Is buying mixed-use a good investment?

Romesh NavaratnarajahApril 30, 2015

City Gate showflat

Speakers at PropertyGuru’s recent Guru Talk seminar helped educate attendees about how mixed-use developments can be viable property purchase options.

PropertyGuru recently held its second Guru Talk seminar for 2015 at the City Gate show suite where respected Guru ‘Talk-ers’ shed light on the value of mixed-use developments both as an investment and residential option.

In a bid to equip consumers with even more ‘Guru Views’ of the property market, Guru Talk, a series of knowledge empowerment seminars, was initiated. In the latest edition, close to 80 attendees turned up to gather insights from industry leaders Mr Francis Tan, Chief Investment Officer, SLP Scotia and Mr Eugene Lim, Key Executive Officer, ERA Realty Network.

Tan opened his talk by explaining the concept of mixed-use developments, while dropping hints as to what they could evolve into in future.

“It is a combination of residential, commercial, cultural, institutional or industrial uses. In Singapore, because of our very clear URA zoning, you don’t see residential cum industrial, but in general (in the world) there are cases where there are industrial cum residential developments. I am not dismissing the possibility that over the next 20 years, as the Jurong and Tuas mega ports take shape, that there could be industrial cum residential mixed-use developments here in Singapore,” Tan said.

He also shared insights on what constitutes a wise calculation of the profitability of an investment. He urged attendees to start looking at ROE (return-on-equity) rather than ROI (return-on-investment), citing the example of a retail space in a mixed-use development.

“…ROE is what investors should be looking out for, not ROI, as it (ROI) is a very blunt instrument where a lot of costs are being swept under the carpet…” he noted.

“… the difference (for ROE, compared to ROI) is calculating based on what has been taken out of your pocket (equity), not the total value of your property; and you will see your yield shoot up… this is called ‘gearing’. If you are investing, you have to think about ‘gearing’ as far as you can, but, within a certain appetite,” Tan added.

Meanwhile, ERA’s Lim shared how the location of a mixed-use property can enhance its value, specifically touching on the Rest of Central Region (RCR) and how it is a ‘quiet achiever’.

“According to URA statistics, there are two times more homes that are sold in the city fringe than in the city area, (that is) about almost 20,000 units against about 9,000 over the last five years. In terms of pricing… (it) has accelerated and gone up by 51 percent (for) city fringe (developments) against 38 percent for city centre (developments) over the last five years,” stated Lim.

Guru Talk attendees were left satisfied with the knowledge provided along with new-found insights of how a mixed-use development can be an extremely viable property purchase option.

To view what was shared at the Guru Talk seminar, please watch our videos: [http://bit.ly/1drG18s].

Also, stay tuned to the Guru Talk landing page for more information and news on upcoming seminars! [http://events.propertyguru.com.sg/gurutalk].

Image: Crowds at the recent Guru Talk seminar held at City Gate’s show suite.

 

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

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