To Choose Right Property All First-Time Buyers Need To Know

To Choose Right Property All First-Time Buyers Need To Know

Kumar Properties

To choose right property all first time buyers need to know

As you are going to buy for the first time, there are many things to fear. Most people do not have proper knowledge in buying & selling properties so it may be difficult to choose the perfect property that could possibly enjoy growth and fit within affordable budget.  Mostly the first time buyers number one choice is either the next BTO or a resale flat close to their families and they think of their future and consider that they can afford of the public housing. Is this the right choice.

If all you want a peaceful life, this is the right choice. But if you want earn more for a better future and lifestyle, then you have to consider other options. Let’s have a look.

 

 

Mostly the young buyers do not consider lengthy timeline, one have to realise their first fortune you made in your life.

Actually the 4 years long waiting of a couple to complete with the Minimum Occupation Period of 5 years which locks a young couple of 30 years old for a period of 9-10 years it means that the young couple reach at age 40.

We know that time is money and this is the unchangeable fact of life! Many people have the misunderstanding that property investment should start in the late stage of life but due to the mortgage limitations in Singapore, they get the shorter loan tenure which sadly means  that the monthly loan repayment will be heftier with additional expenses like child care and educational commitments. This makes many people miss the high speed train of property investment, having still advantage.

So, if you can afford to get a very nice home with the first investment which have a high potential of making decent profit in 5 years,  wouldn’t it be great jumpstart to your property investment journey? It is crucial to know that you have to start this journey as soon as your finances sound.

Remember I mentioned that being sensible is important. I cannot stress enough that success of your first investment depends on careful planning. Now we can see that private homes going to hit new highs in 2021 in the given figure. Each time the market falls down, it rebounds with more height, and those having fear to invest in the market and choose to wait end up with paying more for which they have to pay. These are the basic mistakes which can be avoided easily.

Even though by seeing the chart show that the home prices continuously climb but we have to consider the truth that some inexperienced “investors” who made losses too. This is because of various factors and most of the common factors are not setting aside reserve funds, wait to invest and misunderstanding the property market without proper knowledge. This can be easy and much safe if you follow our proven strategy.

Private property price index percentage from 2000Q1 to 2021Q3

The historical price chart of a private property Changi Green, as a first-timer, do you buy property since prices now are at its previous high in 2014? Do you believe that the price will continue to increase in the next three years?

Changi Green historical monthly price (psf) range.

Now, let me show you in the given figure, some of the transactions that occurred in the recent years at Changi green. Some buyers brought up with resale property and end up with not making any profits and some of them incurred loses too. Do not repeat these expensive mistakes made by others!

Changi Green transaction history

Then a question arises, how will one select a right property?

Here, we consider 2 important factors – potential upside & risk involved. With this careful analysis of the facts, and market insights of these 2 points determine if the property is safe to enter. No one can guarantee that you will definitely make money, so we have to consider that risk is as important as the potential upside.

One last example to determine the further points. Looking at the figure, between Queens and Commonwealth Tower, one would have been very upset and utterly disappointed  if you choose to purchase the former because of its low entry price. As we can see, even tough the commonwealth tower has higher entry price, the profits earned much has been increased. Do you think is this the case?

 Historical price for Queens & Commonwealth Tower

With all these questions keeping in mind, you have to know that it is key to understand how to select the right singapore property market. The essential factors listed above will have the criteria in determining the right property, this makes you to start you real estate investment journey in the right direction. It can be easier if you know all the fundamentals of choosing right property it can also be applied for future properties when you upgrade. Try to avoid repeating mistakes done by others.

 

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How You Can Still Make Profit After Selling High and Buying High?

How You Can Still Make Profit After Selling High and Buying High?

Kumar Properties

Sell High & Buy High – Will This Still Make You A Profit?

 

Whenever a seller want to sell his property in an specific time, the seller would assume to sell for a high price, by feeling to do this so, they won’t be buying high price as well? Here property prices are increasing continuously, there is no such need. And many of them bought their properties at a relatively lower price, because they can’t find anything similar in that low price bracket in any given market, let alone this sizzling hot market.

