View Full Version : Are Singapore developers forced to walk a tightrope?
https://www.propertysoul.com/2017/05/21/developers-forced-to-walk-a-tightrope/
Are Singapore developers forced to walk a tightrope?
May 21, 2017
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Government Land Sales for residential sites in Singapore just crossed the S$1 billion mark. A 99-year leasehold site in Queenstown Stirling Road was sold at a top bid of S$1.003 billion. (Read article in Bloomberg.)
The winning consortium is China’s Nanshan Group and Logan Property (a Chinese developer listed in Hong Kong). Nanshan has been eyeing at the Singapore property market for long. In the past 12 months, it participated in 8 of 11 tenders in Singapore’s land auctions.
What is the role of the government?
In Singapore, land use is regulated by Singapore Land Authority and Urban Redevelopment Authority (URA). They make decisions on zoning, plot ratio and development charges which have direct impact on the value of the sites.
The Chief Valuer at IRAS sets a minimum reserve price on the land parcels based on recent property transactions. URA then sells them to developers through public tenders. The sites will be awarded to the highest bidders if they don’t fall below 85 percent of the reserve price.
Chesterton Singapore reported that land prices have increased by an average of 30 percent each year from 2011 to 2014. Land auction data from URA also show that suburban areas such as Tampines, Clementi and Jurong West have land prices almost doubled from 2008 to 2014.
The government can indirectly influence the selling price of new sites in at least 3 ways:
1) Increase or reduce the release of new sites for public auction;
2) Impose or relax cooling measures to restrict or stimulate the property market; and
3) Launch of public flats to meet the demand for public housing.
Where have developers’ profit margins gone?
Building up the land bank and replenishing the stocks of sites are important to a property developer. Successful acquisition of land parcels means the launch of new projects in the pipelines. Successful launch of new projects can do wonders to the company’s financial results.
The number of bidders in public auction has increased from an average of 8.25 in 2nd half of 2015 to 13.3 this year. In 2017, so far 2 out of 4 land tenders were awarded to foreign bidders.
Keen competition from cash-rich foreign counterparts are forcing local developers to bid aggressively. If they are conservative in bidding, they will be easily outbid by China developers who are eager to take a share of the Singapore property market.
A recent report by Cushman & Wakefield mentioned that developers are paying an average of 29 percent more for residential sites over comparable sites sold in the past 5 years ago. In the 2nd half of 2016, developers were paying only 13 percent on average in premiums.
Land prices have shot up. But property prices are falling. How badly are developers’ margins affected?
In 2009, developer margin stands at an average of 35.7 percent. It drops to 11.8 percent in 2014 and 4 percent for ECs.
https://i2.wp.com/www.propertysoul.com/wp-content/uploads/2017/05/developer_margin.jpg?
Are developers committing suicide?
Back in August 2013, City Development Limited’s Kwek Leng Beng told the media that “if the Qualifying Certificate is there, it will be suicidal to keep tendering at high prices just because we want a land bank.”
According to the Qualifying Certificate regulation, new projects must be sold within 2 years after obtaining the Temporary Occupation Permit, or face extension charges on the unsold units. If developers can’t sell all units in their project after 5 years, they have to pay Additional Buyer Stamp Duty on the remaining units.
With a gross floor area of 954,327 sq ft, the Stirling Road site can be developed into a maximum of 1,110 units. The bidding price of S$1.003 billion translates into S$1,050.71 psf.
The average construction cost of a mass market condominium is $350 psf. Assuming the developer takes 30 percent of the total of land cost plus construction cost (i.e. 30% of $1,050 + $350 = $420 psf) to cover all necessary expenses and a minimum profit margin, the developer would have to sell at a lowest launch price of $1,820 psf ($1,050 + $350 + $420) in order to make a profit.
This is an aggressive jump from the nearby new project Queen’s Peak, which was released last November with a launch price of $1,580 psf.
One reason why the Queen’s Peak was selling well is largely the result of strategic pricing by developer MCC Land (HY Realty). It was also launched at the right time when homebuyers believed that prices have come down to a reasonable level for such a good location.
