Private property market- Volume versus price

Stock of unsold private property units have been falling. At 25 per cent lower this year as compared to 2013, the improving take up rates could be chalked up to pent-up demand from buyers and lowering property prices.

Sol AcresPhoto: Sol Acres Executive Condominium

But the question remains, could sellers and investors expect a quick turnaround next year with profits and rental yields increasing? Resale property prices have dropped 6 to 11 per cent since 2013 and while sales volume has risen, the property rental market remains quiet. In fact, rents have softened this year and with the impending boom in supply of completed residential units next year (including executive condominiums or ECs and HDB flats), the rental market may be facing competition that’s tougher than before.

There are currently more than 300 unsold units the executive condominium (EC) market in projects such as Sol Acres, The Criterion and The Terrace. Developers of these and other private projects with unsold stock might be pressured to move these units next year as some may face restrictions such as the Qualifying Certificate penalties and the Additional Buerys’ Stamp Duty (ABSD). The latter not only affects developers, but also buyers who are also further restrained by the Total Debt Servicing Ratio (TDSR).

The PanoramaPhoto: The Panorama

Prices of developer-sold new properties have already been on the decline this year. At The Panorama in Ang Mo Kio, prices fell fromr $1,343 psf to $1,226 psf within 10 months. Similarly in Sims Urban Oasis, prices have dropped $112 psf to $1,285 psf in 9 months.

2016 begins in less than a month, and everyone will be keeping a keen eye on the first quarter for the tone it sets for the year ahead.

From East to West – What’s prompting Singaporean investors to invest in UK properties?


Investment trends in 2015 have made for compelling analysis.

Uncertainty in global equities markets and political instability are just some of the reasons that have prompted many of the world’s investor community to reconsider their investment strategies this year.

Yet amid all of this change and upheaval has remained one asset that continues to generate global investment interest – UK property.

A weakening rand, for example, has triggered high numbers of investors in South Africa to get their money out of the country and diversify their portfolio with a British real estate acquisition.

And another region in which the UK market has seen significant levels of sentiment is Singapore. This year many investors have decided to hold off entering one of Asia’s most popular property markets, and instead invested in one of the highest performing in Europe. Such significant activity has prompted Select Property Group, the UK’s leading property investment company, to open an office in downtown Singapore, where they will be holding an exclusive grand opening on 25th November.

But why are investors in the region rushing to secure assets in a market 7,000 miles away?

Singapore – a 13-year slump with no end in sight

For many investors, patience has finally worn thin. Singapore’s property market has now been sliding for eight consecutive quarters, overwhelmed by the government cooling measures put in place in recent years to control what has become the continent’s second most expensive real estate market. With yields being swallowed and an outlook that predicts little market improvement, an alternative investment strategy is urgently sought.

What about the Singapore equities market?

Although it offers an alternative investment option, Singapore shares are also on the wane. The Straits Times Index has plummeted 18.6% since its peak in the middle of April this year.

Besides, it’s real estate that investors in Singapore have familiarised themselves with, thanks to historic capital growth of 83.7% in the last 10 years. But now house prices are experiencing slow residual declines and they cannot be offset by yields.

Property is still the answer, just not in Singapore.

So why has the UK now become the place investors want to own real estate?

High returns and a long track record of growth for international investors make British property an attractive proposition. In three decades UK residential real estate has driven better returns than gilts, equities and commercial property.

Instead of weathering the storm of the Singapore market, investors can take advantage of the security the UK offers, with its political and economic stability and returns in a strong currency.

Which UK markets are currently offering the highest growth?

Traditionally a nation of homeowners, Britain is currently undergoing a rental revolution. A preference for flexibility, as well as changing generational attitudes, means that by 2025, it’s estimated that over 50% of 20 to 39-year-olds in the UK will be renting their property.

As such, private rented sector (PRS) property is one of the must-have property assets in the UK right now. Cities such as Manchester have seen yield growth 13 times faster than London, as the demand for property in key regional markets is being met with low levels of supply.

Additionally, student property has been established as the UK’s number one asset in recent years. A product that experienced growth throughout each year of the global economic downturn, huge undersupplies of purpose-built student accommodation (PBSA) across the UK has created huge investment opportunities in a country with an international appeal for higher education.

Select Property Group will hold the exclusive grand opening of its new Singapore office on Thursday November 25th – and it wants you be part of it. Hear about the latest UK investment opportunities and find out why Select Property Group are the trusted UK property investment experts of investors in over 117 countries. To register and secure your place, follow this link.

Lions, Alligators, Elephants & Locusts – Investment lessons from the wild


Here is my take on the Asia Pacific real estate market and why Malaysia is still the place to invest.

Before I go into the details of the market, I want to identify the segment of the market which I believe holds the key to any major real estate boom; the middle and upper middle class. For this article. I will specifically look at the middle classes of Asia Pacific.