Is there any possibility to make high Massive Profits, regardless  of whether you sell high followed by buy high. We all know that every investment involves some form of risk, so prudence has always been part of my own investment principle. At the end of the day we all need profit,  but we have give preference to our financial security than other factors.

Due to the lack of knowledge in property investment strategies many people are not yet decided state as their minds are extremely clouded by market noise, monetary concerns and misconceptions. I am sharing my insight for everyone to better understand the market and make there own decisions.

 

In reality, “the rich will get richer” because of the simple reason, they will continuously multiply their wealth by selling and buying properties, and particularly at the early stages of the property tenure. They will do it simply, because of the notion that generally a property’s price will hit its peak upon obtaining the Temporary Occupation Permit (TOP). Hence the investors need to utilise this ripen opportunity for earning maximum profit and to compound their property investment and grow their assets, this allows them to acquire personal wealth and their investment strategy.

The Average transaction price for The Centris from 2006 to 2013

Let’s take a look at the price chart for The Centris Condominium in the West. In this chart the property prices for this project have been increasing over time in an even way from the past the TOP stage. So do I sell or wait further at this point of time? Assuming that the early buyers of this development does not take any action and realise that they will get a massive profit of at least $500,000 (for a 1,066sqft unit) in 2012-2013 and waited till today. What would be like in the numbers today’s sizzling hot market?

 The average transaction price for The Centris (2006-2021)

You can see that the price momentum eventually loss its steam. The profit what we are earning now is same as the profit earned 8 to 10 years ago! They would probably console that the price is finally reaching to its past status.

What most people do not see this inflation in the past decade and those missed opportunities to multiply their realised $500,000 profit. I cannot stress enough the importance of knowing when to enter and exit for those looking to increase their wealth.

Many people have to question themselves for not making a early decision to invest in the property. The charts show you that the prices keep on moving upwards despite of the cooling measures and crisis.

Many have a fear to whether to invest or not and failed to take an action when the market is slow, and believe that the uptrend will have a sharp reversal that will bring the property prices decrease. For those who are waiting the day did not come again. As the market prices gone up they feel that the opportunity has already slipped from there hands.

This seems to be a cyclic process of taking no actions and where the plenty of opportunities has gone wasted. It is mostly due to the lack of understanding in property investment and also the uncertainty of how to take the first step even. With an open mind always understand that the property investment strategies that will bring profit to you and your family. Stop believing that the property investment is only for the rich. Many fall into the trap of ‘Investment is not for me’, ‘I already know’ and end up. You can avoid these kind of mistakes!

Overall transactions (psf) of Non-landed residential (2000-2021)

Looking at transaction data below of leasehold 99-year Seaside Residences, units were transacted at an average of $1,573 psf in 2017 – which many would consider overpriced for a Leasehold 99-year property in that area during those times. In contrast, a freehold property(FH) in the area cost around $1,000 psf. It looks like a bad purchase, isn’t it?

The investment of Seaside Residences for many investors turned out to be a blessing in disguise! Few people in the market were confident that the market could have enjoyed a momentous increase where units are transacted in the region of $2,000psf – this is considered record-breaking for a 99-year LH development in D16. Selling would allow one to bring home a fantastic score of $600.

This is to show you that buying at increased price does not mean you will not make money, it is more important to get into the facts right. Speculation may put you at risk, clarity through proper guidance helps you making good judgements that go on to earn you good money.

Transactions records of Seaside Residences

An article to share with you below, the point that I have been driving this entire time – increasing your wealth through investing in stable assets. The interest rates of your savings account and rate of your income growth does not allow you the comfort of hedging against rising in the cost of living and inflation, none of these can beat the increase in property prices. What you need is systemic growth in terms of wealth gaining.

For more articles about current market analysis and property knowledge contact us.

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Things to be Consider While Buying a Property

Things to be Consider While Buying a Property

Kumar Properties

Things To be consider While Investing in a property

Are you looking to invest in property? Don’t know how to buy a property? Need guide about property investment? Most of these queries having to the first-time buyers only, there are many things you may fear about property investment. Due to lack of experience or knowledge in buying or selling properties, So we are here to guide from first step to buy property. This article may help you to understand about property investment.