Will the Stirling Road site share the same luck? Who can guarantee the market condition by the time the project is ready to launch?
What is the potential price to pay?
The last price record for a residential site was created 20 years ago when Hong Kong tycoon Li Ka-shing’s Cheung Kong Holdings paid $683 million or $456 psf for the 99-year Costa del Sol site on Bayshore Road in January 1997.
What happened to the developer after they paid the top price?
Not long after Cheung Kong won the land auction, Singapore was hit hardly by the Asian Financial Crisis. This was followed by the dot.com burst, SARS outbreak and economic recession in Singapore in the mid-2000s.
When Costa del Sol was launched in May 2000, the initial launch price was $765 psf. Remember the developer told the media and early buyers that selling prices would stay the same in subsequent launch phases even if property prices fall?
By February 2005, prices had been lowered to $650 psf for the re-launch of about 600 units.
After the project’s completion in 2003, for several years blocks of units in the project were still unsold and left vacant. It was not until August 2007 that Hotel Properties’ Ong Beng Seng and his family helped to clear an entire block of 180 remaining units that the 906-unit project finally concluded its 10-year episode.
In the Stirling Road record-breaking auction, MCL Land is the second highest bidder who lost to the Chinese developer at the price of S$925.7 million.
Is it a terrible loss or a blessing in disguise? Well, only time can tell.
Suggest paying a visit to Forest City to know what is a Chinese Developer than he or she will know is a blessing.
I think she has not done business with Chinese before.
In even the most tough conditions as SARS plus dot com plus AFC, developers also do not do free service. It's better to wind up than to do free or losing services.
Reduce profits yes, by increasing competition. Free business, what do you think as we switch to 72% HDB, 28 % private property?
tonymontana
22-05-17, 09:12
to me it's obvious, propsoul is trying to talk the market down. she's panicking that big timers are buying up land at a 29% premium to a few years ago. Like that , how can prices crash 50% for her to go and buy up all those distressed D9,10,15 properties.
it's vested interest as she is now sitting on a pile made during the last recession but finds that her cash pile can currently barely only afford one good property , not 3.
in a way it's ironic that someone nicknamed "property soul" can be so negative about property.
https://www.weforum.org/agenda/2017/05/this-is-malaysia-s-new-100-billion-forest-city?utm_content=buffer43437&utm_medium=social&utm_source=facebook.com&utm_campaign=buffer
anythingwhatever
22-05-17, 10:31
Another Hidden Price:
With margins coming down significantly, the end consumers may end up suffering as developers may try to cut corners in terms of building quality...
There is no blessing. Shrinking margin is manifested and witnessed in poor and near atrocious workmanship and finishing in the new condos.
There is no blessing. Shrinking margin is manifested and witnessed in poor and near atrocious workmanship and finishing in the new condos.
Margin big or small developer also give the same shit.
to me it's obvious, propsoul is trying to talk the market down. she's panicking that big timers are buying up land at a 29% premium to a few years ago. Like that , how can prices crash 50% for her to go and buy up all those distressed D9,10,15 properties.
it's vested interest as she is now sitting on a pile made during the last recession but finds that her cash pile can currently barely only afford one good property , not 3.
in a way it's ironic that someone nicknamed "property soul" can be so negative about property.
One of my friend also did the same thing, sell his EC and wait for the crash.
Now still waiting.
anythingwhatever
22-05-17, 11:21
One of my friend also did the same thing, sell his EC and wait for the crash.
Now still waiting.
Sold how long ago? Paying rents in the meantime? :)
anythingwhatever
22-05-17, 11:23
There is no blessing. Shrinking margin is manifested and witnessed in poor and near atrocious workmanship and finishing in the new condos.
Exactly my worries.
With bigger margins, maybe not so desperate and cut less corners.
With smaller margins, you may imagine...
Great patience.
My friend Beh Lun sold EC in 2010 bought cluster landed in 2015.
One of my friend also did the same thing, sell his EC and wait for the crash.
Now still waiting.
anythingwhatever
22-05-17, 13:16
Suggest paying a visit to Forest City to know what is a Chinese Developer than he or she will know is a blessing.
