.

Pitfalls of foreign property investments

For those of us who have considered purchasing properties for investment in other parts of the world, we would have come across certain projects that offer attractive deals or innovative financing schemes.

From down payments that come in amounts as little as hundreds (even your non-contract iPhone costs more than that!) to financing schemes that guarantee immediate cashback or other dubious incentives, it’s surprising that while Singaporeans are well-educated, we fall prey to such deceptive schemes.

Perhaps it’s the dream of retiring in a luxury property, away from the hustle and bustle that we fail to be realistic. Instead, we find ourselves looking through rose-coloured glasses and before we know it, we’ve fallen victim to yet another scam project.

The government has tried to step in and help. For example, the Council for Estate Agencies released a guide on consumer tips and what to look out for when buying foreign properties. Despite the cautionary tale, many buyers are still unable to tell the good from the bad.

This lack of discernment is concerning; we may be a trusting bunch, but the onus is on us as buyers to do our due diligence before making a purchase. It is up to us to ensure the deal does not go south, or wind up in payment schemes that lead to financial commitments much heavier than what we signed up for.

There is a growing number of investors who need to know how to safeguard themselves from such pitfalls. We hope the government will educate unsuspecting investors and put measures in place to prevent Singaporeans’ hard-earned money from being swindled.

Decoupling should be better leveraged

Many couples (or even multiple property owners) have taken alternative routes to purchase a second or subsequent property without the need to cough up funds to foot the Additional Buyer’s Stamp Duty (ABSD).

Decoupling is the act of freeing one owner from a property to allow him / her to purchase another property, without incurring the ABSD. Of course, this is not without certain limitations. For one, decoupling is not allowed between married couples staying in a HDB flat. You can, however, decouple if the transfer of ownership is between parents and children, or ex-spouses.

There is more flexibility for decoupling when it comes to private properties. Even so, you would be subjected to the costs of decoupling. Just the Buyer’s Stamp Duty and Seller’s Stamp Duty alone can easily set you back tens of thousands. Aside from that, legal fees are doubled as both buyer and seller would each have to engage lawyers to handle the transfer of shares from one to another.

Ultimately, decoupling is not the end-all solution as it does not necessarily guarantee savings. There are times where the costs associated with decoupling may be more than bearing the cost of the ABSD, so it is essential to do our calculations before executing the transaction.

It’d be good to relook the property cooling measures and regulations, and perhaps come up with methods that are less of an inconvenience for buyers.

Whether certain regulations will be lifted or revised, for now, it’s still uncertain. But we are optimistic that these concerns will be addressed.

Disclaimer:
The views and opinions expressed in the article are those of the author’s and do not necessarily represent the position taken by PropertyGuru, and its employees. Information provided in this publication is general in nature and does not constitute professional financial advice. PropertyGuru will endeavour to update its publication and website as needed. However, information can change without notice, and we do not guarantee the accuracy of information in the publication or on the website, including information provided by third parties, at any particular time.
Whilst every effort has been made to ensure that the information provided is accurate, individuals must not rely on this information to make a financial or investment decision. Before making any decision, we recommend you consult a financial planner or your bank to take into account your particular financial situation and individual needs. PropertyGuru does not give any warranty as to the accuracy, reliability or completeness of information which is contained in this publication or on its website. Except insofar as any liability under statute cannot be excluded, PropertyGuru and its employees do not accept any liability for any error or omission in this publication or on its website or for any resulting loss or damage suffered by the recipient or any other person.

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  The PropertyGuru News & Views   This article was first published in the print version PropertyGuru News & Views. Download PDFs of full print issues or read more stories now!
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<![CDATA[The rise of Bukit Batok]]> https://www.propertyguru.com.sg/property-management-news/2017/7/156445/the-rise-of-bukit-batok www.propertyguru.com.sg:news:156445 Thu, 20 Jul 2017 09:11:52 +0800

Bukit Batok gaining prominence in Jurong district

Situated close to the Jurong Regional Centre with the Pan Island Expressway (PIE) separating Jurong and the north region, Bukit Batok is known for many of its attractions including the former quarry hill called ‘Little Guilin’ and shopping centre, West Mall.

The Housing and Development Board (HDB) announced in May that for the upcoming August Built-To-Order (BTO) sales launch, there are about 1,410 new flats with units ranging from 2-bedroom Flexi to 5-bedrooms.

The detailed area where the flats are located are shown below:

Bukit Batok map

Source: HDB

From the chart above, the flats are shown to be close to the Bukit Batok MRT station and West Mall. The flats are also close to several amenities including Bukit Batok Community Club and Bukit Batok Polyclinic.

Demographics of Bukit Batok

According to HDB’s annual 2015/2016 report, the total land area of Bukit Batok is 785 ha, of which 291 ha is allocated to residential use. The total population in Bukit Batok as of 31 March 2016 numbered approximately 111,100.

The number of occupied units under management as of 31 March 2016 totals 32,498, along with an additional projected number of occupied units expected to increase the supply to 53,000 units.

Details of URA’s 2014 Masterplan

In the 2014 Urban Redevelopment Authority (URA) Masterplan, it was revealed that the government has plans to develop the estate with new and improved amenities & facilities. For example, a new community club is slated to open along Hillview Avenue.

The Hillview area is now being turned into a vibrant town with a new mixed development called The Hillier and HillV2 to serve the needs of the residents and tap into their spending power. The Hillier offers a wide range on dining, and entertainment needs.

The Masterplan also outlined plans for an aged care home set up by Rec Ci Nursing Home which has been in service since it opened in 2015.

Bukit Batok is located close to work places

One of the unique aspects of Bukit Batok is the town’s closeness to major industrial and commercial developments. The estate is the nearest to nearby Jurong East Central, International Business Park, and retail malls.

The government also made plans toward turning Jurong East into the next commercial hub. This plan is expected to generate additional employment opportunities for many residents living around Jurong East, including Bukit Batok.

Another major aspect of concern is catering to the needs of the small and medium-sized businesses (SMEs), particularly in the light industrial usage, manufacturing, export and import businesses. Due to the nature of some operations like in light manufacturing, the high costs of operations require facilities that conform to tight budgets and still function normally.

The government has recognised their needs and allocated certain tracts of industrial land for common industries where economies of scale can be aligned. An example would be designated industrial areas for car workshop/repairs and another for automation works.

Aside from industrial developments, URA launched a mixed-use commercial and residential site at Bukit Batok West Avenue 6 in 2016. At the end of the tender, a total of 11 property developers were vying for the 158,194 sq ft. site with a gross plot ratio of 3.0.

Qingjian Realty, a Chinese developer eventually won the top bid of S$301.2 million.

The site has a maximum permissible gross floor area of about 474,591 sq ft. with a potential to yield more than 400 residential units. The maximum gross floor area (GFA) set aside for commercial use is 64,583 sq ft.

According to an article by Today Online, Mr. Nicholas Mak, Executive Director and Head of Research & Consultancy at SLP International Realty opined that developers were attracted to the site as it was one of the only mixed-use commercial-cum-residential site in the Government Land Sales (GLS) programme for the first half of 2016.

Mak also added, “This is a greenfield suburban site and the developers are basically buying into the future master plan for this section of the west region.” Mak also noted that there are several HDB housing projects that are in development near the actual site. He thinks that once the mall is ready for business, the HDB flats should be completed. This could provide the added convenience of a shopping centre for future residents.

Based on these new developments, there could be more upcoming public and private housing projects planned for Bukit Batok. Moreover, with 291 ha of the 785 ha made available for residential land use, the government could be considering long term projections as it forms its drawing boards for the town’s overall development.