Some of the things you need to consider before purchasing a home are:
• Budget
• Commuting plans
• Type of property you are looking to purchase
• Additional facilities

The most important question to consider is: what is your budget for purchasing a home? This will help you in determining the type of residential property you are eligible for.

However, if you do not have a specific budget constraint, then you might want to decide what type of residential property is suitable for you and your family. This can be determined by other factors such as commuting plans and additional facilities, which may include neighborhood schools, if you have children, and the proximity of certain amenities such as shopping malls and sports complexes.

Financing Your Home

It is advisable to finance the purchasing of a home using a bank loan, especially if you have limited excess funds. For this, it is recommended that you decide first on the type of residential property you are looking for, and ensure that it is within your budget. If you have engaged a real estate agent or a solicitor to act on your behalf, check with them on all fees payable so as to prepare a more accurate estimate of your overall budget.

Banks will also charge an administrative fee for processing a mortgage, as well as an additional fee for valuing a property. When applying for a mortgage, the amount you will ultimately be allowed to borrow will depend on your own individual financial circumstances and the bank’s valuation of the property or the actual transaction price, whichever is lower. The bank will also take into consideration your ability to make the monthly instalments to repay the loan, as well as your credit history.

Singaporeans are usually allowed to borrow up to a maximum of 90 per cent of the property value, while foreigners may be granted a loan of up to 60 per cent to 70 per cent of the property value or purchase price. Some foreigners may be allowed to borrow up to a maximum of 80 per cent, depending on their credit standing and their ability to provide evidence of having established funds, but this approval is only granted on a case-by-case basis.

For resale flats, a loan of 90% of the resale price of 90% of the market value, whichever is lower is offered to qualifying parties.

If you are buying a Housing Development Board (HDB) flat, you may want to look into applying for a HDB loan. HDB offers concessionary loans to first-time home buyers and second-time home buyers, who are upgrading to another HDB flat. DBSS (Design, Build and Sell Scheme) and BTO (Built to Order) flats are also available and applicable to Singaporeans only.

There are various schemes offered by HDB to ease the process of paying for a HDB flat. Listed below are some of them;
• Additional CPF Housing Grant (AHG): This is meant to assist families with a steady income to purchase their first subsidized HDB flat. The AHG can be used for the purchase of new, resale and DBSS flats and it is an additional subsidy over and above the regular market subsidy and CPF Housing Grant that new and resale flat buyers respectively enjoy. This scheme was further enhanced in 2009 to make owning a home easier especially for lower income families. The maximum AHG amount has been increased from $30,000 to $40,000 and the income ceiling has been raised from $4,000 to $5,000. Continuous working period preceding the flat application is reduced from two years to one year.
• Special CPF Housing Grant (SHG): This scheme provides first-timer families who are earning up to $2,250 a month to buy a smaller flat from HDB that is well within their means.
• CPF Housing Grant for Families DBSS: The CPF Housing Grant is a housing subsidy (in the form of CPF monies) provided by the Government. The grant assists eligible first-timer family to buy a DBSS flat from the developer.
• CPF Housing Grant for Singles/Singles living with parents: This is to assist singles who are 35 years and older in purchasing a flat.
• The CPF Housing Top-Up Grant: This scheme is a housing subsidy for those who have taken a CPF Housing Grant for Singles previously in their purchase of a resale flat who marry a first-timer citizen spouse or another Singles Grant recipient or in the event where the non-citizen spouse or child have become a Singaporean Citizen or Singapore Permanent Resident.
• CPF Housing Grant for Family: The CPF Housing Grant is a housing subsidy (in the form of CPF monies) provided by the Government. The grant assists eligible first-timer family to buy an EC from the developer

As home purchase is a long-term financial commitment, therefore it is imperative for you to consider and plan your budget effectively before purchasing a flat.
These are some steps to take:
• Available cash savings
• CPF Monies
• Housing Loan (if required)
• CPF Housing Grant (if required)
Foreigners are allowed to purchase resale HDB flats and private residential property according to their financial abilities.

