Follow the Sine to Singapore Property Prices

For Mr Andrew Chua, 46, owner of Focus Adventures, Camp Challenge and Outdoor Adventures, enjoying life is part of work.

'I believe in work-life integration. A lot of people work to get money to enjoy life. My philosophy is to work while you enjoy life.'

This is similar to his thinking when it comes to spending money. He will spend only when he can see a return on his investments (ROI).

That's how he views his expenditure on his 60m yacht. He bought it two years ago to charter out, but will use it when it is not being rented.

It's as much a lifestyle choice as an investment as he now lives on board the boat when he is in Singapore.

More than half of his time, though, is spent in Hainan, China, where he is setting up a facility that will run sea sports activities for tourists.

He has already brought Focus Adventures, which offers adventure-learning activities for corporate groups, to Sibu, Batam, Bintan and New Delhi.

Mr Chua, who is single, used to be a Republic of Singapore Air Force pilot.

Q: Are you a spender or saver?

I balance my savings with my spending. And I spend only on things that will give me a return on my investments such as my yacht or a jet ski that I can modify and sell at a higher price.

My crew and I are repairing a yacht for sale.

I don't spend on clothes as I wear a uniform every day. You will see me in a beige company T-shirt, beige pants and brown belt seven days a week.

I also don't spend on drinks, cigarettes and karaoke as these do not give me any return on my investment.

When it comes to charity, I like to help underprivileged children as I want to help them achieve their own ROI.

Q: How much do you charge to your credit cards every month?

I applied for my first Amex card when I was 21. I charge about $5,000 a month to my credit cards.

Credit cards come in handy as I buy a lot of spare parts and gadgets online.

Q: What financial planning have you done for yourself?

I have health insurance and I used to invest in shares. But I liquidated almost all my shares to raise cash for my house in 2010.

Right now, my business is giving me the lifestyle that I want. But I plan to invest in one or two properties in the next few years. Then I will have a stable passive income stream for my later years.

I like property as I've always made money from my property investments.

Property is a good hedge against inflation. I used to speculate in property and have bought a few on and off.

Q: Moneywise, what were your growing-up years like?

My mum was a nurse and my father ran a small retail business. They provided for me and my two younger siblings but we were not rich.

I signed on with the armed forces when I was 18 and started to live on my own since then. Enlisting in the military was a good option as I did not have to rely on my parents for money.

Q: How did you get interested in investing?

I became a fully qualified pilot earning about $4,500 a month at the age of 21.

I saved quite a bit as I was staying in the officers' mess where food was provided and so I did not spend much money for three years.

I decided I needed a savings plan. I made up my mind to buy my first property as it would mean that I had to be disciplined and set aside a specific amount of money every month to pay the mortgage.

I borrowed some cash from my parents for the down payment to buy a freehold Flamingo Valley unit that cost $393,000.

I sold it for $680,000 four years later.

Property gives you very good value and is the most stable in terms of your return on investment. You can also get good rental yields here.

If I did not commit to a property, I would probably have spent the money and bought some flashy sports car.

Q: What property do you own?

It's a four-storey terrace house in Sembawang that I bought for $1.95 million in 2010.

I rented out four rooms, which pay for the mortgage, and I keep a small room for myself. I go back once in a while to do the laundry and to make sure everything is in order.

Q: What's the most extravagant thing you have bought?

I bought a sea plane for $80,000 a few years ago. I flew it a couple of times but unfortunately I crashed it. I had to spend another $40,000 to $50,000 to rebuild it.

Q: What's your retirement plan?

I plan to work till I cannot work.

Q: Home is now...

A room in my 60m yacht. I bought it second-hand for $150,000 and spent about $100,000 to do it up. Recently, someone offered to buy it for $350,000.

Q: I drive...

A 2003 C-class Mercedes-Benz.

joyceteo@sph.com.sg

WORST AND BEST BETS

Q: What is your worst investment to date?

I invested almost $70,000 in shares in China Aviation Oil and I lost $50,000 after news of the firm's financial scandal broke in 2004.

I still have the shares. Hopefully, their value will creep up over time.

Q: What is your best investment to date?

I bought a three-bedroom unit in Poshgrove East in the Katong area back in 2007 for more than $800 per sq ft.

When I received the keys to it in 2009, a property agent asked me whether I wanted to sell it. By then, the price of my unit had gone up by another $200,000, so I said OK.

Murtaza Razvi, 47, was the head of Dawn Magazine and the senior assistant editor at Dawn Media Group, a leading Pakistani media organisation.

He was found murdered in Karachi on April 19, in an office apartment in the Defence Housing Authority (DHA) area. DHA is a real estate development organisation administered by the Pakistan Army.