Average monthly prices of HDB flats in Bukit Batok

The monthly prices of three-room flats have hovered around SGD300,000 to SGD350,000 since March 2012, and they have trended down from the peak of SGD400,000 to SGD300,000 in June 2016.

During the final round of the property cooling measures in 2H2013, where the mortgage servicing ratio (MSR) of 30% of total income of a borrower was introduced, prices of three-room HDB flats in Bukit Batok continued to hover around SGD350,000 to SGD400,000.

Source: HDB

Source: HDB

Since 2012, monthly prices have swung from SGD600,000 to the current price of around SGD450,000. The price fluctuations could be volatile due to government policies, resale transaction volume effects, individual household preferences for larger units than 4-bedroom flats, and the overall market conditions that impact flat buying behaviour.

Source: HDB

Source: HDB

As prices alone have fallen substantially from SGD600,000 to SGD450,000, this might be enough to suggest that prices have largely adjusted to market conditions and could move up if there are expectations for new developments in the area.

Stable prices in the HDB 5-room market in Bukit Batok

Looking at the chart below, monthly prices are shown to have stablised around SGD600,000 to SGD700,000.

Bukit Batok resale

Source: HDB

It is possible that the cohort of potential resale buyers could be HDB upgraders who might choose to eschew private or condominium developments, and instead upgrade to a bigger flat to continue reaping the benefits from the various utility rebates offered by the government.

As for possible explanations as to why prices of 5-bedroom flats remained stable in Bukit Batok, it could be that the flat owners or buyers in this category might feel comfortable with the surrounding amenities, including the proximity to nearby MRT, bus interchange, or West Mall. It could also be as simple as not wanting to move out of their childhood neighbourhood.

No discernible trends in Executive Maisonette flat prices

Looking at the historical prices of the executive maisonette flat prices in Bukit Batok, it is difficult to exactly pinpoint a certain trend due to the scarcity of resale transactions for such flat types. Again, it is entirely possible that the lack of transaction volumes might cause prices to fluctuate without being affected by any significant trends.

Bukit Batok resale data

Source: HDB

However, the short supply of executive maisonette flats in Bukit Batok, and the rest of the island, might empower these flat types (and their owners) to command some price premiums in the long run. This will also include Bukit Batok especially with many development plans, and proximity to the Jurong East Central where the centre of business activities are located.

Bukit Batok is poised to be an up and coming town

Taking stock of the many development plans and the upcoming BTO exercise in August in the town, the place is expected to attract young families who favour living close to parks like Little Guilin, while continuing to enjoy the various amenities offered with Bukit Batok or Jurong East nearby.

Flat prices are still relatively affordable if one were to look at the 3 & 4-bedroom types. It is expected to be a long-term investment for the future for families who believe in the Jurong and Bukit Batok stories.

If you’re a first-time homebuyer preparing to purchase a BTO, find all the information you’ll need at our Ultimate BTO Guide.

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<![CDATA[Sengkang: An investment for the future]]> https://www.propertyguru.com.sg/property-management-news/2017/7/156413/sengkang-an-investment-for-the-future www.propertyguru.com.sg:news:156413 Wed, 19 Jul 2017 02:23:19 +0800 Sengkang: An investment for the future
Sengkang: An investment for the future

A vibrant HDB town in the North-East

In the north-east corner of Singapore lies Sengkang. Now a vibrant town, it is filled with HDB flats that have sprouted up alongside the two corners on the Tampines Expressway (TPE). Based on the latest 2015/2016 Annual Report by the Housing and Development Board’s (HDB), Sengkang is home to about 201,800 residents as of 31 March 2016.

The whole estate occupies a total land size of 1,055 ha, of which 397 ha is devoted to residential usage. Currently, there is an estimated 63,047 dwelling units in Sengkang, with a projected addition of around 20,000 units to reach the target of 92,000 units.

Average prices of HDB flats in Sengkang

 According to HDB’s annual report, a breakdown of the average price range for various flat types in Sengkang are as follows:

Source: HDB Annual Report 2015/2016 (AHG means Additional Housing Grants; SHG means Special Housing Grants)

Source: HDB Annual Report 2015/2016 (AHG means Additional Housing Grants; SHG means Special Housing Grants)

Based on the average selling price range of the flat types, the net amount of a typical 2-bedroom flat and above, after grants is about 3% to 95%. The volume of sales and rental transactions are as follows:

Source: HDB Annual Report 2015/2016

Source: HDB Annual Report 2015/2016

The most popular flat type sold in Sengkang are the 4 & 5-bedroom HDB units, while the most common rental flat type is the 2-bedroom. It is likely that space and functionality are important criteria for each household when ultimately deciding on a certain flat type.

For example; in the general sales/purchase market, a household looking to purchase a 4 or 5-bedroom HDB flat will have requirements based on family size (possibly including parents in the equation), costs, and potential resale price appreciation in the future, after the minimum five years Minimum Occupation Period (MOP) is over.

For the HDB rental market in Sengkang, one of the possible explanations for the relatively high take-up rate for the 2-bedroom units could be singles who typically aim for the smaller units due to practicality and budget constraints. Alternatively, they could be renting a modest apartment while waiting for their new flats to be completed within the same neighbourhood.

Upcoming Built-To-Order flats in August

In the upcoming Built-To-Order (BTO) exercise in August, the government plans to launch 2,440 units comprising of 2-bedroom Flexi to 5-bedrooms. The site for the flats is as follows:

Source: HDB

Source: HDB

This site is expected to be modelled after a waterfront living lifestyle as it is situated along the Serangoon Reservoir. However, part of the site also runs parallel to the busy interchange junction connecting the Kallang Paya Lebar Expressway (KPE) and the Tampines Expressway (TPE). That may be great for convenience but noise and air pollution will inevitably be a concern, especially for households on the lower floors. 

Conceivably, some applicants who prefer quietness and fresher air might be impeded by this factor, especially if they fail at the chance to pick a reservoir facing unit (which will undoubtedly be the more popular option), or a unit that is high enough so as to mitigate the consequences of facing a busy road. 

Moreover, the site is located quite a distance from the main Sengkang Town Centre (not shown on the map), and the nearest Light Rapid Transit (LRT) station is Bakau LRT station, or Rumbia LRT station (not shown on the map). Potential applicants who want accessibility may need to consider this factor more closely.

Development plans in the pipeline

In July 2016, Prime Minister Lee Hsien Loong unveiled development plans for Sengkang West that includes an integrated community facility due by 2020, and a hospital; the Sengkang General & Community Hospital to be opened in the second half of 2018.

Also, to ease the child care concerns of many young parents living in the town, the government erected a childcare centre at Fernvale Link which saw completion in 2016.

The government has also built two additional covered walkways from Anchorvale Street to Anchorvale Link and along Sengkang West Avenue starting from Seletar Mall, which was ready last year.

As part of the Urban Redevelopment Authority (URA) Master Plan 2014, the Sengkang West area will be integrated with various green corridors. There will also be various LRT stations nearby.

Additional land sites for public housing have been allocated in the vicinity including land surrounding projects like Compassvale Boardwalk, and Compassvale Mast.

Monthly resale prices since 2012

From the 3-bedroom flat prices represented on the graph below, the average prices have turned out more or less stable at around SGD380,000 to SGD400,000, with the July 2016 median prices dropping close to the SGD320,000 range.

Source: HDB

Source: HDB

The 3-bedroom prices in general has fallen substantially if current prices are compared to those in 2012 and 2013. It is possible that with the introduction of more supply for the larger room sizes in the town, prices for the 3-bedroom flats could see some stabilising.