According to a report by Ernst and Young released on 25 April 2013 in London

“By 2030, two-thirds of the global middle class will be residents of the Asia-Pacific region, while Europe’s share of this population will have dropped by 14%” – Ernst & Young

From studying the different markets of the world that went from sleepy to scintillating and boring to boom, we can see a certain pattern emerging. It always starts with strong government initiatives for economic transformation and growth that motivate and trigger an influx of savvy investors both big and small to develop various fundamental industries like construction, transportation, utilities, education, health care, corporate services, logistics, recreation etc. which are crucial to building a successful city or region.

Real estate will also have to be developed to anticipate the population growth created by such transformation. As such It baffles me to hear people saying constantly that supply is greater than demand during the transformation period. Doesn’t it make sense to build homes and offices first and than fill them up as you go along? Any government worth its salt will ensure there are homes first before bringing the people in! That means there will always be more homes and offices than people during this phase and the disparity is greatest at the beginning.  Imagine doing the opposite? Where would the people live or the businessmen do their businesses? I can imagine these people would leave as soon as they come to such cities as there are not enough housing or places to run their businesses effectively. My point is if a country is going to grow successfully, there must always be more homes and offices first. Yet In some strange ways, you will hear people saying that there is an oversupply or saying that the place is a ghost town and there are still nothing there and no one is living there! Excuse me, but it is still a construction zone and there are no bars and restaurants and anything else at the moment and supply will always exceed demand at this stage.

It is good to note that most of the savvy investors and institutional investors would have gone in early. They are the lions and alligators and elephants but like lions, alligators and elephants, the big players’ who have gone in will not cause a frenzy. The lions, alligators, and elephants eat and have their fill and will then sleep. No impact on the forest or jungle (real estate market). Eventually,  the market will go into a little slumber. This slumber will persists until visible signs of change appear and more stories of people making money surfaces. This is where the middle class, the locusts (who are, at the moment, still grasshoppers) will come in and devour all in its sight.

China, Hong Kong, Singapore is not palatable for most middle and upper middle class as prices are too high and/or restrictions aplenty.

India is for Indians or NRI and has its restrictions and may not be

Emerging markets like Myanmar, Cambodia, Philipines, Thailand, Vietnam, Jakarta are emerging markets and are not for bulk of the middle & upper middle classes as they are more risk adversed and these markets do not have a mature secondary (resale) market.

Australia & New Zealand, Taiwan are slower markets and may not generate the right rate of returns for those who wants faster returns

One country, Malaysia, where many people speak English, Chinese, Indian etc and where food from India, Hong Kong, China, Singapore, Korea, Japan etc can me found. Where it’s relatively cosmopolitan and many MNC’s are moving to. Where Price WaterhouseCoopers and Ernst and Young report to be the place to set up businesses to penetrate the lucrative South East Asia market. One major reason, Profitability.

Where there are quality workforce, adequate facilities and has all the logistic support equivalent to developed cities but much lower operating costs. PWC and E&Y

The World bank reported it to have better investor protection than Australia, UK and the U.S.

It is strategically located right in the middle of Asia Pacific and a short distance to all the countries mentioned above

Yet prices of its properties are still one of the cheapest in the region.

Fact is the middle & upper middle class will finally realize that there is only a place that suits their profile. Just that they will only move when all the Economic Transformation Program are in place, the people and industries are in place and then the middle class who waited will see all these happening and then it will boom.

It is like Singapore in 2005 period where we were in the transformation transition. The middle class stayed away from District 1,2 and 4 in Singapore and avoided properties like The Sail & Icon until they finally saw the Marina Bay Area truly transformed with the Casino, MBS, Flyer, Esplanade, F1 happening and heard people started making money. By then, the properties which could have turned many middle class into multi-millionaires became out of reach of them. Pity.

In Malaysia, All the Savvy investor and institutional investors have gone in. They are the lions and tigers and elephants but like them, the big players’ who have gone in will not cause a frenzy. The lions, tigers, and elephants eat and have their fill and will then sleep. No impact on the forest or jungle (real estate market). It is the middle class, the locusts (who are now still grasshoppers) that will come in and devour all in its sight.

In short, the middle class will consider these:

  • Proximity
  • Culture
  • Investor protection
  • Resale
  • Increase in population thru transformation
  • A mature local real estate market
  • Lower price and entry level

Singapore had all of these but the one country most similar to Singapore in Culture, language, and social and economic make up. Which country in Asia Pacific is most similar to Singapore in these aspects?

Remember, Singapore boomed and attracted the expatriates and grew our population because of adding one element to work and live, play. Which country is working on the same industries and ingredients that transformed Singapore in the last 20 years?

Your guess is as good as mine. We are just waiting for the grasshoppers from China, Korea, India, Hong Kong, Indonesia, Singapore and even Malaysians themselves to become locusts.


By Colin TanColinTan Training & Consultancy

ColinTan Training & Consultancy

iProperty H2 2014 Survey: Sellers Up, Buyers Down


Owners keen to sell while buyers expect price declines; HDB confidence rises.