It is not known who killed him and why. He is survived by his wife Shahrezad, and daughters Maya, Priya and Dina.

Born in Lahore, the veteran newsman had more than two decades of journalistic experience and was resident editor of Dawn - Pakistan's oldest and most widely read English-language newspaper - from 2005 to 2007.

He was also a well-known columnist and political analyst for the Indian Express newspaper.

In 2009, he was in Singapore as part of the pioneering group of journalists selected for the three-month Asian Journalism Fellowship (AJF).

The AJF brings together journalists from across Asia to network and hone their professional skills through lectures, seminars and research.

Since its launch, 67 journalists have participated in the programme, which includes workshops and seminars on media-related subjects.

While here, participants also undertake an independent research project that may be significant to their home country or related to Singapore.

Held at the Wee Kim Wee School of Communication and Information in the Nanyang Technological University, the AJF is supported by Temasek Foundation, a non-profit organisation that provides grants for the development of health care, education and research programmes in Asia.

This year's AJF programme ended two days ago, with 16 fellows from 13 countries.

In a commemorative newsletter to mark the journalist's death, AJF director Cherian George said: 'On the morning of April 13, 2012 - six days before his passing - I sent a Facebook message out to the AJF alumni asking whether they would be interested if we organised a reunion in Singapore next year.

'By the end of the day, Murtaza replied, 'Sounds great. Just meet and discuss ideas like good people do...''

Candice Neo

BUYERS can still snap up private apartments of reasonable size for less than $1 million - but do not expect up-to-the-minute styling or prime locations.

Yet such buys could end up being a good deal if they are in an area that is set to be revitalised or developed. Buyers have been quick to jump in.

There were 1,249 private flats of 1,000 sq ft or more sold for below $1 million in the period from Jan 1 to May 4, consultant Nicholas Mak said. This includes new and resale private and executive condominiums.

Mr Mak, the head of research at SLP International Property Consultancy, added that most sales were made in 99-year resale condos in suburban areas. The freehold properties were mostly in city fringe areas such as Geylang, where there is a higher concentration of such homes, he said.

Homes costing less than $1 million can be found in both new launches and the secondary market but it is rarer in the former, because the increase in land prices has led developers to offer higher per sq ft (psf) prices and smaller units, R'ST Research director Ong Kah Seng said.

New launches of flats of at least 1,000 sq ft and costing below $1 million can be found in the north-eastern areas like Hougang, Sengkang and Punggol.

Mr Ong noted that in the first four months of the year, there were 74 such transactions at The Minton, an upcoming 99-year condo in Lorong Ah Soo, and 36 at Sengkang's Riversound Residence, a 99-year condo.

Deals can also be found in upcoming condos in Pasir Ris. There were 24 sales at The Palette and 12 at Ripple Bay. For example, a 1,076 sq ft flat at Ripple Bay was sold for nearly $902,000 last month. That works out to $838 psf. The 99-year condo is expected to be completed in 2015.

'(These areas) are more valued propositions as the north-east promises exciting future growth while Pasir Ris is an established and refreshing resort-living area,' he said.

In Yishun and Sembawang, some similar transactions were made at The Nautical and Eight Courtyards.

These areas are also good scouting grounds for buyers looking to get a resale unit, which could be as big as 1,400 sq ft for that price, Mr Ong said.

Based on caveats lodged in the first quarter of the year, completed condos like Regent Heights, Changi Rise Condominium, The Mayfair, The Warren and Hillview offered bargains.

Last month, a 1,346 sq ft unit at Melville Park in Simei was sold for $888,000. The 99-year condo was completed in 1996.

Many shoebox units - measuring about 540 sq ft or less - cost less than $1 million but these are said to be too small for a family.

Decent-sized units can also be had for a similar price, but buyers have to bear in mind the trade-offs, like how an older condo may look dated.

Mr Lee Sze Teck, senior manager of research and consultancy at Dennis Wee Group (DWG), pointed out: 'When a property is older... there will be more maintenance issues which may require higher upkeep.'

He warned that major repairs, if any, will 'dip into the sinking fund of a strata-titled property' and if it is not enough, buyers will have to pay in cash. 'Also, banks may not be willing to lend to leasehold properties with short leases remaining,' he said.

While R'ST Research's Mr Ong noted that some people might not mind buying a older project, those looking for homes with lasting power may find it worthwhile to look into executive condominiums instead, Mr Mak suggested.

'Other than that, private condos that are more than 10 but less than 20 years old can beat newer launches in size and price, even though there might be some wear and tear,' he said.