Source: HDB

Source: HDB

Monthly resale prices for 4-bedroom flats in Sengkang range from SGD500,000 to close to SGD600,000 with the peak being around SGD650,000. There were around 2,433 transactions from March 2012 to July 2016 compared to the 104 transactions for 3-bedroom flats in Sengkang during that same period.

Presumably, one of the factors for the rise in prices, aside from a bigger flat, could be the impact of upgraders and transaction volumes. With many 3-bedroom flat owners crossing the MOP period, they may wish to upgrade to a larger unit within the same town, thus creating the demand for that flat type.

Notably, prices for 4-bedroom flats did not exhibit much significant decline on the long-term trend basis, although since 2016 prices have moved lower to around the SGD450,000 to SGD500,000 range.

Source: HDB

Source: HDB

For 5-bedroom flats, the monthly resale prices have crossed the SGD500,000 mark. However, in comparison with the 4-bedroom transaction volumes, there were about 1,790 transactions from March 2012 to July 2016.

The lesser transactions for the 5-bedroom HDB resale market could partly be attributed to supply/demand factors, and the household’s decisions where upgrading is concerned. For example, they could choose between a condominium, an executive condominium or a HDB flat.

Price resiliency could also work to the advantage of a 5-bedroom household as they may want to market their properties based on the flat’s interior design (ID) features, along with the potential flat price appreciation due to supply dynamics working in favour of the 5-bedroom owner.

Executive maisonette resale prices

The resale prices of HDB executive maisonette units have been lowered down close to the resale price of a standard 5-bedroom flat in Sengkang. Choosing an executive maisonette is made increasingly irrelevant to potential flat owners as some may opt for an executive condominium or a condominium simply by topping up some extra cash to enjoy the private facilities available in both markets.

Source: HDB

Source: HDB

Another possible reason could be the narrowing of price differences, and the practicality of choosing a larger unit as compared to a 5-bedroom which can easily accommodate multi-generation families living comfortably under the same roof.

However, prices alone can’t be the main decisive factor for upgraders choosing between a 5-bedroom or an executive maisonette. There could be additional reasons impacting buyer behaviour.

Sengkang is expected to thrive going forward

With plenty of planned developments in store for Sengkang Town, both residents and potential residents would be glad to know that it is no longer just another isolated north-east town, but a town being built for people who prefer to live near nature, have easy connectivity, and be a place to raise their kids.

On that final note, there are two good schools called Nan Chiau Primary School and Nan Chiau High School situated in Anchorvale Link. These two are one of the few schools that have produced many talented artists and individuals.

This factor might reassure parents that Sengkang offers both quality living, and education opportunities for their children and is therefore a sound investment to make for the future.

 

If you’re a first-time homebuyer preparing to purchase a BTO, find all the information you’ll need at our Ultimate BTO Guide.

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<![CDATA[Housing loans account for 31% of domestic banking unit]]> https://www.propertyguru.com.sg/property-management-news/2017/7/156370/housing-loans-account-for-31-of-domestic-banking-unit www.propertyguru.com.sg:news:156370 Tue, 18 Jul 2017 02:51:47 +0800

 

The easing of some of the property cooling measures in March has resulted to renewed interest in the residential market, which witnessed higher take-up rates at launches and more active secondary market, reported Singapore Business Review citing Maybank.

Land tender bids also exceeded expectations, said Maybank analyst Ng Li Hiang.

“These are positive for bank lending to the housing and building and construction (B&C) sectors,” noted Ng.

In fact, the banking system’s domestic banking unit (DBU) housing loans accounted for 31 percent of advances at S$194 billion as at end 17 May.

Notably, housing and B&C loans constitute between 40 and 50 percent of the total loans of Singapore’s three giant banks, with housing loans accounting for between 21 and 27 percent as at the first quarter of 2017.

“In our assessment, housing loans remain an important lending segment for the three banks. Banks are prepared to tighten pricing to attract new borrowers, potentially limiting the upside to earnings.”

And in the event of sustained property transactions, Ng expects an upside to the current system loan growth assumption of six to seven percent.

 

This article was edited by Denise Djong.

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<![CDATA[Singapore economy to grow 2.7% this year]]> https://www.propertyguru.com.sg/property-management-news/2017/6/155035/singapore-economy-to-grow-2-7-this-year www.propertyguru.com.sg:news:155035 Fri, 23 Jun 2017 02:51:55 +0800

 

Driven by the ongoing recovery in global trade and the resilient domestic demand, the Singapore economy is expected to expand by 2.7 percent this year – surpassing last year’s two percent growth and trumping the private sector economist’s 2.5 percent estimate for this year, revealed a new report. 

“We are confident that an improved external environment will help sustain Singapore’s growth – despite the drag from domestic factors,” said Mark Billington, South-east Asia director of the Institute of Chartered Accountants in England and Wales, which commissioned the report.

The institute, however, noted that growth will be uneven across different sectors, with those depending on a stronger global economy, such as financial services, having a brighter outlook, reported The Straits Times.

“A modest recovery in business investment may soon be under way, as business loans rose to 8.1 per cent year-on-year in the first quarter, the strongest growth in loans since 2014,” revealed the report produced by Oxford Economics.

Sectors heavily dependent on domestic factors, on the other hand, will need more time to be on track considering concerns on unemployment, subdued household spending growth and the softer property market.

“I am cautiously optimistic about the outlook. There are still some key risks such as protectionism, an unexpected slowdown in China’s growth or export demand, which will have a knock on impact on the factory supply chain that exists across Asia,” said Oxford Economics lead economist Priyanka Kishore.

Nonetheless, Kishore expects the long-term prospects of the ASEAN-Five – comprising Singapore, Indonesia, Malaysia, Thailand and the Philippines – to remain bright.

 

This article was edited by Denise Djong.

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<![CDATA[Financing property in Geylang]]> https://www.propertyguru.com.sg/property-management-news/2017/6/154953/financing-property-in-geylang www.propertyguru.com.sg:news:154953 Fri, 23 Jun 2017 00:30:01 +0800

Historical homes in the Geylang area.

In the past, most banks would refuse to lend money to buyers of Geylang properties due to its shady image. But in recent years, efforts to transform the area from vice to nice have seen lenders loosen restrictions.

By Paul Ho

What comes to your mind when you hear the word Geylang?

For many people, it’s the various durian stalls and great food options, but others point to its seedy reputation, especially at night.

Despite this, there was a run up in property prices and rents in Geylang between 2006 and 2013, as a large inflow of expatriates saw it as an alternative residential location near the Central Business District. Distance-wise, Geylang is just 2.5km from shops and offices at Bugis Junction, and it is also near Suntec City and Marina Square. At the same time, the area is fast becoming a second Chinatown where new citizens and permanent residents from China congregate. In recent years, new residential and commercial projects have sprung up in Geylang to meet this demand.

Changing face of a red-light district

Previously, there were legal brothels operating from even number lorongs (“streets” in Malay) 4 to 40, and there were also numerous KTV pubs. Much of the vice activities would spill over onto the odd number lorongs, with some prostitutes renting rooms in nearby budget hotels to ply their trade. A significant number of these hotels were completed from the year 2000 onwards, offering hourly rates. This meant that hotels could reap high yields for each room. This led to many low-rise shops and homes being torn down to make way for hotels.

Small residential and commercial lots were subsequently amalgamated and developed into hotels. Larger projects such as condominiums could take up 10 to 30 lots.

