View Full Version : Bought new from Developer, how many years before you let go for LH 99 years?
PropVestor
28-04-17, 15:15
Lets take away the owner needing the money urgently at the point in time or the need to time the market, what are the triggers that will motivate you to consider letting it go?
1) 10-15 years
2) The management fees are beyond a certain threshold
3) Outlook and maintenance of the property
What other factors do you guys think about that will trigger the sale of that LH property if it is bought new?
PropVestor
anythingwhatever
28-04-17, 17:59
Lets take away the owner needing the money urgently at the point in time or the need to time the market, what are the triggers that will motivate you to consider letting it go?
1) 10-15 years
2) The management fees are beyond a certain threshold
3) Outlook and maintenance of the property
What other factors do you guys think about that will trigger the sale of that LH property if it is bought new?
PropVestor
Factors 2 & 3 maybe applicable to FH too.
Those who think freehold can last forever good luck!!
Don't need money urgently only will look to buy more, sell cannot loan for another one.
Unless need to upgrade or downgrade.
Or adopt mortgage equity options. No need to sell.
If maintenance goes very high like 20 or 30 years later, maybe will try for enbloc le.
Lets take away the owner needing the money urgently at the point in time or the need to time the market, what are the triggers that will motivate you to consider letting it go?
1) 10-15 years
2) The management fees are beyond a certain threshold
3) Outlook and maintenance of the property
What other factors do you guys think about that will trigger the sale of that LH property if it is bought new?
PropVestor
Don't need worry, wat will be , will be.... bought a few properties, say don't sell, end up also sell...u will sell wen u get sian of it 😜 Or too many condos spring up and decrease ur value
Sell also cannot buy why sell.
Yah if too many also headache. Lots of coordination work to manage, unless you can make it your full time job...
Don't need worry, wat will be , will be.... bought a few properties, say don't sell, end up also sell...u will sell wen u get sian of it 😜 Or too many condos spring up and decrease ur value
anythingwhatever
28-04-17, 22:49
Yah if too many also headache. Lots of coordination work to manage, unless you can make it your full time job...
Full time landlord... :-)
anythingwhatever
29-04-17, 15:17
Those who think freehold can last forever good luck!!
In Singapore's context, nothing is forever...
Eventhough the land is FH, the building and facilities probably won't last more than 50 years.
Couple with future population growth, land scarcity and the need to build taller and taller structures, chances are both FH and LH will go en-bloc around 50-60 years.
The difference between FH and LH may not be too much after all.
PropVestor
29-04-17, 16:35
All my investments are mixed development. Since they are bought/developed at such land prices (around $3bn+ each), I probably think en bloc could be a real challenge. That's why I thought of letting go before 15 years is up.
Your statement:
The difference between FH and LH may not be too much after all.
doesn't make any cow sense do you know that?
Now, assuming both FH and LH properties next to each other go en-bloc at 60 years old.
Now assuming that the freehold property market price is valued at say $10M.
Then, the 99-years LH property owner will only get compensated an amount = (39/99)x$10M = $3.9M !!!!!!!
Wow! Whether you own a FH or LH property means you get compensated $10M or $3.9M respectively!!!!!!!!!!!!!
and You are telling us that a difference of $6.1M or 156% is NOT TOO MUCH?!
Wow! Doesn't make any cow sense at all!
In Singapore's context, nothing is forever...
Eventhough the land is FH, the building and facilities probably won't last more than 50 years.
Couple with future population growth, land scarcity and the need to build taller and taller structures, chances are both FH and LH will go en-bloc around 50-60 years.
The difference between FH and LH may not be too much after all.
anythingwhatever
29-04-17, 18:17
Your statement:
The difference between FH and LH may not be too much after all.
doesn't make any cow sense do you know that?
Now, assuming both FH and LH properties next to each other go en-bloc at 60 years old.
Now assuming that the freehold property market price is valued at say $10M.
Then, the 99-years LH property owner will only get compensated an amount = (39/99)x$10M = $3.9M !!!!!!!
Wow! Whether you own a FH or LH property means you get compensated $10M or $3.9M respectively!!!!!!!!!!!!!
and You are telling us that a difference of $6.1M or 156% is NOT TOO MUCH?!
Wow! Doesn't make any cow sense at all!
Gotcha!! :p
Your statement:
The difference between FH and LH may not be too much after all.
doesn't make any cow sense do you know that?
Now, assuming both FH and LH properties next to each other go en-bloc at 60 years old.
Now assuming that the freehold property market price is valued at say $10M.
Then, the 99-years LH property owner will only get compensated an amount = (39/99)x$10M = $3.9M !!!!!!!
Wow! Whether you own a FH or LH property means you get compensated $10M or $3.9M respectively!!!!!!!!!!!!!
and You are telling us that a difference of $6.1M or 156% is NOT TOO MUCH?!