Credo Real Estate executive director Ong Teck Hui pointed out that a freehold unit would be 'better value compared to 99-year leaseholds'.

'The latter would have run down by quite a number of years and may not appreciate as well over the longer term,' he said.

Buyers, of course, must know what they are buying the unit for before snagging a deal.

For instance, investors must consider the 'rentability' of the unit, said Mr Danny Yeo, group managing director of property consultancy Knight Frank.

'They will also look at capital appreciation. Thus, it's better to select locations closer to MRT stations and town,' he said.

However, owner-occupiers could be more willing to trade a good location for a family-sized unit, given that budget.

Aside from private projects, landed homes have also recently sold at low prices.

DWG's Mr Lee said a 60-year leasehold terraced house at Geylang's Lorong 3 was sold for $90,000 this year, although it only had seven years of the lease left.

'People who buy such homes are likely to be looking at getting passive rental income ... it is unlikely that they will be able to resell it for gains,' he said.

tamanda@sph.com.sg

Decent-sized units can also be had for a similar price, but buyers have to bear in mind the trade-offs, like how an older condo may look dated.

A GOOD Class Bungalow (GCB) at Swettenham Road was recently sold for about $25.8 million or $1,714 per square foot on a freehold land area of 15,069 sq ft.

On site is a bungalow that was completed about a year ago and currently tenanted at a monthly rental of slightly over $40,000. The property has two storeys and a basement. It has five bedrooms and a swimming pool. The buyer is understood to be a Singapore citizen.

Newsman Realty is said to have brokered the deal.

A two-storey house at Third Avenue is also understood to have changed hands recently at $13.5 million or $1,536 psf. RealStar represented the buyer, a local businessman. The seller was represented by Singapore Residential Properties.

According to CBRE's analysis of caveats data, deals in GCB areas this month include a property at Rebecca Road (near Coronation Road) that has been sold for $17 million or $1,575 psf, and another at Margoliouth Road (near Stevens Road/Bukit Timah Road) which fetched $12.2 million or $1,849 psf. Last month, a bungalow at Binjai Park transacted at $12.8 million or $1,049 psf.

GCBs typically have a minimum plot size of 1,400 square metres (or 15,069.46 sq ft). But when GCB Areas were gazetted in 1980, they included some smaller existing sites.

These are still considered GCBs as they would be bound by other GCB planning rules if they were to be redeveloped. For instance, such plots cannot be further subdivided and they cannot be built more than two storeys high (plus an attic and a basement).

Newsman Realty managing director KH Tan observes that house hunters in the GCB market these days are mostly Singaporean buyers looking for a home to live in.

He predicts GCB prices will end this year at 10 per cent above end-2011 levels. "Most of the sellers are not in a rush, while buyers are still making purchases," he adds.

Coldwell Banker Realtors managing director Alexs Chua expects GCB prices to "easily go up" by $200 to $300 psf this year for ultra-prime locations such as Nassim, Cluny and Dalvey, where there is always very strong demand. "Currently prices in these locations are hovering at about $2,000 psf or higher."

For places like Cornwall, Belmont and Leedon, where prices today are about $1,600-1,700 psf on average, prices could probably rise by another $100 to $200 psf this year, he adds.

"Out of 10 GCBs put on the market today, owners of two to three are probably 'motivated sellers', ie, they could be emigrating, or downsizing their home. The rest are less motivated to sell unless they get the price they want.

"As for buyers, seven out of every 10 are investors. They don't need to buy unless they get a good price. Of the remaining three who are buying for their own occupation, one or two will commit to a purchase on fear that prices may rise further."

Realstar Premier managing director William Wong observes that since March, the buyer-seller price gap for GCBs has started to narrow, as buyers lately are more prepared to pay a premium to meet sellers' expectations in prime GCB locations due to limited choice in availability of properties for sale. "In less choice GCB districts, sellers may have trimmed their price expectations to more realistic levels and this has helped seal deals."

Outside GCB Areas, a freehold bungalow at Holland Grove Terrace recently changed hands at about $10.5 million or $1,280 psf. It sits on land of 8,219 sq ft. On site is an old single-storey bungalow that is expected to be redeveloped by the buyer - which is a boutique property development company. The site is zoned for two-storey semi-detached use. Coldwell Banker represented the seller in that transaction.

Over in the Sentosa Cove upscale waterfront housing locale, YTL sold a 99-year leasehold bungalow on Sandy Island last month for $21.85 million or $2,364 psf on land area of 9,241 sq ft. The buyer is Singaporean.

The two-storey property has an attic and basement. It has five bedrooms with a private pool in the waterfront garden and a private berth for a 36-foot yacht.