Forest City maybe a time bomb...
https://www.theedgeproperty.com.sg/content/strata-problem-brewing-forest-city
to me it's obvious, propsoul is trying to talk the market down. she's panicking that big timers are buying up land at a 29% premium to a few years ago. Like that , how can prices crash 50% for her to go and buy up all those distressed D9,10,15 properties.
it's vested interest as she is now sitting on a pile made during the last recession but finds that her cash pile can currently barely only afford one good property , not 3.
in a way it's ironic that someone nicknamed "property soul" can be so negative about property.
Yah, she has been deligently talking down on the market on the pretext of giving good advise to buyers.
But, I kind of agree that the way the developer is bidding, it seems like they are desperate and willing to gamble big.
Yah, she has been deligently talking down on the market on the pretext of giving good advise to buyers.
But, I kind of agree that the way the developer is bidding, it seems like they are desperate and willing to gamble big.
Or the Chinese want cooling measures to remain...so local developers chokes and their JB projects has significant price advantage.
Or the Chinese want cooling measures to remain...so local developers chokes and their JB projects has significant price advantage.
Also possible since JB projects will look so much cheaper compare to SG. But people like myself will not invest into JB at least for now. JB has plenty of land, public transport is still so bad, security issues.
Forest City maybe a time bomb...
https://www.theedgeproperty.com.sg/content/strata-problem-brewing-forest-city
Did you go and visit?
Veronica is probably closer to the ground (in understanding buyer and seller sentiment) and the top (developer sentiment) than any of us.
Don't know how anyone can talk this bid as bullish development for the wider market. If anything it held the hand of the government who repeatedly said that CMs will not be relaxed until there is "meaningful correction". Where is the correction when new launches selling at record (and irrational) prices?
The killer of the CMs is not ABSD but SSD; SSD discouraged the needed liquidity for proper price discovery. In fact, SSD is the culprit that drove buyers to new launches. This is the setup for this market.
As said before, this government is clueless.
Firstly, Veronica should have been off the employment market for a very long time. The investors she works closely with are all multiple property owners who do not work but are looking to buy (my sensing only). Based on my sensing, she is unlikely to be close to the ground, especially for buyers side, but she is close to a certain type of investor, the type that Govt is not keen to have many more of...
I am not too sure whether your SSD argument holds water. As far as the bulk of home owners and investors are concerned, ABSD is the main killer. It still is a killer for me moving forward, as I am not selling despite clearing SSD period, and looking to secure likely my last local property.
Veronica is probably closer to the ground (in understanding buyer and seller sentiment) and the top (developer sentiment) than any of us.
Don't know how anyone can talk this bid as bullish development for the wider market. If anything it held the hand of the government who repeatedly said that CMs will not be relaxed until there is "meaningful correction". Where is the correction when new launches selling at record (and irrational) prices?
The killer of the CMs is not ABSD but SSD; SSD discouraged the needed liquidity for proper price discovery. In fact, SSD is the culprit that drove buyers to new launches. This is the setup for this market.
As said before, this government is clueless.
tonymontana
23-05-17, 10:50
Veronica is probably closer to the ground (in understanding buyer and seller sentiment) and the top (developer sentiment) than any of us.
Don't know how anyone can talk this bid as bullish development for the wider market. If anything it held the hand of the government who repeatedly said that CMs will not be relaxed until there is "meaningful correction". Where is the correction when new launches selling at record (and irrational) prices?
The killer of the CMs is not ABSD but SSD; SSD discouraged the needed liquidity for proper price discovery. In fact, SSD is the culprit that drove buyers to new launches. This is the setup for this market.
As said before, this government is clueless.
Nobody is saying vina has no skill, experience and/or indepth market knowledge. What is obvious is her incessant talking down of the market being not altruistic in nature, but a desire to buy up properties from distressed fire sales to make a killing.
Her entry is probably another 50% correction. if that happens, majority of us can look forward to working till 80.
SSD is not the killer, as what kelonguni write above. ABSD and TDSR is. especially TDSR.