The biggest condominium in the area right now is The Waterina along Lorong 40, which comprises 398 units and is a freehold project. It was completed in 2005.

There’s also the 142-unit freehold Atrium Residences along Lorong 28, which was completed three years later.

This contributed to many brothels moving out from Lorong 28 onwards. They are now mainly concentrated along lorongs 6 to 20, with very few brothels operating beyond Lorong 24.

Bank financing in Geylang

Unsurprisingly, most banks used to shy away from offering loans to buyers of Geylang properties, especially the even number lorongs. There were exceptions like The Waterina. Even so, the choice of banks was limited to just two players – Hong Leong Finance (HLF) and Singapura Finance.

After the 2010 to 2011 period, more banks began to offer loans for properties from lorongs 30 to 40, but anywhere below Lorong 30 was still a challenge.

At present, both OCBC Bank and Maybank do provide financing for properties from Lorong 30 onwards. For HLF and Singapura Finance, it continues to be across all the even number lorongs, subject to the customer’s profile.

OCBC and Maybank may offer financing for properties in Lorong 26 and 28, but subjected to the project type and customer profile.

Some lenders even impose a loading fee of 0.25 percent on top of their usual lending rates for even number lorongs.

Getting a maximum loan of 80 percent is possible for owner occupied properties from Lorong 30 onwards, subject to the Total Debt Servicing Ratio (TDSR) rules and credit profile of borrowers.

More homes being built

Over the years, many private properties have come on-stream at lorongs 24, 26 and 28. In fact, the entire area now has a more residential feel. As such, there are one or two banks financing properties in lorongs 26 and 28, subject to it being owner occupied and the loan-to-value (LTV) limit being around 70 percent. If your credit profile is strong, you may be eligible for an 80 percent loan.

In our private conversations with banks, there’s one lender other than HLF and Singapura Finance that may be able to finance properties from lorongs 6 to 24, with the LTV limit capped at around 50 to 60 percent for clients with good credit profiles. However, those who opt for a 70 to 80 percent loan usually stick with HLF or Singapura Finance.

Meanwhile, some banks still view Geylang as a risk and impose LTV restrictions as well as a cap on the maximum loan quota for the area.

You will sometimes hear comments such as: “Normally we can finance this project, but we have no more quota this month”. This is an example of a cap in the quota to limit their risk. Certain banks also require approval from higher level management for Geylang properties.

These restrictions also apply to odd number streets that are near lorongs 6 to 24, but to a lesser extent.

While we are seeing a positive change in the overall character of Geylang, there is some concern that it may lose its unique charm and become too sterile.

Paul Ho is the founder of www.iCompareLoan.com

Disclaimer:
The views and opinions expressed in the article are those of the author’s and do not necessarily represent the position taken by PropertyGuru, and its employees. Information provided in this publication is general in nature and does not constitute professional financial advice. PropertyGuru will endeavour to update its publication and website as needed. However, information can change without notice, and we do not guarantee the accuracy of information in the publication or on the website, including information provided by third parties, at any particular time.
Whilst every effort has been made to ensure that the information provided is accurate, individuals must not rely on this information to make a financial or investment decision. Before making any decision, we recommend you consult a financial planner or your bank to take into account your particular financial situation and individual needs. PropertyGuru does not give any warranty as to the accuracy, reliability or completeness of information which is contained in this publication or on its website. Except insofar as any liability under statute cannot be excluded, PropertyGuru and its employees do not accept any liability for any error or omission in this publication or on its website or for any resulting loss or damage suffered by the recipient or any other person.

 

 
  The PropertyGuru News & Views   This article was first published in the print version PropertyGuru News & Views. Download PDFs of full print issues or read more stories now!
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<![CDATA[Geylang’s lights burn more than red]]> https://www.propertyguru.com.sg/property-management-news/2017/6/154420/geylangs-lights-burn-more-than-red www.propertyguru.com.sg:news:154420 Wed, 14 Jun 2017 06:01:06 +0800 Geylang’s lights burn more than red
Geylang’s lights burn more than red

Image: Christopher Chitty

The mention of Geylang during any casual conversation will often trigger some sort of sarcastic response among locals and residents in Singapore. Geylang with its infamous red-light district is hardly taken seriously as anything other than a den of vice to be shunned by members of polite society. Even prolific condominium developers shy away from mentioning Geylang as being an option for amenities despite the location being extremely convenient.

But despite its weary image, Geylang is often known for its contemporary conservation shop houses, and has a rich history Singaporeans just cannot afford to lose. And not to mention, there are various food joints and hawker centres literally at every corner and along every road in the area which makes Geylang one of, if not the most, dense district of eateries on the island.

In fact, Geylang is more well-preserved relic than it is red-light but the only way for people’s opinion of it to change is for the district to shed its current image; and that is something that is currently in the works.

The Housing and Development Board (HDB) recently announced an upcoming built-to-order (BTO) sales launch for May 2017 at two plots close to Dakota MRT station along Old Airport Road.

One of the plots will house 310 units of 2-room ‘Flexi’ type and 3-room type flats. The other plot beside the Mountbatten Community Centre will house 950 units of 2-room ‘Flexi’, 3-room and 4-room type flats. In total, HDB is expected to offer 1,260 new flat units in the area for sale in May.

Fig 1.

Dakota Breeze and Pine Vista

Source: Housing and Development Board (HDB) (A close-up view of the flats offered in Geylang HDB town in May 2017)

Details of the latest flat offerings in Geylang

The two HDB developments, ‘Dakota Breeze’, and ‘Pine Vista’ have their own unique features. According to the site plan for Dakota Breeze, it will have five, 18-storey residential blocks with 954 units of 2-room Flexi, 3 & 4-room flats. Some 4-room flats in Dakota Breeze includes a balcony in the living room.

The second development, Pine Vista, counts two, 18-storey residential blocks. There will be a choice of 319 units of 2-room Flexi, and 3-room flats.

Both developments, Dakota Breeze and Pine Vista are expected to be completed by Q2 2021 and Q4 2020 respectively.

Dakota Breeze and Pine Vista

Source: HDB (Clockwise from top left: Dakota Breeze, Dakota Breeze and surroundings, Pine Vista and surroundings, Pine Vista

Amenities near both HDB developments

The two HDB developments are conveniently located near schools like Broadrick Secondary, Kong Hwa, Dunman High, and Cheung Cheng High (Main). The Old Airport Road Hawker Centre, and wet market next door is also close to both developments. Another MRT station, Mountbatten, is situated across the wet market.

Their location affords both developments quick and easy access via car or public transportation to the city centre. Buses like 16, though long, will pass by City Hall, Dhoby Gaut and Orchard. In the opposite direction, it goes to Joo Chiat, Katong, Marine Parade and ends up in Bedok Interchange.

The various recreational facilities nearby include the Geylang Park Connector, Sports Hub, Kallang Practice Track, Kallang Theatre, and the Singapore Indoor Stadium. The Kallang Wave Mall, and Leisure Park Kallang mall is a short walk from Stadium MRT station, which is one stop from Mountbatten MRT and two stops from Dakota MRT.

Both malls offer varieties of dining outlets, supermarket, gyms, a rock climbing wall (Kallang Wave Mall) and a movie theatre at Leisure Park Kallang mall.

Pricing

The latest pricing details for both built-to-order (BTO) developments in the Dakota neighbourhood was published along with the sales launch announced on May 18, 2017. Based on the median prices of 3-room and 4-room HDB resale transactions, from Q2 2007 to Q4 2017 prices were at $287,000 and $457,000 respectively for the entire Geylang HDB town.