A car lift moves cars to the basement garage, which can accommodate up to three cars. In addition, a passenger lift connects all four levels of the home.

Sandy Island - YTL's maiden Singapore project - is a collection of 18 villas designed by famous Italian architect Claudio Silvestrin. The project received Temporary Occupation Permit in the first quarter of this year. YTL has one villa available for sale at the moment with a price tag of about $17 million. It has a land area of about 8,000 sq ft.

Is the dream of home ownership still within the reach of young people in Singapore?

THERE'S nothing quite like the subject of property to get the average Singaporean excited. Discussions on home prices, movements of the property market, unit sizes and even interior decoration dominate all manner of daily conversations, from Parliament debates to coffee shop talk.

Singapore is a home-owning, house-proud nation. This has its roots in a decision made by the first generation of leaders more than 50 years ago - when Singapore gained self-governance - who saw the value of home ownership.

Former prime minister Lee Kuan Yew, for example, saw it as a way to create a sense of national belonging in a volatile era, when the country was coming to terms with self-governance and later, independence.

Mr Lee wrote in his 2000 memoirs that it was important for Singaporeans to own their homes: 'I believed this sense of ownership was vital for our new society, which had no deep roots in a common historical experience.'

Over the past five decades, the Housing Board has been the cornerstone of that fundamental philosophy. The HDB was established on Feb 1, 1960 - shortly after Singapore gained self-governance in 1959, and amid a housing crisis. Then, much of the population was living in crowded squatter settlements and unhealthy conditions.

The HDB, taking over from its predecessor, the Singapore Improvement Trust, was tasked with housing the entire nation. It built 21,000 flats in under three years. By 1965, when Singapore gained independence, it had built 54,000 flats. Within 10 years of its formation, it had the housing problem under control.

Today, it has built more than one million flats, housing over 80 per cent of Singapore's residents.

The homes have become a social safety net, an asset that has become a hedge against inflation and a store of retirement income for home owners.

In Singapore, about 88 per cent of households own their homes, with most owning HDB homes. This is a notable achievement for a city once overrun by slums. In comparison, rival city Hong Kong's figure is much lower, at about 52 per cent.

Singapore's public housing policies and projects have also gained international recognition. In 2010, the HDB was awarded the 2010 United Nations-Habitat Scroll of Honour Award, the most prestigious award of its kind, which recognised the housing board for 'providing one of Asia's and the world's greenest, cleanest and most socially conscious housing programmes'.

But as successful as HDB has been in the past, other more complex issues have surfaced in recent years that have prompted a national discussion and review of current housing policies.

In last year's General Election, housing emerged as one of the hottest topics, with the public voicing strong opinions over the affordability of homes, particularly for newly-wed, first-time home buyers.

Singapore's property bull run of the past five years - bolstered by the country's strong economic growth - had seen private and public housing prices soar to historic highs.

Home buyers were unhappy about either being priced out of the HDB resale market or repeated failure in balloting for a new flat from the HDB.

The question that young home buyers were asking was: How can we afford that first, dream home?

Well, the good news is that homes are still affordable - depending on what you are aiming for.

The Government's promise - and the HDB's mission - is to provide affordable housing for the masses.

Newly-weds earning below $10,000 in combined monthly income can apply for the HDB's new Build-To-Order (BTO) flats, which are typically priced around 30 per cent cheaper than comparable resale flats in the same area.

The income ceiling was recently raised from $8,000 to $10,000 to enable a larger number of buyers to purchase flats directly from the HDB. The move was seen to help in drawing demand away from the red-hot resale market.

The HDB has in the past year launched new projects at least once every two months across a wide range of locations. BTO flats, however, take around three years to be built - so young buyers have to be prepared to wait for their home.

Prices of new BTO flats have been kept stable in the past year, and are generally affordable for young couples, going by widely used standards.

The internationally recognised threshold for housing affordability is a 30 per cent 'debt-to-service ratio' (DSR) - the proportion of monthly income that goes into paying the mortgage. (See box for a worked example.)

Another widely used affordability measure divides the price of a home by a potential buyer's annual income.

The affordability picture changes if the couple opt for a resale HDB flat instead.

The Government does not control prices of HDB resale flats, which reflect market demand and supply. Many resale flats are in mature estates with many amenities, and in locations more central than new flats. The result: Most HDB resale flats are more expensive than new flats.

Buyers of resale flats also need more cash reserves to pay for their homes, as sellers typically demand a cash premium - called cash-over-valuation - over and above a flat's valuation.

According to the HDB's latest figures, the median price of a four-room resale flat ranges from $384,000 in Yishun to $655,000 in Queenstown.