Firstly, Veronica should have been off the employment market for a very long time. The investors she works closely with are all multiple property owners who do not work but are looking to buy (my sensing only). Based on my sensing, she is unlikely to be close to the ground, especially for buyers side, but she is close to a certain type of investor, the type that Govt is not keen to have many more of...
I am not too sure whether your SSD argument holds water. As far as the bulk of home owners and investors are concerned, ABSD is the main killer. It still is a killer for me moving forward, as I am not selling despite clearing SSD period, and looking to secure likely my last local property.
Everyone has a vested interest, same with Veronica. Same as for you and me. I am not saying that she is totally objective in all her views, but her view on this bid is correct (for me).
The good thing is viewpoints do not generally move market, except the government 's.
Not saying ABSD is not a deterrent, but it is a lesser evil of the two. Upfront tax does not deter a rising market, just look at HK, Australia etc. It is the same for during a bull market, there will still be buyers even when prices has risen 10, 20, or even 100%.
Policy drives the behaviour of buyers, in this case SSD drives buyers to new launches. This is the setup and developers love this setup. If the purchase is for investment, then isn't it better to buy a resale (lower price generally when compared with new launches) that can generate the investment income straight away?
tonymontana
23-05-17, 10:56
About the SSD, vina was absolutely correct. yes, i do read her . relaxation of SSD stimulates selling. Govt is saying.. you want to buy property make sure you really can afford (TDSR), and pay hefty tax (ABSD)
if you want to exit market, i make it easier for u.
So relaxation of SSD is not a signal by the govt to go buy new launches. To actually signal that, the govt would relax ABSD.
The uptake in new launches is merely a sign of pent up demand by the public who see the relaxation of SSD as a govt willingness to tweak policy.
PropVestor
23-05-17, 11:08
There are many different types of investors. The CMs of today is unprecedented and no one has ever witnessed of such lengthy, engineered 'depression' of the market. Applying any previous form of experience (could be decades worth which I am not discounting) based on current govt intervened ones is speculative at best. I find some investors keenly applied outdated views on the current market and find themselves being frustrated about reading of the market. For example, in the showroom visits I go to, I always find them saying City Fringe prices to be exorbitant at $1,600 to $1,900 psf ... till it crashes in a crisis and then they go in. I just hope time is on their side as massive market correction is based on current prices.
Is it illogical to view a current depressed market with a less positive view to get more eye-ball on your content or is it harder to apply positive light on a negative downturn market?
It is the government policy and I say this without compunction. No one can be depended upon for CMs news. It can come any minute, day, month or very likely years ahead. No one is asking any investor to put all the monies in properties since the wait can be so 'stressful' and potentially long before entering the market. One thing I am certain is with each second passing we all get older and our children too.
One thing I must emphasize with my 2 cents worth of analysis is that the local government is not at all clueless. If they are, our properties would not have been worth what it is today since our 3rd world, backwater 1950s days.
PropVestor
About the SSD, vina was absolutely correct. yes, i do read her . relaxation of SSD stimulates selling. Govt is saying.. you want to buy property make sure you really can afford (TDSR), and pay hefty tax (ABSD)
if you want to exit market, i make it easier for u.
So relaxation of SSD is not a signal by the govt to go buy new launches. To actually signal that, the govt would relax ABSD.
The uptake in new launches is merely a sign of pent up demand by the public who see the relaxation of SSD as a govt willingness to tweak policy.
The way the government applied the SSD revision, to me is just ridiculous. The revision should apply to new and previous purchases where SSD encumbered.
Take a guess how this revision drives purchases for the next quarter.
Will sales volume go up or down?
Please kindly explain how SSD revision has any real, direct impact. People who bought in 2012 and some of the buyers in 2013 can sell today without SSD but they are generally in no rush to sell.
The real deal is in TDSR revisions.
SSD has no real impact other than signalling the willingness to adjust and calibrate to market conditions.
The way the government applied the SSD revision, to me is just ridiculous. The revision should apply to new and previous purchases where SSD encumbered.
Take a guess how this revision drives purchases for the next quarter.
Will sales volume go up or down?
The killer of the CMs is not ABSD but SSD; SSD discouraged the needed liquidity for proper price discovery. In fact, SSD is the culprit that drove buyers to new launches. This is the setup for this market.