The latest iProperty Asia Property Market Sentiment Report H2 2014, Asia’s largest consumer property sentiment survey, shows a significant shift in Singapore sentiment, with more wanting to sell (from one per cent to 16 per cent) and fewer wanting to buy now (from 22 per cent to ten per cent) as prices head lower. More respondents also expect new and resale private condominium prices will continue to decline (up from 34 per cent to 53 per cent), but are more confident about HDB values.

“The H2 2014 report shows that both property sellers and buyers are nervous a year after the start of the Total Debt Servicing Ratio (TDSR). In the H2 2013 APMSR report, just after the TDSR was announced, 59 per cent of owners were confident their property would retain its value; now only 38 per cent think so, a decline of 21 per cent.  Another 25 per cent are unsure if the value will be retained,” commented Mr. Sean Tan, Singapore General Manager.

“Buyers are biding their time, with affordability and financing as top concerns. While the number of respondents who intend to purchase within the next 24 months remains the same at 51 per cent, buyers may wait for new and resale private condo prices to fall,” said Mr. Tan.

Developers are already responding to the more cautious market, delaying new project launches and lowering launch prices, among other strategies. According to the Urban Redevelopment Authority (URA), developer launches decreased from 441 to 351 private homes last month. Median prices between Q1 2013 and Q2 2014 declined three per cent for completed projects, while declining eight per cent for uncompleted projects.

Singaporeans do however continue to view property as a good investment, stating rental income (34 per cent) and long-term investment (29 per cent) as the top reasons. Home ownership was at 23 per cent. Private condominiums (57 per cent) continue to be the top choice, with terrace houses at 25 per cent and HDBs at 23 per cent. Survey respondents chose price, location and potential ROI as the top three factors when purchasing properties.

“Singaporeans are confident about property and have the money. 17 per cent of respondents have identified budgets above $1 million; 61 per cent have budgeted between $500,000 and $1 million; and 18 per cent have less than a $500,000 budget. The market is now correcting after the rapid rise over the last few years ago, and demand is there at the right price point,” concluded Mr Tan.

Mr. Getty Goh, Director at real estate research and consultancy firm Ascendant Assets, noted that buyers are jumping in to purchase properties when prices are within expectation, or if they are in a good location. “Examples include the 91 per cent surge in sales in District 9 and 10 reported by Barclays, and more recently the good sales figures at Highline Residences,” said Mr. Goh.

The Highline Residences in Tiong Bahru, District 3, launched in September, saw a strong sales with 80 per cent of its 160 units launched, following a “special preview discount” that took prices from $2,000 per sq. ft. (psf) to an average of $1,900 psf. District 3 was selected as one of the top three preferred locations in the iProperty H2 2014 survey.

A large number of respondents (45 per cent) indicated lower price per square foot was more important than other incentives, such as furniture vouchers. The next most important criteria (40 per cent) were smaller unit sizes. CIMB has reported that median sizes of homes have fallen from 1,200 sq. ft. to 800 sq. ft., because “most buyers compromised on smaller units in order to keep the investment amount more affordable”.

52 per cent say HDB resale prices are not affordable, down from 53 per cent in the previous survey, and from 61 per cent before that. Only 15 per cent say HDB resale prices will continue to fall, down from 37 per cent in the previous survey. This shows pricing levels are becoming more comfortable for buyers.

Overseas Properties Popular For Investment Purposes; Malaysia #1 followed by Australia and the UK

Overseas property continues to appeal for investment, with private condominiums and serviced apartments as the preferred property type. In May 2014, the Monetary Authority of Singapore (MAS) reported that the value of overseas property investments handled by local real estate agencies increased by 43 per cent from S$1.4 billion in 2012 to S$2 billion in 2013. Malaysia accounted for slightly more than half of investments, followed by the United Kingdom and Australia.

Malaysia remains Singaporean’s top investment destination at 31 per cent. Most respondents (40 per cent) are willing to pay less than S$500,000 for overseas properties and the attractive exchange rate of the Malaysian currency against the Singapore dollar continues to draw Singaporeans. Iskandar Malaysia remains a stronghold for investors, with 58 per cent stating investment as a reason for purchase, while citing affordability (54 per cent) and proximity to Singapore (69 per cent) as positives.

Australia sees continued interest (18 per cent, down from 22 per cent) along with the United Kingdom (UK) (12 per cent up from 9 per cent). Australia appeals for its proximity, quality education and lifestyle. The UK draws interest for capital growth, yields and as a place for buyers’ children to live while they study. Recent exchange rate shifts have made investing in both locations more attractive.

Respondents also indicated a preference for seminars and exhibitions when purchasing overseas properties, with 53 per cent having purchased their overseas properties through developer shows/seminars/exhibitions in Singapore.