First-time buyers have to do their sums carefully to determine if they can afford it. If the couple can qualify for an HDB loan, the upfront payment needed will be 10 per cent; for those who do not qualify and have to get private bank loans, the upfront payment is a heftier 20 per cent.

For a $655,000 flat, this is $65,500 or $131,000 respectively, which can be paid in cash or with one's Central Provident Fund.

Those who have just joined the workforce would have to work for several years before they can come up with those kinds of savings. Those earning below $5,000 monthly will also find that their DSR will shoot past 30 per cent (explained in the worked example) if they set their sights on pricey resale homes.

Those with loftier ambitions of getting into the private property market after working for a few years might need a further reality check.

Latest figures from the Singapore Real Estate Exchange (SRX), which collects price data, shows that the average per square foot price of a non-landed private home is $1,061 for the first quarter of this year.

This means a three-bedroom condominium unit of, say, 1,000 sq ft will cost about $1 million, of which about $200,000 is needed upfront.

It is no wonder that parents often advise their children to start with a new HDB flat. You need to live in it for at least five years before it can be sold or rented out.

Existing housing policies favour the family unit - only married couples are allowed to buy new flats from the HDB or qualify for grants. Singles cannot buy new flats directly, and have to be above 35 years of age to purchase HDB resale flats.

For young buyers who are neither married nor have a fat bank account as yet, there are other options to consider. They can live with their parents or other family members, or rent a place.

More may be doing so: Figures from the 2010 Population Census show a rise in the proportion of one-person resident households in the 25 to 29 age group, from 10 per cent in 2000 to 28 per cent in 2010.

Such an option might cost more, but offers more flexibility on flat type and location, as well as the freedom and independence that many young people desire today.

Ultimately, the path to your dream home can be achieved in several ways. Arming yourself with intimate knowledge of the property market, housing policies and financing options is the first step to getting that first dream home.

jcheam@sph.com.sg

Can you afford a new home?

LET'S look at HDB's recent launch of subsidised new flats at Ping Yi Greens in Bedok as an example.

A three-room flat is priced between $281,000 and $317,000, and a four-room from $400,000 to $464,000.

Based on a total monthly income of, say, $3,600, a young couple can get an additional housing grant of $15,000 for a $300,000 three-room home.

This means a net purchase price of $285,000. With an HDB loan of 90 per cent of that price, or $256,500, and at the current interest rate of 2.6 per cent, their monthly instalment repayment will be about $1,020 based on a 30-year loan.

This works out to a 'debt-to-service ratio' (DSR) of 28 per cent - which means 28 per cent of their monthly income goes to paying the mortgage. The internationally recognised threshold for housing affordability is about 30 per cent.

So the three-room flat is relatively affordable for a couple in that income range.

A couple with higher monthly incomes can go for bigger flat types.

Take a couple earning, say, $5,800 monthly. The monthly instalment on a four-room flat of $430,000 - with an HDB loan of 90 per cent of the purchase price at the current interest rate of 2.6 per cent for 30 years - would work out to $1,549 or 27 per cent of monthly income.

The Big Quiz in short

Housing policies at a glance

HDB FLATS

Under government policies, first-time home buyers who form a family nucleus can buy a new, subsidised flat directly from the Housing Board.

Those who choose to buy a resale HDB flat can qualify for a housing grant of up to $40,000.

The rules?

- Your spouse, and children (if any)

- Your parents, and siblings (if any)

- Your children under your legal custody, care and control (for a widowed/ divorced person)

- Your fiance/fiancee

- Your unmarried siblings (if you and your siblings are orphans)

DBSS FLATS

Some other housing options include homes under the HDB's Design, Build and Sell Scheme (DBSS) and executive condominiums. Both schemes were meant to cater to the 'sandwich class' of middle-income buyers who aspire towards private condo-style living but cannot afford the prices.

DBSS projects are built by private developers but have HDB rules.

Units have condo-like furnishings but the blocks are ungated, like normal HDB blocks, with no perimeter or security guards as in private estates.

Land sales for such projects have been suspended for the time being following a public outcry over a Centrale 8 DBSS unit in Tampines bearing an original price tag of $880,000 last year.

Couples earning between $8,000 and $10,000 can buy new DBSS flats with a $30,000 Central Provident Fund housing grant.

EXECUTIVE CONDOMINIUMS

Executive condos (ECs) are built by private developers and boast features found in private estates such as swimming pools and tennis courts.

The government imposes conditions on those who want to buy EC units. The monthly household income of a couple applying for an EC unit must not exceed $12,000, and they must occupy the apartment for at least five years before they can sell it on the open market or rent it out.

After 10 years, the units are converted into private housing and can be sold to foreigners.