Geylang price graph

Source: HDB, PropertyGuru

The latest BTO pricing for both the 3-room and 4-room flat types in Dakota appear to be marked at a premium.

It is possible that pricing for the BTO flats could have been influenced by market transactions in the Dakota area, a price markup by the government, and the various amenities located within walking distance, including Dakota MRT station. Also, the latest BTO pricing were absent the various subsidies offered by the government.

Source: HDB

Source: HDB

Geylang 2

Source: HDB

If the various government subsidies were included and matched with the mortgage servicing ratio of 30% for second-timers and above, the net price in the form of a housing loan for a 3-room and a 4-room flat in Dakota are around $302,000 and $429,800 respectively.

Price comparisons with flats in Dakota area

Based on comparable HDB resale prices near the Dakota area, prices are generally lower, and is a contrast from the previous section, where the comparisons in pricing were between the new BTO flats in Dakota and the entire Geylang HDB town.

Price comparisons with flats in Dakota area

Source: Source: HDB, PropertyGuru (Note: No comparable 2-room HDB prices are available)

Based on comparable HDB resale prices near the Dakota area, prices are generally lower, and is a contrast from the previous section, where the comparisons in pricing were between the new BTO flats in Dakota and the entire Geylang HDB town.

Additionally, the lower pricing does represent some extra advantages for a potential home owner, given its proximity to the city centre and MRT stations.

Moreover, if a successful applicant were to move in and live in the neighbourhood for the mandated five-year Minimum Occupation Period (MOP), there will be opportunities for price appreciation.

 Application Rates for the new Dakota HDB flats

As expected, the application rates for the 3-room flat units and above received an overwhelming response, particularly for the second-time applicants seeking a 4-room unit at the Geylang Dakota Breeze development. The application rate recorded for second-timers for this 4-room type unit is 25 times at the close of the sales launch on May 24.

Application Rates for the new Dakota HDB flats

Source: Source: HDB, PropertyGuru (Application rates as of May 24, 2017)

It is possible that one of the reasons for the relatively high application rate for this development is due to its proximity to Dakota MRT station, whereas the Geylang Pine Vista development is located closer to Guillemard Road, and therefore, a distance from both the Dakota and Mountbatten MRT stations as shown in the map (Fig 1.)  above.

Development plans for Geylang under the 2014 URA Master Plan

Under the current 2014 Urban Redevelopment Authority (URA) Master Plan for the Geylang HDB town, the government has plans to transform Paya Lebar Central into a Sub-Regional Centre, with the present Paya Lebar Square.

Paya Lebar Central

Source: URA Master Plan 2014 (Urban Redevelopment Authority)

The area around the Paya Lebar MRT station will house the upcoming Workforce Singapore (WSG) Continuing Education and Training (CET) Campus East and the new civic centre of Wisma Geylang Serai (WGS).

Wisma Geylang Serai

Source: URA Master Plan 2014 (Urban Redevelopment Authority)

The present Paya Lebar Square and the industrial estates of Eunos, Ubi, Kaki Bukit, MacPherson, and Tai Seng, among others are currently serving the employment needs of many residents around the HDB towns of Bedok, Geylang, Marine Parade, Kallang/Whampoa and other HDB towns outside of the Central Region.

Moreover, with the Paya Lebar Central occupying one of the largest land spaces at 12 ha, this translates to approximately 53,819,55 sq ft. of commercial floor space which could ideally serve as a retail and commercial hub for residents nearby.

A vibrant HDB town still in demand

Although this article was opened with the affidavit of Geylang as a red-light district, the latest news that show an overwhelming response from flat applicants for the 3-room and above units in the Dakota area, has disproved many misperceptions of living in Geylang.

Geylang is indeed a vibrant town, and will be more so particularly when the government initiates plans to develop the Paya Lebar Regional Centre, and to move the Paya Lebar Airbase to Changi in the years to come.

The amenities and attributes have bolstered the profile of Geylang, and the town is gradually shrugging off its heavy association with vice in all its forms.

If you’re a first-time homebuyer preparing to purchase a BTO, find all the information you’ll need at our Ultimate BTO Guide.

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<![CDATA[Bidadari: A former cemetery given new life]]> https://www.propertyguru.com.sg/property-management-news/2017/6/154357/bidadari-a-former-cemetery-given-new-life www.propertyguru.com.sg:news:154357 Tue, 13 Jun 2017 04:21:47 +0800

Image: HDB

Bidadari, once known for its cemetery grounds is in the process of being transformed into a new HDB town. It is expected to be fully completed by the end of this decade around 2019 or 2020.

Since the first batch of 2,139 built-to-order (BTO) flats were launched in November 2015, the response was well received with over 259 applicants vying for 151 five-room HDB flats, and 399 applications for the 1,229 four-room flats on the first day of the sales launch in that year.

Since the launch for the first batch of HDB flats in Bidadari, the subsequent sales launch in November 2016 has also attracted many potential buyers, including those who missed out on the first launch held in the previous year.

Bidadari’s enigma

As many would say, the value of a home depends on its location. Bidadari, by being in a central location within the larger Toa Payoh HDB town, is situated close to the city centre.

It is also close to the Potong Pasir and Woodleigh MRT stations on the North-East line (NEL).

Good schools like St. Andrews Secondary and Maris Stella High School are nearby as well. Other education institutions include Stamford American International School, and James Cook University.

The locational attributes, along with the government’s push toward a car-lite society will benefit many future residents of the town. According to the 2014 Urban Redevelopment Authority (URA) Masterplan, the Bidadari estate will be designed with a garden-like setting where a 10-ha Bidadari Park will be built in the estate to promote green, community spaces. There are also plans to convert part of Upper Aljunied Road (from Upper Serangoon Road to Vernon Park) into a heritage walk for pedestrians.

As for development of amenities near Bidadari, the government plans to make Bidadari estate into a cycling and pedestrian-friendly town. The estate will also be equipped with a new commercial development next to Woodleigh MRT station, a bus interchange, a neighborhood police centre and other community facilities located nearby. The estate will also have various places of worship, health, and medical facilities located within reach of each other to cater to the residents’ needs.

Overwhelming response for Bidadari flats during third BTO launch in May 2017

As of 8am on the final day of the HDB Built-to-Order (BTO) launch exercise on May 24 2017, out of the 143 three-room flats offered, there were 138 applicants with the application rate from the first-timers and second-timers standing at 0.5 times and 9.9 times respectively. Overall, the application rate for 3-room flats in the Bidadari Woodleigh Hillside development is 1.0 times.

For the 4-room flats, out of the 680 units offered, there were 1,808 applications received, with the application rate for first-timers and second-timers at 2.3 times, and 8.7 times respectively. Overall, the application rate for 4-room flats is 2.7 times.

Finally, for the 5-room, and 3 Gen flats, out of the 374 units, including 48 Three-Gen flats offered, there were 1,662 applications received. The application rate for first-timers and second timers is 3.1 times, and 31.5 times respectively. Overall, the application rate for 5-room and 3rd Generation flats in Bidadari’s Woodleigh Hillside is 4.4 times.

A table showing the application rates, and number of flat units offered at Bidadari Woodleigh Hillside HDB development is as follows:

Source: HDB (As of May 24, 2017, 8:00 am)

Source: HDB (As of May 24, 2017, 8:00 am)

Pricing for Bidadari Woodleigh Hillside HDB development

Moving on to the pricing information shown above and the median price of resale flats calculated from Q2 2007 till Q4 2017 for the whole Toa Payoh HDB town, except for 3-room flat prices, the new BTO flats in Bidadari are competitively priced.