The APMSR is Asia’s largest consumer sentiment survey, with close to 13,000 respondents from four countries, including 2,805 in Singapore. The survey was conducted by iProperty Group from June to July 2014. For the full report, please refer to

Property Trends in Singapore for 2014 and beyond

Suffice to say, the numerous property cooling regulations imposed by MND, URA, MAS, IRAS have done much to curb the speculative fever and more.

Click on this link for Chronology of property regulations to get the background. I will not elaborate on each of these policies.

Background of Singapore’s housing woes

We highlighted that regulations to stop latent demand is futile. In short, if there are 20,000 people needing houses and only 10,000 houses, then prices will surely go up. Brute force measures to artificially restrict 10,000 people from changing their minds to stop buying or defer buying will only momentarily solve the problem. But is the Singapore government sincere in wanting to solve these problems given the way government land sales are structured where the chief valuer lets the bid price meet an undisclosed minimum bid price before releasing land out for tender.

When prices of land run up to meet the minimum bid price the Singapore government wants, the pressure of demand outstripping supply has already built up. And given that houses need 2 to 3 years to build, during this phase, the land prices will continue to shoot up. This is also the reason why we think that Mr. Ku Swee Yong advocated that in Singapore, the strange things happen when supply is released, the prices shoot up, it’s uniquely Singapore. Why? This is because when land is released, developers are already starving of land, and will bid aggressively for the land. Developers would also know that this supply is released on the back of demand outstripping supply. Else why would developers bid high?

Here is a chart of property prices run up.


Figure 1: Sequence of events of property prices run up

So, if the government really wants to cool the market or solve the issue of property prices running out of control, they would do well to solve the inherent problems in the system. Many people have already suggested the remedies for fixing wild property price swings, but I doubt anything has been adopted or will ever be adopted.

Trend for 2014 – With property regulation as the backdrop

For existing home owners who bought their houses before 29 June 2013 (before the imposition of TDSR and who are a bit stretched, income-wise, now is probably a last chance to refinance. Else you may not get another waiver anytime soon. Check out the home loan refinancing experts.

Pockets of Extra HDB supply coming back to the market

By Jan 2013, when Permanent Residents are not allowed to rent out their units anymore after expiry of current lease, this means that by Jan 2014 or Jan 2015 many of these Permanent residents will be looking to sell their HDBs if they continue to be away from Singapore. This presents a small pocket of extra supply of HDB.

However Permanent residents who are away from Singapore and cannot secure permission to rent out their HDB flats have no economic benefit from keeping these units and will be keen to sell their HDB units. We have come across several Permanent residents who has left Singapore to work overseas and decided to sell their HDB due to not obtaining a license to rent out their HDB flats.


Financing Anomaly – Extremely difficult with HDB and EC, but not so with Condominiums

With the imposition of MSR of 30% or less for Executive Condominium, coupled with the income ceiling of $12,000, this means that the maximum price of an Executive condominium is about $880,000 (in order for a 80% loan of $880,000). Buying an EC or HDB will be tough as many will fail the MSR criteria. A couple would still have an easier time to borrow a larger quantum for Condominiums than for HDB or an executive condominium (EC).


Artificially depressed HDB demand and prices may bounce back in 2016 onwards

HDB prices will be artificially depressed due to the MSR of 30% or less, at least for the short term plus other possible artificial barriers created to slow down demand for housing. And all at the same time, the government has deliberately stopped or slowed down HDB supplies through slow release of land supplies for building HDB, citing already ample supplies.
There may be built-up pressures for HDB in a few years time when the moratorium of 3 years on new permanent residents comes due and in 2016. Currently new PR are barred from buying HDB resale for 3 years upon obtaining PR. By 2016, these new PR numbering tens of thousands would be 3 years in Singapore and eligible to buy HDB, causing more demand – supply imbalance. As HDB is the base benchmark, if HDB rises, every property class takes it’s reference from there. HDB prices may bounce back in 2016 onwards, just after election.

HDB housing is the base denominator of Singapore’s housing prices. If HDB prices rise, all property classes rises with it.


Demand artificially channeled to Private (non-landed) housing

Many property buyers have selected private residential dwellings instead due to EC and HDB financing difficulties. And since they could not afford a large quantum, they ended up buying very tiny private apartments or condominium.


Private residential vacancy rate
However, if you look at the Private property vacant units, there is some 18,003 units representing 6.2%. Traditionally this is considered low. If you take a look at 2002 to 2005 property price index, the vacancy rate at which property price is more or less in equilibrium (i.e. not increasing nor dropping in prices) is about 7.5% to 8%. Hence the prices for private properties though softening, is still holding up fairly well for completed properties even while we hear evidence of prices softening ahead of the actual supply coming on-stream.

But the supply in the pipeline is a healthy 83,702 units, annual consumption is about 11 to 15 thousand, representing roughly 5 to 7 years of supply, coming on-stream in the next 1 to 5 years.

The supply in the Private residential sector is much more ample than the HDB sector.