Foreigners looking to purchase private residential property or landed property are still required to seek approval from the Singapore Land Authority prior to purchasing. Do bear in mind that if the property you are buying has a limited lease, it may be more difficult to finance the purchase using a housing loan. Generally, the shorter the lease period, the higher the interest rate of the loan will be. If you are planning to use your Central Provident Fund (CPF) savings to finance part of your purchasing of a private residential property, you must familiarize yourself with the limits on the use of CPF savings for residential properties.

Buying an Uncompleted Private Residential Property

If you own a HDB apartment or an executive condominium, make sure that you have fulfilled your minimum occupation period. You cannot purchase a private residential property until you have done so. If you are a non-Singaporean citizen and you intend to purchase a landed residential property, you must first obtain approval from the Controller of Residential Property under the Singapore Land Authority. Non-Singaporean citizens include permanent residents.

If you are buying an uncompleted private residential property, it is essential that you check that the housing developer you are purchasing a residential unit from has a Sale License. Only housing developers with a Sale License are allowed to offer housing units for sale. When viewing a show flat, you should be aware that show flats may differ slightly from the actual units. In this case, you should check the specifications of the unit you are purchasing in the Sale and Purchase Agreement.

You should also be thorough and check with the housing developer if the housing project will be affected by any public schemes and special conditions stipulated by authorities. The sale and purchase of a private residential property is only deemed complete when the housing developer has transferred to you the legal title of the unit. One important thing to note is that HDB does not allow for the buyer, the spouse or anyone listed in the application form to have ownership or a vested interest in other property, be it in Singapore or overseas.

Applicants must not currently own or have disposed property within 30 months before the date of application and between the application date and the date of taking possession of the flat. HDB may grant an exemption but this is strictly on a case to case basis. If you are interested in seeking exemption, you must fill up a questionnaire and send it back to HDB.

Singaporean buyers may purchase the below mentioned housing units only twice:
• a flat from the HDB;
• a resale flat with the CPF Housing Grant*;
• a DBSS flat from developer;
• an EC unit from developer.

*Only applicable for first-timer applicants

If you have already bought two housing units, you will not be eligible to apply or be listed as an essential occupier in an application.

For more information regarding HDB eligibility.

Option to Purchase

If you wish to purchase a property, you must obtain an Option to Purchase from the seller. An Option to Purchase is essentially a right to a property and acts as a reservation. As the intending purchaser of the property, you will be required to make a payment known as the booking fee, or the option fee, as a deposit of good faith.

The option fee payable for a HDB unit is of an amount not exceeding SGD1,000 and the Option deposit does not exceed SGD5,000. This amount is inclusive of the option fee. Once an Option to Purchase has been granted, you or your representative should receive all necessary documents, including a duplicate of the Sale and Purchase Agreement, within 14 days from the date of the Option to Purchase. This 14 day includes Saturday, Sundays and any public holidays that may fall within the allocated period. If the buyer decides not to go through with the sale, he can simply allow the Option to expire. Only the Option Fee will be lost.

During the validity period of your Option the Purchase, the seller is not allowed to offer the property for sale to other interested parties. You should be aware that the Option to Purchase obtained from a housing developer is only valid for three weeks from the date of delivery to you or your representative, and if you do not exercise your Option to Purchase within its validity period, it will expire and the seller is entitled to keep 25 per cent of the option fee. You will be refunded the remaining 75 per cent of the booking fee and the seller may then offer the property to other prospective buyers.

All licensed housing developers are required to use the standard form of the Option to Purchase, which can be found on the Urban Redevelopment Authority’s (URA) website. Any amendments to be made to the Option to Purchase must be approved by the Controller of Housing.

Please note that the Option to Purchase is non-transferable. Therefore, all persons intending to buy a property together should be named as intending purchasers in the Option to Purchase.
Only those named as intending purchasers in the agreement may exercise the Option to Purchase. After an Option to Purchase has been granted, any name changes in the agreement must be approved by the Controller of Housing.