Source: Housing and Development Board (HDB)

Source: HDB

Moving on to the pricing information shown above and the median price of resale flats calculated from Q2 2007 till Q4 2017 for the whole Toa Payoh HDB town, except for 3-room flat prices, the new BTO flats in Bidadari are competitively priced.

The median resale prices calculated for the entire Toa Payoh HDB town from Q2 2007 till Q4 2017 for the 3-room, 4-room, and 5-room HDB flats are $310,000, $509,000 and $682,500 respectively. Also, during the same period, the price for 3-room HDB flats in Toa Payoh have been steadily declining, while for the 4-room HDB flats, the overall trend is heading upwards.

Source: URA, PropertyGuru

Source: URA, PropertyGuru

Source: URA, PropertyGuru

Source: URA, PropertyGuru

How affordable are prices for flats for homes in Bidadari Woodleigh Hillside HDB development?

Based on the two illustrations shown below, a potential home buyer going for a 3-room or 4-room HDB flat could expect to fork out between $315 to $455 in cash after deducting all the various housing grants, and additional CPF savings, among others.

Source: HDB

Source: HDB

Source: HDB

Source: HDB

Based on the two illustrations, a potential home buyer going for a 3-room or 4-room HDB flat could expect to fork out between $315 to $455 in cash after deducting all the various housing grants, and additional CPF savings, among others.

The above illustrations assume the median monthly household income levels for a 3-room and a 4-room flat to be between $4,500 and $6,500 respectively.

For example, with a housing loan amount of $297,500 and accounting for the mortgage servicing ratio (MSR) of 30% for second-time HDB home buyers and above, a typical buyer for a 3-room flat in Bidadari could face a monthly instalment payment of $1,350 for a 30-year mortgage loan.

Out of the $1,350 in monthly instalments, and after deducting from the CPF Ordinary Account (OA) on a monthly basis, the home buyer could see himself paying $315 in cash.

Price comparisons around Bidadari estate

Based on the table below, most of the 3-room, and 4-room flat prices at the Bidadari Woodleigh Hillside development are competitive. However, prices for the 5-room flats offered at the same development is higher on the lower end of the range at $579,000 as compared to the resale prices at the lower end of the price range for flats around the Bidadari area at $508,000.

Source: URA, PropertyGuru

Source: URA, PropertyGuru

As for the upper price range of a typical 5-room flat in Bidadari Woodleigh Hillside development, there appears to be a slightly over $120,000 price difference between the top end of the price range at $681,000 and the top end of the resale price range for another comparable 5-room flat unit in the area at $800,000.

The $120,000 price difference could be due to the comparisons made among 5-room flats located in the Bishan area where the Bidadari HDB town is located nearby. As of Q4 2016, based on data provided by PropertyGuru and HDB, the median price for a 5-room flat works out to around $778,500.

What is next for Bidadari HDB Town

With the overwhelming response shown in the last two HDB launches in the Bidadari area, along with the latest application figures obtained for the May 2017 BTO sales launch exercise, it is highly likely that the new town will continue to attract interest among many home buyers.

The convenience of being close to two MRT stations – Potong Pasir and Woodleigh – along with the amenities nearby, is rare at most times.

Moreover, the town is expected to be one of the few test beds to showcase the government’s efforts in transforming HDB estates into car-lite towns. This is expected to be well received by many potential home buyers looking to establish firmly themselves in the new environment.

If you’re a first-time homebuyer preparing to purchase a BTO, find all the information you’ll need at our Ultimate BTO Guide.

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<![CDATA[Understanding Woodlands through its home prices]]> https://www.propertyguru.com.sg/property-management-news/2017/5/153468/understanding-woodlands-through-its-home-prices www.propertyguru.com.sg:news:153468 Tue, 30 May 2017 07:30:18 +0800

Once a sleepy town situated at the northern tip of the island, Woodlands has become synonymous with a laid-back lifestyle, food, and vast open spaces. The northern HDB (Housing Development Board) town has light industrial zones located nearby with many employment opportunities. The town continues to attract young families who desire to live close to their parents, while providing them with the chance to reconnect with their childhood days.

Moreover, Woodlands continued to attract one of the largest residents among the 26 HDB towns with a population of 242,600 as of end March 2016, per the latest HDB Annual Report 2015/2016.

Lately, the government has unveiled plans for Woodlands Town as part of the ‘Remaking Our Heartland’ (ROH) programme. Under this inaugural programme, HDB outlined plans for Woodlands where it will be transformed into a “star destination of the north”. The plans include six ‘star attractions’ to be rolled out completely across the 1,198 ha neighbourhood, along with a projected 98,000 HDB units to be built over the course of the next few years.

Among the six star attractions identified, these names include “Discovery Playground”, “Woodvista Gallery”, “Woodlands Regional Centre, “Social Corridor”, “Community Nexus”, and “Wellness Haven”. One of the main star attractions is the Woodlands Regional Centre, which includes Woodlands Central and Woodlands North Coast. The Woodlands Central area is the focus of the town as the bus interchange, and connectivity to the existing North-South Line (NSL) and the Thomson East-Coast Line (TEL) – scheduled to be fully completed by 2024 – are located within walking distances.

The other MRT line known as the Rapid Transit System (RTS) Link is slated to be completed soon and will connect Woodlands to nearby Johor Bahru, Malaysia. Construction for the rail system is currently underway, but the complete details are still being worked out on the mode of connection to Johor Bahru. Some of the ideas being discussed include building a bridge across where the trains will run, or an underground system.

The main mall in the area, Causeway Point enjoys high foot traffic, and is the main gathering area where families and friends meet, shop, eat, and play in the mall. So far, its mall owner, Frasers Centrepoint Trust (FCT), reported higher Net Property Income (NPI) of SGD16.8 million during its latest 2QFY2017 ending March 31, 2017. The comparable quarter last year saw NPI of SGD16.1 million.

The mall occupancy is 99.3% as of end March 2017, and has been quite steady at close to full occupancy since last year. Causeway Point currently has around 42 leases totaling 66,198 sq ft. in Net Lettable Area (NLA) expiring as of end March 2017. This is a 16% of leased area of the mall, and close to 20% of total gross rent of the mall.

HDB price trends in Woodlands

Based on the analysis of ten years of data of HDB resale price data for registered applications in the Woodlands area, executive condominium flats have been one of the resilient ones in terms of prices since most have maintained a price range of SGD580,000 to SGD600,000 in recent years.

Woodlands executive flat prices

Source: PropertyGuru, HDB

Although there has been a drop from SGD650,000 to SGD660,000 in Q2 2013 before the property cooling measures were implemented, prices of many executive type flats have largely stayed close to the SGD590,000 to SGD600,000.

However, the price resiliency cannot be said for the rest of the flat types which showed declining trends across the board.

Woodlands 3-bedroom prices

Source: PropertyGuru, HDB

Looking at the 3-bedroom HDB prices, we noted that they hit the peak about SGD330,000 to SGD332,000 before pulling back to a low of SGD268,000. The median price is about SGD273,000.

A check with the asking prices shown on Propertyguru.com as of May 10, 2017 indicated that there were around 136 listings, with many sellers who were pricing their units from SGD235,000 with the highest being priced at $370,000 for a 3-room HDB flat in the area.

Additionally, for this particular unit, it is in the Marsiling area and near the Woodlands Checkpoint Terminal with views of the Johor Bahru town across the Straits of Singapore.

The unit is also on the high floor level, and is situated close to amenities such as a Hawker Centre located about 550m. The nearest secondary school is Si Ling Secondary School which is located around 360m away.