As said before, this government is clueless.
You are sharp, with SSD, it is no longer possible to just flip a ppty within hours of getting hold of the OTP. And with that, it denies the exuberance seen in the last ppty bull run. But I wouldn't be so quick to suggest the gov is clueless though....it kept the price from running away like during the last bull.
Please kindly explain how SSD revision has any real, direct impact. People who bought in 2012 and some of the buyers in 2013 can sell today without SSD but they are generally in no rush to sell.
The real deal is in TDSR revisions.
SSD has no real impact other than signalling the willingness to adjust and calibrate to market conditions.
I am sure you can get it with enough thoughts.
If no impact there is no recent revision liao.
I only trust data. Switch to Table mode to see the actual amounts. Based on actual data, the amount of SSD collected from 2013 to 2015 ranged from 23-48 million, with the peak (48 million) at 2013 and about 30 million for all other years displayed.
ABSD was 3 million (2011), 762 million (2012), 1.5 billion (2013), 920 million (2014), and 788 million (2015).
Look at those values and tell me again, SSD more crucial or ABSD more crucial. Please give it careful thought and not pluck feathers from thin air.
https://data.gov.sg/dataset/stamp-duty-assessed-for-private-residential-properties-annual
The main stimulation for this tweak is in TDSR...
I am sure you can get it with enough thoughts.
If no impact there is no recent revision liao.
I only trust data. Switch to Table mode to see the actual amounts. Based on actual data, the amount of SSD collected from 2013 to 2015 ranged from 23-48 million, with the peak (48 million) at 2013 and about 30 million for all other years displayed.
ABSD was 3 million (2011), 762 million (2012), 1.5 billion (2013), 920 million (2014), and 788 million (2015).
Look at those values and tell me again, SSD more crucial or ABSD more crucial. Please give it careful thought and not pluck feathers from thin air.
https://data.gov.sg/dataset/stamp-duty-assessed-for-private-residential-properties-annual
The main stimulation for this tweak is in TDSR...
Are you lost?
I said:
1) ABSD does not deter purchases
2) SSD drove purchases to new launches
3) New launches are irrationally priced; not all of them but the recent ones certainly are.
The data supported 1) and 2), no?
To sell a unit purchased at new launch yesteryear, it is a resale transaction tomorrow. No?
You are sharp, with SSD, it is no longer possible to just flip a ppty within hours of getting hold of the OTP. And with that, it denies the exuberance seen in the last ppty bull run. But I wouldn't be so quick to suggest the gov is clueless though....it kept the price from running away like during the last bull.
Can still lar, just add "and anomaly" in the OTP. But must be quick.
1) ABSD does not deter purchases but it does with the imposition of TDSR. Check the table again.
2) SSD has been imposed since 2010 and lengthened to four years in 2011. It has always remained a low figure. Its true that people buying new launches are less affected by SSD than existing.
3) True, but what was irrational 10 years ago is deemed rational today.
Are you lost?
I said:
1) ABSD does not deter purchases
2) SSD drove purchases to new launches
3) New launches are irrationally priced; not all of them but the recent ones certainly are.
The data supported 1) and 2), no?
To sell a unit purchased at new launch yesteryear, it is a resale transaction tomorrow. No?
You are sharp, with SSD, it is no longer possible to just flip a ppty within hours of getting hold of the OTP. And with that, it denies the exuberance seen in the last ppty bull run. But I wouldn't be so quick to suggest the gov is clueless though....it kept the price from running away like during the last bull.
Go for RES course, join a agency and learn the fine art of property buying and selling. I still learning the art.
You can't get everything just from reading, facts and figures.
Can still lar, just add "and anomaly" in the OTP. But must be quick.
Haha....thanks, I know what you mean regarding `and anomaly'....i know can use this to flip otp. But what i meant was last time, after a couple of weeks or months, can really see the price increase. But actually it was really frightening back then as the idea of FT coming to singapore in droves was not known to many.
Go for RES course, join a agency and learn the fine art of property buying and selling. I still learning the art.
You can't get everything just from reading, facts and figures.