If you wish to exercise your Option to Purchase, you must sign all copies of the Sale and Purchase Agreement and return them to the housing developer, and make a down payment, which may be between five per cent and 15 per cent of the purchase price, within the validity period.
However, the housing developer may also permit you to make the down payment within eight weeks from the date of the Option to Purchase. The standard down payment is 20 per cent of the purchase price, inclusive of the option fee.

Sale and Purchase Agreement

A Sale and Purchase Agreement is a contract for the sale and purchase of a property between a buyer and a seller. If you have been granted an Option to Purchase, you should have received a copy of the Sale and Purchase Agreement within 14 days from the date of the Option to Purchase.

All licensed housing developers are required to use the standard form of the Sale and Purchase Agreement, which can be found on the URA website. Any changes to be made to the Sale and Purchase Agreement must be approved by the Controller of Housing and when this has been done, the housing developer is required to list all amendments made in a separate schedule in the contract, commonly referred as the second schedule.
You should ensure that you make all necessary payments due to the housing developer on time in accordance with the payment schedule included in the Sale and Purchase Agreement, or you may be held liable for additional interest payments.

If you do not settle any payments due within 14 days, the housing developer may deem that you have repudiated the Sale and Purchase Agreement and take the necessary steps to annul the contract.
Once the contract has been annulled, you will be returned 20 per cent of the purchase price, but you will still be held liable for any outstanding interest owed to the housing developer.

In the event of a dispute between you and the seller, you may wish to engage the services of a professional mediator to resolve the situation, or seek legal advice if the need arises. You cannot request for the Controller of Housing to intervene as this is outside of the Controller’s jurisdiction.

Payments

Under the Standard Payment Scheme, you will make a total of 10 different payments.
1. The first payment to be made is the booking fee, which is typically between five per cent and 10 per cent of the purchase price.
2. After signing the Sale and Purchase Agreement, you will be required to make a down payment of 20 per cent of the purchase price, less the option fee.
3. Upon completion of the foundation work, you will be required to make a payment of 10 per cent of the purchase price.
4. You will have to make another payment of 10 per cent of the purchase price, following the completion of the unit’s reinforced concrete framework.
5. Once the brick walls of the unit have been completed, you are expected to make a payment of five per cent of the purchase price.
6. Another payment of five per cent is due upon completion of the unit’s roofing and ceiling.
7. After electrical wiring, internal plastering, plumbing and door and window frame installations have been completed, you will be required to make a payment of five per cent.
8. Following completion of the car park, roads and drains, you will have to make another payment of five per cent.
9. Upon receiving a Notice of Vacant Possession, you will be required to make a payment of 25 per cent of the purchase price.
10. On the completion date, you will have make payment on the remaining 15 per cent.
Besides the purchase price, there are other costs which you are likely to incur such as property taxes and maintenance charges. If you are a non-Singaporean citizen, do note that you will be taxed differently from that of a Singaporean citizen, in accordance with the Inland Revenue Authority of Singapore’s (IRAS) regulations. (Visit the IRAS website here.)

Notice of Vacant Possession

When the unit is ready to be handed over, the housing developer will issue you a Notice of Vacant Possession. The housing developer must also provide you with a copy of the Temporary Occupation Permit or Certificate of Statutory Completion as well as a copy of a certificate by an architect or a professional engineer, who can verify that all works have been completed in accordance with the approved plans and specifications.

Defects

There is a defects liability period of 12 months from the date you receive your Notice of Vacant Possession from the housing developer. During this period, the housing developer has an obligation to rectify any defects in the housing project which become apparent.

You should inspect your unit thoroughly as soon you take possession of it. If you discover a defect, inform the housing developer in writing and request that it be rectified. The housing developer is obliged to rectify any defect within one month of receiving notice.

If the housing developer is unable to rectify the defect within one month of receiving notice, you may notify the housing developer in writing that you intend to engage a third party to carry out the necessary repairs and provide the estimated costs of the repair works.

You should not include any defects in this notification that were not mentioned in the previous notice to the housing developer. If any new defects are found, you should inform the housing developer in writing first before allowing a one-month period for rectification works.