Price trends of other flat types in Woodlands

Looking at the median prices of other flat types including the 4-bedroom, and 5-bedroom flats, a similar falling resale price trend is shown.

Woodlands 4-bedroom prices

Source: PropertyGuru, HDB

Woodlands 5-bedroom prices

Source: PropertyGuru, HDB

The median prices for 4-bedroom and 5-bedroom flat types over the past ten years or so from Q2 2007 to Q4 2016 are SGD358,000 and SGD425,000 respectively. We noted that there a periods of price stability for the 5-bedroom HDB flat types when prices hovered around SGD420,000 to SGD430,000 for a period of nine quarters from Q4 2014 to Q4 2016.

5-bedroom and executive flat prices continue to show resiliency

Using the published HDB data of flat prices in Woodlands, there could be some form of price resiliency among the 5-bedroom and executive flat types in Woodlands. Through Propertyguru.com’s data, prices for 5-bedroom prices did dip over the past 12 months, but when the data is extrapolated over the past 10 years, there appears to be some stability.

5-room flat price trend Woodlands

Source: PropertyGuru, URA, HDB

Whereas, the executive flat types show that transacted prices have been rising over the past one year and ten years respectively, and this could be a case of a potential limited supply that might cause prices of executive flat types rising over time.

Looking at the one-year price trend for executive flat types, prices have generally rise from SGD320 psf to SGD330 psf, or about 3.1%, and there could be a chance that it might hit the SGD335 to SGD340 psf levels in the next few months given the latest HDB renewal plan has begun, and HDB home buyers and sellers are positioning themselves to take advantage of the market opportunities.

Per HDB Annual Report 2015/2016, a total of 6,191 executive flat types were transacted during the period, and this compares to the 19,639 5-bedroom flats sold during the same period. The most transacted flat unit type is the 4-bedroom units with 27,763 flats sold.

However, it’s likely that the continued pace of increase for executive flat types could also be tested given the uncertain macro-environment, and flat buyers in general would normally hold their purse strings tight, and minimise big-ticket purchases in uncertain times.

Executive flat price trend Woodlands

Source: PropertyGuru, URA, HDB

Executive flat price trend Woodlands 10-years

Source: PropertyGuru, URA, HDB

In closing, Woodlands HDB town does have some potential for further growth especially with the development of amenities, MRT lines, factories, business parks, and educational institutions, among others. The town also has plenty of opportunities to rival Jurong East to be an up and coming ‘star destination of the north’.

If you’re a first-time homebuyer preparing to purchase a BTO, find all the information you’ll need at our Ultimate BTO Guide.

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<![CDATA[Understanding Yishun through its home prices]]> https://www.propertyguru.com.sg/property-management-news/2017/5/153410/understanding-yishun-through-its-home-prices www.propertyguru.com.sg:news:153410 Tue, 30 May 2017 02:48:18 +0800 Understanding Yishun through its home prices
Understanding Yishun through its home prices

 

Located between Sembawang and Punggol in the north, lies Yishun, where acres of pineapple plantations used to define the entire town. The 778-ha town was owned then, by ‘Pineapple King’, Lim Nee Soon, who had a road named after him.

Fast forward to present time, the entire Yishun HDB town currently has about 57,538 public flats, with plans to house another 20,000 more which would bump that number up to around 84,000 HDB flats in total, per the latest HDB Annual Report 2015/2016.

Yishun is home to an estimated 187,800 HDB flat dwellers as of March 31, 2016. Under the Master Plan 2014, the government has designated the new town for additional developments under the “Remaking Our Heartland” (ROH) exercise where one of the development plans includes the Northpoint City.

Northpoint City is a multi-functional mall developed by Frasers Centrepoint Limited (FCL) and is expected to serve the transportation, and other functional needs of the entire town. The present mall, Northpoint, including the Yishun 10 retail podium is currently undergoing a comprehensive 18-month Asset Enhancement Initiative (AEI) which aims to integrate next-door Northpoint City to provide additional amenities.

The entire development is expected to be fully completed by December 2018. A peek at the plan is as follows:

Northpoint City

Source: Frasers Centrepoint Trust (FCT) 2QFY2014 earnings presentation

Apart from serving the needs of Yishun’s residents through the integrated mall like Northpoint and Northpoint City, the government has also embarked several initiatives under the Master Plan 2014 to create a community focused environment. This is done through the upgrading of the pedestrian mall in Yishun town centre which now includes a plaza and green gateways.

The Yishun Pond located close to Northpoint will also see a new addition of a landmark called The Spiral @ Yishun. This new landmark comprises of a three-storey lookout tower that offers residents with a panoramic view and easy access to Yishun Park via an overhead pedestrian bridge.

Moreover, the government is also planning to expand the existing Khoo Teck Puat Hospital (KTPH) which currently serves the needs of residents living in the north region. The plans include a new hospital called Yishun Community Hospital that would be built alongside with KTPH with aims to expand the number of beds while serving as a focal point for fulfilling medical needs of the residents.

HDB price trends in Yishun

Based on the price trends for 3-bedroom, 4-bedroom and 5-bedroom HDB flat types in Yishun, in post Q3 2013, after the government announced the property cooling measures, prices dipped significantly at the start across the board, but have managed to stay stable throughout starting from the following year in 2014.

One of the main cooling measures impacting HDB dwellers is the mortgage servicing ratio (MSR) which is kept at 30% of the monthly gross income spent on mortgage payment.

Yishun 3-bedroom trend

Source: HDB, PropertyGuru

4-bedroom Yishun price trend

Source: PropertyGuru, HDB

5-bedroom Yishun price

Source: PropertyGuru, HDB

Looking at the three price trend charts above, among the 3-bedroom, 4-bedroom and 5-bedroom HDB flat types, the 4-bedroom HDB flat median prices have increased slightly since Q2 2016 where the prices increased from SGD360,000 in Q1 2016 to SGD370,000. This represents an increase of around 2.7%.

Incidentally, for an owner who lived in a 4-bedroom HDB flat in Yishun from Q2 2007 to Q4 2016, the annualised percentage gain is around 1.6%. This compares to the annualised percentage increases of 1.5% for the 3-bedroom and 1.3% for the 5-bedroom resale flat prices.

12-month historical HDB prices

Taking a look at the 12-month historical HDB prices for 3-bedroom flats in Yishun, prices in general have been falling from the peak of SGD371 psf to SGD364 psf.

Yishun 3-bedroom price trends

Source: PropertyGuru, URA, HDB

However, the percentage decline is about 1.9%, and transactions volumes do take a seasonal path.

Yishun 4-bedroom price trend

Source: PropertyGuru, URA, HDB

Flat prices for 4-bedroom units on the other hand, show a steeper decline at around 4.3% for the past 12 months. So, a price decline to SGD320 psf or below is not a surprise as resale transactions volumes seem to pick up north of 50 units in October and March, while 3-bedroom flats transaction volumes are still below 40 each month.

Yishun 5-bedroom price trends

Source: PropertyGuru, HDB, URA

For the 5-bedroom HDB flats (shown below), the pace at which resale flat prices have declined is less steep when compared with the 3 & 4-bedroom HDB flats. In the case of Yishun, 5-bedroom resale prices had a mere decline of 1.6% in the past 12 months. This suggests there could be some price resiliency among these types of flats.

Additionally, transaction volumes for 5-bedrooms flats are not as robust when compared with 3 & 4-bedrooms. There is an average of five to 15 resale flat transactions completed each month since last year for the 5-bedroom flat types in Yishun.