While these 83,702 units seemed like a huge supply pipeline, these supply are phase in over several years (supply numbers changes every quarter as developers alter plans to build or launch).

And at vacancy rate of 6.2% (Q4, 2013), there is some room for more supplies to come in before it reaches a balance at 7.5% to 8%. (See figure 2)


Larger share of salary going into property purchase and loan repayment servicing

The artificial channeling of buyers into private residential dwelling may increase the long term sales trend line (consumption) of private residential dwelling. (Even though the average household income of a family buying a private residential dwelling has been falling). What this means is, more and more people are buying private residential housing despite having not so strong incomes. And it is not because they really want the luxurious lifestyles or “high life” as the government is prone to highlight, but because they could not wait for the HDBs anymore having been repeatedly rejected by the BTO balloting processes due to not enough units given or not getting a loan due to MSR.
Hence developers are building ever smaller private residential units for this substantial group of people, therefore robbing Singapore property buyers their space by charging ever high per square feet (PSF) prices.

Are prices really crashing for properties?

There is however competition from developers to launch uncompleted units for sale to ease their financing cost. Highly leveraged or weaker developers may be more hard pressed to launch and garner sales faster. As many developers rush to launch, these uncompleted units comes into the market (as uncompleted “supply”), hence giving rise to the impression that the market is softening dramatically or even “crashing” with so many units for sale.

The stronger developers will have holding power and not act rashly unless triggered by unbalanced release of land supplies or the government deliberately not releasing land for sale citing “land reserve value not met”. Once the weaker developer’s stock are absorbed, we can see that prices will firm up again. HDB shortages will set the baseline prices and all the other classes of properties will have upward pricing pressures. (It’s basically a scarcity game).


Figure 2: URA Q4, 2013 Stock and vacancy supply in pipeline.


Other things to note are, the Core Central Region (CCR) has become very attractively priced relative to outside of central region (OCR). This is an anomaly which is not justified. There is currently no change so material that makes Punggol/sengkang more attractive than say Orchard road.

Historically prime regions in core central regions always command a premium relative to the other 2 location classes. OCR overshooting CCR may indicate that many people may be buying into hype of Outside of central region (OCR) and are paying too much for these properties (on a per square feet basis). (The reason as to why these properties overshoot the price, that is a discussion for another day)

If property buyers start to look at the prime areas, they may yet realize that these areas are not too expensive after-all. And the current over-supply in Core Central Region (CCR) reflects price quantum affordability as some of these units are bigger in size and hence could cost between $3m to $10m at least and so the lower Per square feet prices of CCR reflects this phenomenon of CCR having a lower price than OCR. All that glitters in OCR regions may not be gold, many people could be sitting on stagnant prices for many years.

If there is no recession, no economic boom, no further regulatory boosts or impediments, we expect property prices to soften about 10% based on current trend.

Good pickings will be in CCR areas for long term rental possibilities, capital downside protection as well as capital gains potential.


Figure 3: Property Price Index – Q3 2013 – Non-landed Private residential Property


What do you think? Share your thoughts with by leaving a comment below.


  1. How is Singapore land supply managed,
  2. TDSR causes Home loan refinancing hardships,
  3. MAS broadens Exemptions from TDSR thresholds,


  1. Summary of Property Regulations since 14 Sep 2009 till Aug 2013,
  2. Summary of property regulations aug 2013 till feb 2014,


This article is contributed by Paul Ho, the Chief Mortgage Consultant of iCompareLoan. iCompareLoan is a Research Focused Mortgage Consultant who compares and gives you the best fit home loan, commercial loan or SME business funding.

iCompareLoan is Singapore’s first and only Home Loan reporting platform used by Property agents, mortgage brokers and financial advisors to provide detailed home loan rates and reports to their clients. Subscribe to the home loan reports for only ~52 cents a day at and impress your clients with detailed home loan analyses which facilitate property buying and selling.

4 reasons why 2014 could be a turbulent year for stakeholders of the Singapore private property market

By Getty Goh

Based on the latest URA private property price index (PPPI) flash estimates, we know that the PPPI, which represents the overall real estate price trend, has dipped in 2013Q4.  This is the first dip the market has seen in the last 2 years.

At present, there are numerous views that the real estate market will stay stagnant for some time.  I agree and here are 4 reasons why we think 2014, and maybe even 2015, could be a turbulent year for stakeholders of the Singapore property market.

Reason 1: More new properties are going to flood the market

By now, we already know that there will be a large number of private properties being completed in the next few years.  However, to give you a sense of the numbers, you can see from Figure 1 that the supply of completed properties from 2014 to 2017 is more than 15,000 annually.

To give you some perspective, the total number of private properties in Singapore (including executive condominiums) is 297,689 in 2013Q3.  Based on the projection that there will be 19,302 units completed in 2014, the increase in residential units works out to be more than 6%.  With so much new supply, buyers will be spoilt for choice and this in turn will lead to their reluctance to pay a premium for potential units.