Following the second notification, you should allow the housing developer an additional period of 14 days to perform the necessary repairs. If the housing developer still fails to do this, you may proceed with the repair works and make a claim for the costs from the housing developer.

Buying a Private Residential Property through a Private Treaty

If you are buying a private residential property from an individual owner, it is advisable to engage the services of a solicitor. You will be required to obtain an Option to Purchase from the seller and in this case, you should be prepared to pay a booking fee of one per cent of the purchase price.

The validity period of an Option to Purchase from an individual seller is considerably shorter than that of a housing developer’s. You only have 14 days to decide whether or not to exercise your Option to Purchase. If you decide not to exercise your Option to Purchase, you will forfeit the booking fee.
If you decide to exercise your Option to Purchase, you should be prepared to make another payment of four per cent or nine per cent of the purchase price, as agreed between yourself and the seller.

Once this is done, you can allow your solicitor to help you complete the purchase of the property. This will probably take eight to 10 weeks, during which, you will be required to make the remaining payment of 90 per cent of the purchase price. Your solicitor will need to coordinate with the necessary financial institutions to finance the purchase, prepare the contracts and lodge a caveat on the property, among other things.

You will also be required to pay a stamp fee to IRAS, which will be three per cent of the purchase price less $5,400, within 14 days of exercising your Option to Purchase.

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6,000 HDB flats to be built in Greater Southern Waterfront, first BTO project within 3 years

6,000 HDB flats to be built in Greater Southern Waterfront, first BTO project within 3 years

Kumar Properties

6,000 HDB flats to be built in Greater Southern Waterfront, first BTO project within 3 years

Around 6,000 Housing Board flats will be built on the Keppel Club site in the Greater Southern Waterfront (GSW), with the first Build-To-Order (BTO) project to be launched for sale within three years. These units are part of the 9,000 homes that will be built on the 48ha site, which will offer unique waterfront living that is close to nature, announced National Development Minister Desmond Lee on Tuesday (April 12).

The remaining 3,000 units are expected to be private housing. A mix of public and private housing developments will be progressively scheduled for launch in the next three to five years, said the Urban Redevelopment Authority (URA). The 48ha site at Keppel Club – about half the size of Bidadari estate – comes under the mature town of Bukit Merah and is bounded by Telok Blangah Road, Berlayer Creek and Bukit Chermin. It has been earmarked for residential use in the URA Master Plan since 2014.

Mr Lee said: “Given its central location and the two MRT stations nearby, we will seek to keep the estate car-lite and enable residents to get around easily by walking or cycling.”

Future residents will be served by Labrador Park and Telok Blangah MRT stations on the Circle Line, which will be connected to the estate via walking trails. Within the site, close to 10ha – about 20 per cent of the site area and the size of about 18 football fields – will be set aside as parks and open land. This includes four green corridors that will run through the estate and serve as recreational spaces – the Central corridor, Berlayer Corridor, Henderson Corridor and the Northern Corridor.

Mr Lee said the plans are guided by recommendations from an environmental impact study (EIS) and feedback from nature groups. These may be fine-tuned after public consultation on the EIS report. Housing blocks will be designed with staggered building heights which step down towards the green spaces, to give residents the view of greenery at their doorstep, HDB said. They will also feature skyrise greenery and landscaped terraces.

Green roofs on lower-rise blocks will serve as additional habitats for butterflies and smaller urban bird species such as the locally endangered blue-crowned hanging parrot and oriental magpie-robin. “As the site is quite close to the city centre, we will bring homes closer to jobs. This is part of our effort to move towards having more housing options and mixed-use development in our central region,” said Mr Lee.

All development works will be confined within the brownfield site of Keppel Club, he added. Brownfield sites are land that had previous developments on them.

When the lease of the golf course runs out, the authorities will redevelop the land for housing, said Mr Lee. A Singapore Land Authority spokesman said the lease for the existing golf course site expires June 30. The existing clubhouse has until March 31 next year to clear and reinstate the site.