Wow! Doesn't make any cow sense at all!
from http://www.sla.gov.sg/Portals/0/Services/Land%20Lease%20Conditions/DP%20policy%20wef%2031%20Jul%202000.pdf
look at appendix 4, example 3, step 2
FH: $10,000,000
Age: 60 -> Tenure left: 39
Value of 39 years as percentage of FH value : 67.7%
premium for 39 year tenure = 10,000,000 /96 * 67.7 = ~ 7,050,000
upgrading premium = 10,000,000 - 7,050,000 = 2,950,000
so developer will pay LH owner 10,000,000 - 2,950,000 = 7,050,000
and developer will pay FH owner 10,000,000
anythingwhatever
02-05-17, 12:48
from http://www.sla.gov.sg/Portals/0/Services/Land%20Lease%20Conditions/DP%20policy%20wef%2031%20Jul%202000.pdf
look at appendix 4, example 3, step 2
FH: $10,000,000
Age: 60 -> Tenure left: 39
Value of 39 years as percentage of FH value : 67.7%
premium for 39 year tenure = 10,000,000 /96 * 67.7 = ~ 7,050,000
upgrading premium = 10,000,000 - 7,050,000 = 2,950,000
so developer will pay LH owner 10,000,000 - 2,950,000 = 7,050,000
and developer will pay FH owner 10,000,000
20% difference at the point of purchase.
30% difference after 60 years.
Guess most of us can live with that... :)
Interesting LH vs FH info :).
So LH value degrades slowly when the building is 0 - 60 years old and start accelerating after 60 years old.
Within 35 - 50 years old, the degradation rate is even reducing, which make it a good time for enbloc.
from http://www.sla.gov.sg/Portals/0/Services/Land%20Lease%20Conditions/DP%20policy%20wef%2031%20Jul%202000.pdf
look at appendix 4, example 3, step 2
FH: $10,000,000
Age: 60 -> Tenure left: 39
Value of 39 years as percentage of FH value : 67.7%
premium for 39 year tenure = 10,000,000 /96 * 67.7 = ~ 7,050,000
upgrading premium = 10,000,000 - 7,050,000 = 2,950,000
so developer will pay LH owner 10,000,000 - 2,950,000 = 7,050,000
and developer will pay FH owner 10,000,000
PropVestor
02-05-17, 14:19
Lets go back in time for then iconic mixed development like Golden Mile Complex (built 1974, I can only view historic records as its before I am born). It was a seaside facing shopping mall and apartment. Its design and location at that time is arguably ahead of many others like Pearl Bank apartment in 1976. Fast forward 43 years today, its lease is 56 years left from 99 years LH (1974-2017). It is still standing today and given its prime location, it will fetch a decent en-bloc price. What I am trying to say is that micro-location counts. If its a prime location, developer who see future value will be willing to top up the lease, pay top dollar and re-develop this property.
Now back to current equivalent iconic development like Marina One for example which is now worth S$7billion even before TOP (circa 2017), it is mind blowing to imagine how much future developer will pay to re-develop this development. More likely such pricey developments, will be re-furbished till it become an 'eye sore' before any en-bloc speak? Therefore owners who now buy into such icons should expect to let it go before 15 years or till 50 years? Hoping for an en-bloc for Marina One is far less likely than a $300-400 million development today?
A sub point today, as land prices keep going up, billion dollar developments will be increasing common. That will change some perspective of developer or consortiums going through en-bloc for such massive prime developments.
What do you guys think?
2 cents,
PropVestor
20% difference at the point of purchase.
30% difference after 60 years.
Guess most of us can live with that... :)
unfortunately, the situation is not so simple.
based on DC charges table , 99LH is 96% of FH, reversing that, it means FH is 4.2% more expensive than LH,
yet developer is selling FH at 20% more, instead of 4.2%. So the question is:
A) are people suckers buying FH, paying 20% instead of 4.2% more? :)
B) are developers being kind by selling LH at a 17% discount instead of 4% discount :)
another viewpoint.
based on above example, the developer can either enbloc FH at $10mio or LH at $7mio + $3mio (top up lease).
assuming construction cost is the same, and selling price of FH is 20% more than LH.
and assuming selling price of FH is $20mio, so that of LH is $16.7mio.
To the developer, returns for LH is less than that for FH for the same amount of work and money invested.
so what does a developer do?
does it preferentially enbloc FH, only turning to LH when there are no FH sites available,
or does it offer the LH owner less than $7mio?
The 20% more is only what buyers would pay for.
Developers will generally not pay even more than a few % more if there is a nearby LH site selling for a lower price. The only way for a deal is for the FH owners to be more realistic and charge close to the levels for a LH 99 property with 99 years left.
That's why there are so few enbloc deals of FH property of late. My two cents.
Lets go back in time for then iconic mixed development like Golden Mile Complex (built 1974, I can only view historic records as its before I am born). It was a seaside facing shopping mall and apartment. Its design and location at that time is arguably ahead of many others like Pearl Bank apartment in 1976. Fast forward 43 years today, its lease is 56 years left from 99 years LH (1974-2017). It is still standing today and given its prime location, it will fetch a decent en-bloc price. What I am trying to say is that micro-location counts. If its a prime location, developer who see future value will be willing to top up the lease, pay top dollar and re-develop this property.