Thanks for the suggestion....unfortunately i am still working so i cant afford the time
Haha....thanks, I know what you mean regarding `and anomaly'....i know can use this to flip otp. But what i meant was last time, after a couple of weeks or months, can really see the price increase. But actually it was really frightening back then as the idea of FT coming to singapore in droves was not known to many.
Now also can, but not new launch.
1) ABSD does not deter purchases but it does with the imposition of TDSR. Check the table again.
2) SSD has been imposed since 2010 and lengthened to four years in 2011. It has always remained a low figure. Its true that people buying new launches are less affected by SSD than existing.
3) True, but what was irrational 10 years ago is deemed rational today.
1) If you wish to add another element in the equation, then of course there is an impact.
2) Relook at the data, where the collection from SSD is low and actually insignificant in the big picture, why the government chose to revise? What did they see?
3) Someone here certainly wish that this statement is true, there are The Hilltops, The Marq etc many examples just refer to BH's reports on CCR transactions. The worst thing that could happen was, having anticipated a bull market and positioned it with multiple purchases but it turned out that all the eggs were/are in the wrong basket. How many 10-years he has?
1) Therefore, with TDSR fixed as permanent measure, ABSD adjustments will have a much larger impact than SSD.
2) Govt adjusted a few CMs at the same time, including TDSR. I suggest you examine that more carefully. This strategy is known as 声东击西。
3) Based on average PSF of market or the median or mean of MOST developments, the prices 10 years ago were irrational. You take your pick.
1) If you wish to add another element in the equation, then of course there is an impact.
2) Relook at the data, where the collection from SSD is low and actually insignificant in the big picture, why the government chose to revise? What did they see?
3) Someone here certainly wish that this statement is true, there are The Hilltops, The Marq etc many examples just refer to BH's reports on CCR transactions. The worst thing that could happen was, having anticipated a bull market and positioned it with multiple purchases but it turned out that all the eggs were/are in the wrong basket. How many 10-years he has?
1) Therefore, with TDSR fixed as permanent measure, ABSD adjustments will have a much larger impact than SSD.
2) Govt adjusted a few CMs at the same time, including TDSR. I suggest you examine that more carefully. This strategy is known as 声东击西。
3) Based on average PSF of market or the median or mean of MOST developments, the prices 10 years ago were irrational. You take your pick.
I thought we were looking at how ABSD and SSD are influencing buying behaviour.
ABSD, SSD, as-is.
I can agree with you when you are looking the impact of POTENTIAL adjustments of ABSD, SSD to buying behaviour.
Regarding pricing, we are also looking at irrationality differently.
I was referring to the peculiarity of why, buyers preferred to pay for the benchmark pricing of a new launch when for the same $psf or lower they can get better ones at resale market. Particularly if the purchases are investment properties.
What you described, to me is just the normal incremental growth of asset value due to inflation etc. Provided the asset is not mispriced originally.
PropVestor
24-05-17, 13:05
I thought we were looking at how ABSD and SSD are influencing buying behaviour.
Regarding pricing, we are also looking at irrationality differently.
I was referring to the peculiarity of why, buyers preferred to pay for the benchmark pricing of a new launch when for the same $psf or lower they can get better ones at resale market. Particularly if the purchases are investment properties.
What you described, to me is just the normal incremental growth of asset value due to inflation etc. Provided the asset is not mispriced originally.
Why buyers buy new launch is mainly due to its unique location and that is not negotiable. For example, there is only this plot of land that is next to an MRT exchange and surround condos are at least 300m away. To buy today at current price is a risk they are willing to take. The proportion of resale out there by volume means you have a much larger choice but that does not mean it is always better even if it is equal or lower psf. Singapore obsession in new and ensuring the skyline is kept modern is also another motivating factor to buy new launches.
The strategy today is not to buy and flip but to hold for at least 5 or more years. This means the age which you want to let go has to be factored in even though it is freehold. New launch projects have the advantage of time before it becomes second hand. I have owned both 31 year old properties freehold and 2 new 99 years leasehold at the same time.
Only time will tell if you actually made money at transacted price after paying all duties and taxes. That is when you know if it is 'mis-priced' or not.