Figure 1: Supply of private residential units by type, development status and expected year of completion as at 2013Q3
Image and video hosting by TinyPic
Source: URA & Ascendant Assets Pte Ltd

Reason 2: More resale units can be expected when the 4-year Seller Stamp Duty duration expires

In the last few quarters, the resale volume has dipped quite significantly.  Based on Figure 2, it can be seen that for 2013, the resale volume dropped to as little as 25.6% (in 2013Q1).  In terms of resale volume, 2013Q3 is the lowest with only 1,340 transactions.

Figure 2: Number of units transacted in the whole of Singapore up to 2013Q3
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Source: URA & Ascendant Assets Pte Ltd

Putting things into perspective, this does not come as a surprise as the resale volume is muted due to the Seller Stamp Duty (SSD).  SSD was first introduced in Feb 2010 and policy stipulated that sellers who flipped their units within 1 year had to pay the additional tax.  On 30 Aug 2010, the SSD duration was increased to 3 years.  On 13 Jan 2011, the duration was revised to 4 years.  Based on these conditions, Figure 3 shows the number of transactions for each time period and when they can sell without being penalised by SSD.

Figure 3: Dates that owners can sell their units without being penalised by SSD
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Source: URA & Ascendant Assets Pte Ltd

The biggest unknown is how many people, who acquired private properties in the last few years, do not have the financial means or intention to hold on to their units for the long term.

Nonetheless, I reckon that there could be a sizable number of people wanting to sell their units over the next 1 to 2 years, as many of them are likely to be affected by the Total Debt Servicing Ratio (TDSR) measure.  So how does TDSR affect some owners?  This brings us to the third reason…

Reasons 3:  Owners who overstretched themselves financially will have a hard time securing refinancing

In the past few years when interest rates were low, liquidity was ample and banks were keen to extend favourable lending conditions, some Singaporeans could have over-stretched themselves by buying multiple properties or borrowing beyond their means.

Back then, numerous banks offered low interest rates of around 1.5% for the first few years followed by a spike in interest rates to more than 3% beyond the third or fourth year.  Before TDSR was introduced, these owners could avoid paying higher interests by simply going to another bank to refinance their loans (and get better rates).  However, with the introduction of TDSR, it is now much harder for these owners to get refinancing as the lending criteria has become more onerous.

To provide you with some perspective of how much more instalment an owner has to pay for a S$1milllion loan: based on an interest rate of 1.5% and tenure of 30 years, the monthly instalment works out to be about S$3451 per month, if he does not get refinancing and interest rates increase to 3.5%, the monthly amount payable is S$4,490 per month.  This works out to be an increase of about S$1,000 per month in loan repayment.

Ultimately, owners are now left with a choice of holding onto the property and paying significantly higher interest rates or selling their unit.  Looking at how much more an owner will have to pay to maintain his unit, it is definitely conceivable that those who had stretched themselves will consider selling their units to minimise their financial strain.  Naturally, the next question is whether there are still property buyers in the market and how many there are.

Reasons 4:  The pool of potential property buyers has shrunk significantly

Taken in totality, the various cooling measures implemented by the Singapore government are intended to achieve two things – prevent property speculation and encourage financial prudence by making it hard for those who already own one property to buy another.  In other words, if you are Singaporean and a first time buyer, you are almost not affected by the measures and can buy under favourable conditions (i.e. 80% financing as well as pay only 5% for your deposit).

Hence, to see how the market will perform in 2014 and beyond, we should try to determine how big the pool of first time buyers is. Logically, if there is a huge pool of first time buyers, we can expect property prices to remain stable or even increase.  Conversely, if the demand is not there, it will be unsustainable for prices to remain high for long.

To answer that question, let us take a look at the home ownership rate for Singaporeans and Singapore Residents.  Based on data from the department of statistics, it can be seen that the home ownership rate in 2012 is 90.1%.  In other words, 9 out of 10 Singaporeans and Singapore residents own at least one property (i.e. their home).  Only 1 out of 10 do not currently own their home and can potentially still buy properties without much restrictions.

Figure 4: Home ownership rate of Resident Households
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Source: Department of Statistics, Singapore & Ascendant Assets


Based on this analysis, the outlook for the real estate sector is definitely not as rosy as it used to be.  In fact, the warning signs have been around for some time and we have been cautioning buyers since Sep 2013 that the market was reaching a turning point (

That said, I concede that I may have made some assumptions and oversimplified some considerations in this article.  Moreover, the situation could change overnight if the government steps in to lift some of the cooling measures.  Nonetheless, this article is meant to put some context to the lacklustre market performance that we have been seeing for the past few months.