Now back to current equivalent iconic development like Marina One for example which is now worth S$7billion even before TOP (circa 2017), it is mind blowing to imagine how much future developer will pay to re-develop this development. More likely such pricey developments, will be re-furbished till it become an 'eye sore' before any en-bloc speak? Therefore owners who now buy into such icons should expect to let it go before 15 years or till 50 years? Hoping for an en-bloc for Marina One is far less likely than a $300-400 million development today?
A sub point today, as land prices keep going up, billion dollar developments will be increasing common. That will change some perspective of developer or consortiums going through en-bloc for such massive prime developments.
What do you guys think?
2 cents,
PropVestor
My father bought a 3 room HDB for SGD 6,600. Today SGD 280,000.
will this Golden Mile Complex conserved by gov too? If so it will be bad because cannot enbloc for redevelopment.
PropVestor
04-05-17, 15:56
will this Golden Mile Complex conserved by gov too? If so it will be bad because cannot enbloc for redevelopment.
Good question. The closest we can guess is from 2018-2022 URA Master Plan where renderings of the Kampung Bugis may include/exclude Golden Mile? I hope to see more developments in the area as the site next to Nicoll Highway or opposite Golden Mile is really prime for some interesting low lying architecture.
2 cents,
PropVestor
Enbloc?
Ha ha ha!
Only 99-years LH owners will keep dreaming about enbloc!
I buy properties never based on enbloc, because I can wait forever!
However, 99-years LH owners will be desperate for enbloc even if their properties are >30 years old!
The 20% more is only what buyers would pay for.
Developers will generally not pay even more than a few % more if there is a nearby LH site selling for a lower price. The only way for a deal is for the FH owners to be more realistic and charge close to the levels for a LH 99 property with 99 years left.
That's why there are so few enbloc deals of FH property of late. My two cents.
Your father time a fresh graduate earns $500 pm.
Now a fresh graduate easily earns >$3500 pm and some even >$8000 pm lah!
Furthermore, if you father wait for another 50+ years his 3room HDB flat will goes back to $ZERO!
My father bought a 3 room HDB for SGD 6,600. Today SGD 280,000.
You won't get to wait forever for your century old mansion, only until the day you are no longer on earth.
Whoever inherits will help you sell for LH99 plus 4% max.
Enbloc?
Ha ha ha!
Only 99-years LH owners will keep dreaming about enbloc!
I buy properties never based on enbloc, because I can wait forever!
However, 99-years LH owners will be desperate for enbloc even if their properties are >30 years old!
I hearsay that nowadays some interns already earn 5K.
Your father time a fresh graduate earns $500 pm.
Now a fresh graduate easily earns >$3500 pm and some even >$8000 pm lah!
Furthermore, if you father wait for another 50+ years his 3room HDB flat will goes back to $ZERO!
It really depend on what field you work in.......
There are fresh graduates who earn >$10k pm too (and not hearsay)!
I hearsay that nowadays some interns already earn 5K.
tonymontana
05-05-17, 06:52
if I like the property and the neighbourhood, I won't sell it.
I will sell only if I seriously dislike something about the condo (for eg my neighbour, or that new colombarium they just relocated in front of my condo).
Not that i dun like FH
http://www.dailymail.co.uk/sciencetech/article-4468700/Stephen-Hawking-says-leave-Earth-100-years.html
Not that i dun like FH
http://www.dailymail.co.uk/sciencetech/article-4468700/Stephen-Hawking-says-leave-Earth-100-years.html
Doom day prediction was there since man can start to think.
First, they burn the wood for fuel and wonder how many kinds of wood on earth can they burn.
Then they found oil and wonder how long can the oil last.
The food they eat they wonder how much can they produce with overpopulation.
You won't get to wait forever for your century old mansion, only until the day you are no longer on earth.
Whoever inherits will help you sell for LH99 plus 4% max.
in another thread, you mentioned that your second purchase was a FH.
care to share the reasoning for getting that FH when you are aware that
1) you pay ~20% more
2) as a result, yield is lesser
3) enbloc price is LH99 + 4% max
that FH will be fully paid up in 2017-18,so i guess it means that it has been kept for a long time, like 15+ years ?
The answer is simple - it was priced very close to LH prices. The yield (most common calculation) is 3.5-3.8%.
I only taunted TB about when I can fully pay up lah. But I also said its fastest 5 years later from today and not 5 years from 5 years ago. Right now, tenant is paying everything inclusive of maintenance and taxes - most probably leave it alone.
in another thread, you mentioned that your second purchase was a FH.
care to share the reasoning for getting that FH when you are aware that
1) you pay ~20% more
2) as a result, yield is lesser
3) enbloc price is LH99 + 4% max
that FH will be fully paid up in 2017-18,so i guess it means that it has been kept for a long time, like 15+ years ?
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