Why buyers buy new launch is mainly due to its unique location and that is not negotiable. For example, there is only this plot of land that is next to an MRT exchange and surround condos are at least 300m away. To buy today at current price is a risk they are willing to take. The proportion of resale out there by volume means you have a much larger choice but that does not mean it is always better even if it is equal or lower psf. Singapore obsession in new and ensuring the skyline is kept modern is also another motivating factor to buy new launches.
The strategy today is not to buy and flip but to hold for at least 5 or more years. This means the age which you want to let go has to be factored in even though it is freehold. New launch projects have the advantage of time before it becomes second hand. I have owned both 31 year old properties freehold and 2 new 99 years leasehold at the same time.
Only time will tell if you actually made money at transacted price after paying all duties and taxes. That is when you know if it is 'mis-priced' or not.
Everyone has his style or niche when it comes to buying a property. There is no superior, right or wrong approach; he adopts the approach he is comfortable with.
There are known unknown risks in buying new launch.
1) If the project to be completed due to probable funding or technical issue faced by Developer - very rarely so in Singapore
2) If the project to be delayed for TOP/occupation - used to be rarely so, but increasingly common because of QC regulation
3) If the finished product built according to plan, that is the quality according to prospectus and the level of defects - commonly so because of tighter margins
For buying style, you have the appetite for these known unknown risks and I don't.
But I am happy to pay a premium (over the launch price) for a project newly TOP'ed. The premium is, to me, fair compensation to a buyer who carried the known unknown risks which didn't materialise. So long as the initial rental contracts support the premium price, the purchase is sound. Also I am fussy when it comes to how idling money is handled.
If I am allowed to comment on DR as a near finished product.
From what can be seen outside, its 'look' supports the launch price. It is certainly iconic and a good addition to the area. It is worth a look from the inside as a finished product and then wait for the initial rental contracts to gauge demand.
tonymontana
25-05-17, 10:35
[If I am allowed to comment on DR as a near finished product.
From what can be seen outside, its 'look' supports the launch price.]
you talking about DR == Duo residences?
[If I am allowed to comment on DR as a near finished product.
From what can be seen outside, its 'look' supports the launch price.]
you talking about DR == Duo residences?
Sorry, yes.
PropVestor
25-05-17, 13:13
There is an optimal path and so thats why there are successful investors over lesser ones even during such challenging times. Do all the homework required. Don't get overtly lazy and greedy. 70% of the information is there to connect the dots.
Your points of a newly developed project risks are all valid. Hence, the developer evaluation is supremely important. M+S is untested but MY and SG PMs came for a site visit, how south can it go? News will cover DR and MO opening. Lets see. For Park Place Residences, another multi billion dollar development, LandLease (Sydney Opera House and Petronas Twin Towers) is well known worldwide and ADIA (higher UAM than GIC) speaks for itself. 2H 2019 will be the moment of truth. I also expect media coverage.
One lesser point is the architect commissioned. I am happy DP Architect is watching over both DR and PPR. DP built Sports Hub, Dubai Mall, Esplanade and RWS. Their fees are top dollar. I put 30% weight on this.
New investment property risks must be contained and calculated. There are too many media coverage on poor ones but good ones are under wraps. I take it as an opportunity as lesser people contending with us! It takes a sizeable pool of trusted property agents to know which developer should be struck off. Its quite a long one for me unfortunately. This applies to second hand properties which I will not touch if its from that list no matter what stories the agent tells me. The trend now is foreign consortium being more common bidding for land, hence the architect weightage will go up in future. Lets see.
2 important conditions for newly launch (assuming economic conditions are as present). Is it a transformational or iconic project by a well-known/backed developer-architect that will revamp the district? Can you afford the entry price for the next 5-10 years? If 2 ticks, go for it. As you can probably tell, not many projects will fit this criteria, just a small handful. You could miss an opportunity that only comes once every decade. 1 plot of prime land = 1 first mover chance. Ballot luck is the last hurdle.
Till today, I always remind myself of The Sail before MBS was built. Hindsight 20/20. Too bad back then I just graduated and not a penny to my name.
2 cents,
PropVestor
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