Mr Lee added that there are also plans to transform the former Pasir Panjang Power Station buildings into a distinctive and vibrant mixed-use district characterised by its unique industrial heritage and waterfront location. On whether the BTO projects in the Keppel Club site will fall under the prime location public housing (PLH) model, HDB said the model will be applied to selected public housing projects in prime and central locations such as the city centre and surrounding areas, including the GSW. These are areas that have very high market values and would require significant additional subsidies to keep flats affordable, said HDB.

While the Keppel Club site is within the GSW, the authorities will consider a range of factors – such as the project’s location, attributes and market values – before deciding whether to apply the PLH model, it added. Owners of flats under the PLH model are subject to stricter buyer and selling conditions, including a 10-year minimum occupation period and having the additional subsidy clawed back by the Government should they sell the units.

Mr Lee said HDB is building more homes to cater to the strong demand for housing from echo boomers – children of the baby boomer generation – and the increasing societal trend of having smaller households.

When launched, the BTO project will kick-start the transformation of the GSW into a mega waterfront development along Singapore’s southern coast. It is expected to draw strong interest, based on previous BTO launches in the area.

The Telok Blangah Beacon BTO project launched in May 2021 saw more than 23.3 applicants vying for each available unit – one of the highest rates in recent years. First announced in 2013, the the GSW comprises 30km of coastline stretching from the Gardens by the Bay East area to Pasir Panjang. It contains 2,000ha of land – six times the size of Marina Bay and twice the size of Punggol.

This is the news article from The Straits times

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How attractive is Singapore property on a global stage?

How attractive is Singapore property on a global stage?

Kumar Properties

How attractive is Singapore property on a global stage?

There is every chance that property buyers, both local and foreign, will be keeping an eye on Singapore as an investment destination for homes. Since the onset of the pandemic, Singapore has been a beacon of stability.

The nation’s pandemic response earned high praise from the World Health Organisation and the International Monetary Fund due to its robust economic policy framework that enabled the authorities to mount a coordinated and comprehensive policy response, with fiscal policy acting as a first line of defence.

Long seen as a safe haven, Singapore’s properties have remained resilient through the pandemic with the Urban Redevelopment Authority’s benchmark overall private home price index rising 13 per cent over the past 2 years. However, housing prices in other key financial hubs around the world have outshone Singapore in the past 5 years as well as for the whole of last year.

Singapore underperforms

Private residential property price increases in key cities

Table with 3 columns and 8 rows. Currently displaying rows 1 to 8.
5-YEAR TOTAL INCREASE
(2016-2021)
2021 GROWTH
Singapore26.5%10.6%
Sydney30.3%23.7%
Hong Kong27.6%2.9%
Tokyo28.9%11.5%
Seoul36.8%18.0%
New York31.5%15.8%
London10.3%5.1%

According to Knight Frank Research’s comparison of Singapore with the other key gateway markets of New York, London, Tokyo, Hong Kong, Seoul and Sydney, Singapore’s property prices rose by a total of 26.5 per cent during the 5-year period between 2016 and 2021, surpassing only London, where property prices grew by 10.3 per cent over the same period due to the fallout from Brexit.

Even for 2021, despite Singapore achieving the highest full-year private home price growth in 11 years, it was still behind most of the competition, outperforming only Hong Kong (2.9 per cent) and London (5.1 per cent).

One major factor for the underwhelming performance could be due the slew of cooling measures implemented by the authorities.

Singapore is probably the most regulated housing market among its global peers. Had the cooling measures been absent, the city state could have easily attracted much more capital and the appreciation in private home prices would have been more pronounced. With cooling measures firmly in place, the question is whether Singapore’s housing market is still attractive.

Based on our house view, Singapore will remain one of the world’s most attractive cities for businesses and investors in the post-pandemic world and this will continue to underpin housing demand over the medium to long term.

The Covid-19 pandemic has magnified geopolitical uncertainties such as the rivalry between the United States and China, disrupted global supply chains and fuelled trade protectionism among countries which are focused only on the short-term results.