I have definitely misread the property market before and this is one occasion where I am hoping my assessment is wrong.  But looking at the current situation, I reckon that we are still in the early days of a government induced property market malaise.  So expect a bumpy road ahead…

Mr Getty Goh has a Masters in Real Estate and a Bachelors in Building from the National University of Singapore. He is a director at Ascendant Assets and the Co-founder of, South East Asia’s first crowd funding and purchase website. The views expressed are his own. For those who wish to know more, please email him at

Tell tale signs of overseas property scams

In the last few years, the Singapore government has been implementing measures to cool the red-hot property sector down.  As more Singaporeans are finding it hard to invest in the local markets, some have started looking abroad.

Over time, different types of property investment opportunities from all around the world have reached our shores. Some are genuine deals while some are dodgy investments.  Hence, it would be useful to share some of the tools to help discern whether a deal is genuine or a scam.

Tell tale sign 1: The construction figures did not add up.

Developers are after all in the business of making money through the selling of properties, thus one of the first things to look out for is whether the projected numbers add up.

In another news article, it was reported that the developer was planning to sell 900 units at US$90,000 (about S$117,000). There were different units and the smallest unit was about 60sq m (about 646sq ft).  Of the 900 units, 200 were already sold at a special pre-launch price of about US$30,000 (about S$39,000), which meant that a deep discount of about 66% had been given to the group of early buyers.

When it comes to development, one key component is construction cost.  To find out how much it costs to build a residential property in Indonesia, construction cost estimates for 2013Q3 from Rider Levett Bucknall (RLB), an internationally renowned quantity-surveying firm, were used (

Based on the report, the estimated construction cost for Jakarta was between RP6,161,000 per sq m (about S$62.36psf) and RP9,839,000 (about S$99.62psf). Due to the lack of more precise data for the Batam region, construction cost for Jakarta was used as an indication.  Based on the estimated cost, purely for construction, it would cost between S$40,000 and S$64,000 to build the smallest 60sq m villa.  Hence, at the special price of US$30,000, the developer may not be breaking even.

Compounding to the risk, the number of people who received the special 66% discount was also unclear.  The project could still be viable if the developer gave the special 66% discount to just a handful of close business associates.  However, if he gave it to all 200 buyers, the total amount collected would unlikely be enough to cover the construction cost for the 200 units.

In fact, based on preliminary calculations, if there was no more sales and the developer had to make good on the 200 units, he would be in deficit of between S$2million and S$5million.

Tell tale sign 2: The developer did not appear to have the financial strength

Developments are generally hefty financial undertaking and many developers do it with some form of construction loans from banks.  While developers may not reveal the true financial situation to the retail property buyers, they will have to show their financial reports to banks in order to secure construction loans.  Hence, developers that can secure bank financing at the construction stage tend to be in a good financial position and are more secure.  Conversely, developers who do not have some form of bank financing during the construction stage are not viewed to be as attractive.

The 900 units Batam development falls under the latter category.  That is not to say that “all” projects that do not have bank financing during the construction stage are doomed to fail.  However, for this specific case, the amount needed to build all 900 hundred units is at least S$36million (assuming all 900 units are 60sq m units that cost S$40,000 to construct).  When we did an ACRA check on the Singapore company, we found that the company had only a paid up capital of S$300,000 and the key appointment holders of the company stayed in public flats.

When it comes to overseas property deals, a key aspect that investors should look at is financial recourse – if things go awry, who will be financial responsible to make the investors whole.  Based on HDB’s website, it states that “Under the Housing & Development Act, so long as one of the flat owners of the HDB flat is a Singapore Citizen, the HDB flat (of any type) will not vest in the Official Assignee (“OA”) in the event of bankruptcy of any or all of the flat owners and the flat owners would not be compelled to dispose of their flat.”  This means that investors would have limited recourse should the development fail to materialise, as the directors’ assets could not be sold to repay the debtors.

More troubling is that the amount raised from the presale is about S$7.8million.  It is still significantly less than the S$36million needed for the project, bearing in mind that this is just a low end estimate as things like land cost, developer profits and other miscellaneous charges have not been factored in.  A S$300,000 company is unlikely to have the type of financial muscle to deliver on a S$36million project. And without bank financing, it is hard to fathom how they will be able to deliver on their promise.

Based on the 2 factors highlighted above, the CoAssets team concluded that the deal was too risky and we were not prepared to endorse it.

At this juncture, I must emphasize that not all projects that fail are scams.  Even good developments with solid management behind them have some risks of failing, as real estate development is, by nature, a risky endeavour.

Genuine business failures are realistic plans that go awry due to a sudden change of market conditions.  On the other hand, scams are “fantastic promises” made by those who do not intend to keep them – this means that the plan is unrealistic at the onset.


To conclude, the Indonesian case study cited in this article could be a genuine deal.  The developer could also have the financial muscle to take on a multi-million project and be profitable selling their villa units at S$39,000.  However, it is always more prudent to err on the side of caution.  Even if I am wrong and this turns out to be the next big financial deal, the market is not short of genuine good deals, all we have to do is look and do our due diligence.