A check with PropertyGuru.com on May 13, 2017 with the highest to lowest prices sorted out, the consensus is even though the median price for 5-bedroom flats was calculated to be around SGD457,900, a home owner has put up an asking price of SGD750,000. This is about SGD200,000 above the second highest asking price.

It is important to note that this is a Design, Build and Sell Scheme (DBSS) flat with the unit located on the high floor. It also has three bedrooms, and three bathrooms.

DBSS flats were introduced by HDB in 2005 where although the flats were meant for public housing, they were built by private developers. However, the construction of such flat types was suspended in 2011.

A check on the location of the flat on Google Maps, shows that there is about a 15-minute walk from where the flat is located to Yishun MRT station and Yishun Central. Despite a relatively long distance, it is possible that the owner has spent quite a big sum in renovating the HDB flat, and perhaps it does command a premium based on the Asset Enhancement Initiatives (AEI).

How living in Yishun will be like in the coming years

In the analysis of HDB flat prices, the understanding is that prices have declined across the board for most flat types. However, there are some exceptions including those flats that are of bigger room size, and flats that were built under the DBSS scheme.

These prices are further affected by HDB dwellers considering the distance to nearby amenities, the cost of their renovations, and their mortgage payment plans, among others before a final asking price is determined, independent of the valuation.

It is important for flat owners to think on a long-term basis, and take the advice of the latest remarks by the National Development Minister that they should not be overly dependent on selective en-bloc schemes (SERs) that may result in overpricing their flats. This might apply to those flat owners that are living in flats built around the 1990s in Yishun.

Yishun is a non-mature estate in the eyes of HDB, but the town is slowing getting the attention of many potential residents who desire a place where they can raise a family, go to work/school, and enjoy the amenities around the place.

With an integrated transport hub, and multi-functional mall, it is a strong possibility that HDB flat prices have the potential to appreciate over time.

If you’re a first-time homebuyer preparing to purchase a BTO, find all the information you’ll need at our Ultimate BTO Guide.

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<![CDATA[Understanding Deferred Payment Schemes]]> https://www.propertyguru.com.sg/property-management-news/2017/5/153181/understanding-deferred-payment-schemes www.propertyguru.com.sg:news:153181 Fri, 26 May 2017 00:30:33 +0800 Understanding Deferred Payment Schemes
Understanding Deferred Payment Schemes

The Interlace condominium in Depot Road has been offering its own version of the Deferred Payment Scheme for some time. (Photo: CapitaLand)

Deferred Payment Schemes have made a big comeback, helping to drive sales at various condominiums. One expert highlights some of the projects offering such unique schemes as well as the different versions available to buyers and investors, depending on their needs.

By Stuart Chng

If you have been actively searching for an investment property in the past year, you should have come across several developers offering different Deferred Payment Schemes (DPS), a popular marketing scheme that was previously abolished in October 2007 due to the upswing in the economy and the property market.

The return of DPS is yet another interesting and creative loophole that developers are using to incentivise buying in projects that have been slow to move, or burdened by the upcoming Qualifying Certificate (QC) and Additional Buyer’s Stamp Duty (ABSD) penalties for not selling all units within a stipulated period.

In the past, such schemes were only offered in new project launches, and payment of up to 90 percent of the purchase price could be deferred until the Temporary Occupation Permit (TOP) date.

The latest versions of DPS are different from what they were previously, as they are now only allowed after the Certificate of Statutory Completion is issued, and the project is delicensed and no longer under the purview of the Controller of Housing.

What are the benefits of buying a DPS project?

The essence of a DPS lies in when the option needs to be exercised, and how long the completion period is deferred for.

Typically, a buyer would pay a 20 percent down payment (five percent in cash and 15 percent in cash or Central Provident Fund (CPF) savings) for a new unit, pay for stamp duties within two weeks of exercising the option to purchase, and start paying progressively increasing instalments within six to nine months as their housing loan starts disbursement. A buyer would also not be able to re-assign their option to purchase to another buyer without incurring the Seller’s Stamp Duty (SSD).

In a resale purchase scenario, a buyer would also pay the 20 percent down payment, pay stamp duties within two weeks of exercising the option to purchase, and draw down on the remaining 80 percent loan within 10 to 12 weeks. This means that he or she would begin servicing their monthly instalments upon completion as their loans are fully disbursed. In addition, a buyer would be able to resell the option prior to exercise if there were a provision of “And / Or Nominee(s)” in it.

The beauty of DPS lies in the flexibilities developers have upon delicensing their projects. Payment schemes can be tweaked to incentivise different groups of buyers with different needs.

Case study: Singaporean owner-occupier seeking to upgrade

John Tan faces difficulty in upgrading his family home as he has an outstanding loan for his current property. According to the Monetary Authority of Singapore’s (MAS) financing guidelines, he would need 25 percent in cash for the down payment, another 25 percent in cash or CPF savings, and be eligible for only a 50 percent maximum loan. He would also be liable for ABSD.

In his case, a DPS where the developer allows a longer deferred completion period would address his obstacles and reduce his down payment to 10 percent in cash, offer him the flexibility of moving into a new home early, ample time to sell his previous home and therefore qualify for an 80 percent loan.

One example of this is the DPS introduced at CapitaLand’s The Interlace and d’Leedon projects.

Case study: Property investor keen to get into the market and feels there is potential upside in the next two years

Dylan Lee would like to buy into properties with ready cash flow, but feels that the ABSD could be revised in the next two years. He however, does not want his funds to remain idle in the meantime, and wants to start deploying them to work.

In his case, a DPS that allows him to own a property with minimal cash down, a deferred exercise and completion date means he could possibly pay less ABSD if the rules are tweaked in the near term.

As an investor, he would also enjoy the flexibility of being able to sell the property anytime during these two years without incurring any SSD.

As such, a project like The Peak @ Cairnhill I and II, with its own version of the DPS, is suitable as it allows investors to take possession and rent out their units and exercise the option only 18 to 24 months later. The option between the developer and the buyer also has a nomination clause that allows the option to be exercised by another buyer should the market improve and the initial investor decides to sell.

This unique arrangement means that an investor experiences a higher return on equity before the completion, as he can start collecting rental income by putting down only 20 percent in cash and having no instalments to service for that same period. At the same time, the rental returns also lower the absolute entry price of his property, giving him an extra safety net.

That said, buyers would be prudent to do their due diligence on whether a project offering a DPS is marketed at a reasonable price today. Some projects have fewer discounts due to this scheme, and it would be wise to make a comparison between the normal payment scheme and the DPS. If the discount range is significant and the financial aspects make sense, it could be a wise choice to go with the norm instead.

 

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Stuart Chng

Co-Founder of Navis Living Group

Senior Associate Executive Director of OrangeTee & Tie

Stuart is a renowned team leader and personality in the real estate industry. 

He is a licensed real estate agent, team leader, industry trainer and speaker, columnist for several property newsletters and blogs and is often quoted in media interviews on 938FM, Channel 8, PropertyReport, PropertyGuru and other publications.

 

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Whilst every effort has been made to ensure that the information provided is accurate, individuals must not rely on this information to make a financial or investment decision. Before making any decision, we recommend you consult a financial planner or your bank to take into account your particular financial situation and individual needs. PropertyGuru does not give any warranty as to the accuracy, reliability or completeness of information which is contained in this publication or on its website. Except insofar as any liability under statute cannot be excluded, PropertyGuru and its employees do not accept any liability for any error or omission in this publication or on its website or for any resulting loss or damage suffered by the recipient or any other person.

 

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