Singapore ascends

The evolving pandemic has thus re-defined attitudes towards risk, particularly among the ultra-high net worth individuals. As a result, wealth flew in; so did wealthy entrepreneurs and global talent. The continued promotion of the variable capital company (VCC) has increased the profile of Singapore as a default go-to location for global funds to be set up here as the island rises as a wealth and asset management hub.

The introduction of the Tech.Pass scheme highlights the new growth strategy of luring high-potential companies in high tech domains that are seeing exponential growth. The capabilities sought will involve expertise in cutting-edge technologies including artificial intelligence, blockchain, cloud computing, data analytics, and birthing unicorns and companies at the pre-unicorn stage.

Despite its small size, Singapore is a regional manufacturing powerhouse. Manufacturing represents a sizeable component of Singapore’s gross domestic product at around 20 per cent, differing from other global financial hubs which tend to be services-led.

Singapore makes 4 out of the world’s top 10 drugs and is the seventh largest exporter of petrochemicals. Singapore is also a key node in the global supply chain for products ranging from storage and memory products, to microelectromechanical systems.

With this backdrop, Singapore’s diversified economic base has paid off during the Covid-19 pandemic. Biomedical activity and advanced manufacturing are seen as gaining considerable traction in Singapore in 2022 and beyond.

Singapore is also unique in its offerings as a global wealth management hub and financial hub anchored in political stability, low corruption rates and transparent public institutions. Singapore will remain a perfect base for businesses and investors seeking to capture the upside of the huge growth potential in Asia in the coming decade.

As economies recover from the pandemic-led crisis, the property cooling measures in Singapore have kept private home prices from escalating out of control – compared with other gateway cities.

There is every chance that property buyers, both local and foreign, will be keeping an eye on Singapore as an investment destination for homes. As such, luxury homes in Singapore are expected to continue to receive keen interest from foreign investors despite the increased additional buyer’s stamp duty (ABSD) rates.

The Republic’s recent announcement of further easing of border curbs should draw some of the globally mobile wealthy who are still prepared to pay the 30 per cent ABSD for entry into Singapore’s stable prime residential market.

Consumer attitudes

Singaporeans themselves, if given a choice, would prefer to purchase in the local residential market than to venture overseas, according to the Attitudes Survey in Knight Frank’s Wealth Report 2022.

However, the latest round of cooling measures announced on the night of Dec 15, 2021 might compel some to look at prospects overseas, with the United Kingdom, United States, Australia and France mentioned as popular destinations for Singaporeans looking beyond domestic borders in the same survey.

With the recent hike in ABSD rates, overseas markets with lower barriers to entry may appeal to property investors looking to diversify their portfolios and in search of higher returns – both from recurring income as well as capital appreciation.

Gateway cities in the UK, Australia and US have always been popular among Singaporean property buyers, as these are mature, highly transparent markets with a strong rule of law and enjoy blue-chip status similar to Singapore. A common motivation for purchasing a residential property in these markets is to provide accommodation for their children pursuing higher education.

Those seeking global mobility also gravitate to these markets for the lifestyle they offer.

Nevertheless, investing overseas, whether in mature or emerging markets, inherently comes with risks and challenges. First and foremost, it is important for buyers to educate themselves on the markets they may be interested in by keeping abreast of the latest regulations, news and market insights through a variety of reputable research reports.

As well, they should obtain professional advice from a licensed property consultant, legal representative, banker and tax professional.

The power and ability to leverage is one of the reasons property is attractive, and in mature markets such as the UK, US and Australia, there generally are more financing options available from local banks, as well as from Singapore banks.

However, this is not always the case in all overseas markets, especially emerging ones. This is something potential buyers should be aware of before they decide to purchase an overseas property. It is recommended that buyers speak to a bank to obtain a loan approval or at least an in-principal nod before deciding to purchase.

Singaporeans may not be familiar with overseas developers; therefore, buyers should also look into the reputation and the track record of the developer they intend to buy a property from.

And finally, at project completion, overseas landlords are going to need assistance with leasing and property management. Buyers should appoint a professional property manager ahead of completion, providing them with the peace of mind that their investment will be well taken care of.

This is the news article from business times

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