This article just provides a brief analysis on two of the more important red flags.  There are many other considerations that have not been listed and a more detailed write-up will be beyond the scope of this blog.  However, if you are currently looking at a deal that seems too good to be true and would like to get a second opinion, you can drop me an email at  While it is not part of CoAsset’s core business, we hope to add more value to you by highlighting some of the blind spots that you might have missed.

Ultimately, let me end off with this adage, “if it seems too good to be true, it often is”.  This statement is pretty much applicable to everything in life, overseas property scams included.

This weekly insights article is contirbuted by Mr Getty Goh, the co-founder of CoAssets, a spin off company from Ascendant Assets Pte Ltd.  CoAssets is Singapore and South East Asia’s first real estate bulk purchase and crowd funding site.  For any queries, please drop him an email at

People’s Choice Award Professional pick by Sonya Madeira Stamp

Have you been cracking your brains on which newly launched private condominium in 2012 to vote for? Help’s here!

This week we have Sonya Madeira Stamp, Founder and Managing Partner at Rice Communications, a full-service PR agency in Singapore with us sharing her views on what’s her pick on People’s Choice Award 2012! Here’s what she have to share with you!

Singapore is such a dynamic city – It is constantly changing, with new, innovative developments springing up all over the place, quite an achievement for such a small island. Here are my picks for the most interesting and compelling new properties of 2012.

1) Property I Would Bet My Granny’s Savings on Award – Condo with Highest Appreciation Potential

EON Shenton

EON Shenton is in the Tanjong Pagar area. Enough said, right? But the development isn’t content with simply being in the CBD; it’s situated the near the future Tanjong Pagar Waterfront City. The yet-to-be-built Marina Coastal Expressway will also link the district directly to the airport, thus giving it unparalleled connectivity and much room for appreciation.

2) Staycation Award – Condo with hotel facilities

1919 at Mt Sophia

Hearkening back to Singapore’s colonial past, the 1919 at Mt Sophia resembles a boutique hotel with its distinctive black and white exterior flanked by sculptured balustrades and white colonnades. The interiors boast stylish, quality furnishings, giving the space a luxe, sophisticated flair.

3) Take My Breath Away Award – Condo With the Greatest View

Waterfront Gold

Waterfront Gold looks out onto the shimmering waters of the Bedok Reservoir and beyond. It’s surrounded by park landscape on all sides, allowing residents to enjoy a lush, green environment that’s so coveted in concrete-jungle Singapore. “Float” in the Bubble Sky Elevator up to the rooftop, where the scenery is best enjoyed.

4) Supersize Me Award – Best Condo for Big Families

Flo Residence

Enjoy some quality time with your spouse in the mini theatre and entertainment function room and let the kids be kids in the multi-deck playhouse. Larger families should choose the four-bedroom Penthouse unit with a maximum size of 2368sq ft.

5) Saving Gaia Award – Best Eco-Friendly Condo


Taking on a literal interpretation of being green, this development is situated in a garden community where residents can enjoy a rich tropical landscape filled with grand rain trees, lush gardens and leisure spaces. Besides being built with eco-friendly materials, the property also features several sustainable measures, such as waste management and shading systems.

6) City Slickers Award – Best Condo in the CBD District

8 Bassein

8 Bassein at Novena offers close proximity to great shopping and dining in the city’s main shopping belt as well as the Central Business District of Singapore. Return home to panoramic views of the vicinity and the most upscale designer furnishings.

7) Life’s a Beach – Resort living

Waterfront Waves


The premier location for water sports and activities, Waterfront Waves presents residents with unrivalled access to the Bedok Reservoir and Bedok Town Park. As indicated by its name, water is an important design element in this development. Just look at the lap pool, splash pools, eco-pond and aqua gym.

8) Foodie Paradise Award – Condo with the Best Food Available Next Door

Idyllic Suites

Venture into the lanes of Geylang to find local delights, best enjoyed 60’s style: eating durians by the road side, slurping beef hor fun at a table you are sharing with strangers, and dunking dough fritters into your soya bean milk. Two streets down at Old Airport Road, you’ll find the Lao Fu Zi Char Kway Teow, Xin Mei Xiang Lor Mee and Blanc Court Kway Chap. Say good bye to your diet plans.

9) Object of Desire Award – Condo with the Best Architecture



Surrounded by 24-hour eateries and pubs at Katong, Parkway Parade Shopping Centre and East Coast Park nearby, The Coralis Condo will present swinging singles with an endless array of entertainment and nightlife in the suburbs. Singles can choose from either one or two bedroom apartments.

10) Object of Desire Award – Condo with the Best Architecture

Sky Habitat


Designed by Moshe Safdie, the same architect who did Marina Bay Sands Resorts, Sky Habitat was conceived on the idea of a sculptural statement on what constitutes a ‘house’. The staggered configurations allow residents to have their private garden or outdoor space. Perhaps most stunning is the pool that stretches across two towers.

You can bet that I would be investing in one or more of these – but how to choose between living the resort life, or with a wonderful view, or smack in the heart of the city? I couldn’t pick just one!