For those selling their property please note your next purchase will be much higher.

[Arcachon]

For those selling their property please note your next purchase will be much higher.

If you need to sell below market value, Do give yourself more time to sell because the market is still adjusting to the new pricing.

Hope the slides will help you sell at a higher price.

Huat Ah.

For those not interested please do not read and comment.


















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[bargain hunter]

in the chart above the breakeven increases as the land cost increases. is it because it takes into account the higher in taxes?

[Arcachon]

in the chart above the breakeven increases as the land cost increases. is it because it takes into account the higher in taxes?

which one

[Arcachon]

Hints on developer launch price

https://www.99.co/blog/singapore/99-...-launch-price/

The site was awarded to the developer in June 2015 at S$345.86 million, which translates to S$755 per square foot (psf) per Gross Floor Area (GFA). Construction costs, including architecture design, is about $350 psf for a mass market condominium. Add them up and you get the base cost.

Next, take 30% of the base cost that will cover the other expenses and profits for the developer. This comes up to about $331 psf, and it includes:

Administrative expenses: Staff costs, office rents etc..
Sales and marketing expenses: Showflat building costs, commission for real estate agencies, advertising for the development, lawyer fees for conveyancing etc..
Finance costs: interest expense paid to the finance institutions for financing the development.
Profit margin: the percentage of profits that the developer makes for the development
Add them all up and you will get the estimated launch price on a psf basis.

Gem Residence $psf
Land cost $755
Construction cost $350
Expenses and profit margin $331
Estimated launch price $1,436

[Arcachon]

https://sbr.com.sg/residential-prope...-private-homes

Construction cost of executive condos 20% cheaper than private homes
Today’s EC discount is $150‐$200psf, or $100‐$150psf.

According to square Foot Research, executive Condominiums (ECs), widely considered to be private properties at a discount, are not exactly the same as private properties if construction cost is anything to go by.

The average construction cost for an EC is about 20% lower compared to that of a private property, based on contracts announced by listed construction companies.

The average cost in building an executive condo is $209 psf while that of a private home is $256 psf.

"Therefore, a part of the EC discount compensates for the difference in the quality of the product compared to a private property. The remaining part of the discount compensates for the expected holding period and restricted resale market from the fifth to tenth year after completion. The expected holding period is significant and can be as long as 9 years, assuming a 4‐year construction period and theimposed 5‐year Minimum Occupation Period (MOP)," it said.

"Recent launches suggest that today’s EC discount is $150‐$200psf, or $100‐$150psf if one takes into account a construction cost difference of about $50psf," it added.

[Kelonguni]

in the chart above the breakeven increases as the land cost increases. is it because it takes into account the higher in taxes?

Financing costs also increase. Higher interest rate and quantum paid on higher land bids as well.

[Arcachon]

Financing costs also increase. Higher interest rate and quantum paid on higher land bids as well.

Financing costs did not increase, the value of Money decrease due to printing.

[Arcachon]

The average cost in building an executive condo is $209 psf while that of a private home is $256 psf.

224.8psf (construction)+ 456 psf (Land)= 680.8 psf

899 psf (selling price) - 680.8 psf = 218.2 psf

218.2 psf / 680.8 psf = 32.05%

The site was awarded to the developer in June 2015 at S$345.86 million, which translates to S$755 per square foot (psf) per Gross Floor Area (GFA). Construction costs, including architecture design, is about $350 psf for a mass market condominium. Add them up and you get the base cost.

Next, take 30% of the base cost that will cover the other expenses and profits for the developer. This comes up to about $331 psf, and it includes:




https://sbr.com.sg/residential-prope...-private-homes

[bargain hunter]

Financing costs also increase. Higher interest rate and quantum paid on higher land bids as well.

for the 15 projects listed above from treasure at tampines to gazania, the breakeven in psf increases as the land cost increases. by right since everything is listed in psf, the higher quantum or higher financing costs should have similar impact on psf? the only reason i could think of is higher land cost in psf = higher taxes.

[Kelonguni]

My thoughts are that with higher land costs, developers need to borrow much more, as compared to little borrowings as their cash or internal funding can settle.

But what do I know?

Eg developer has 100million set aside for land. If the land is bought over at 150 million, the financing is for 50 mil, but if the cost is now 300 million, they need to borrow 200 million and the financing costs increases by 4 times.

for the 15 projects listed above from treasure at tampines to gazania, the breakeven in psf increases as the land cost increases. by right since everything is listed in psf, the higher quantum or higher financing costs should have similar impact on psf? the only reason i could think of is higher land cost in psf = higher taxes.

[bargain hunter]

My thoughts are that with higher land costs, developers need to borrow much more, as compared to little borrowings as their cash or internal funding can settle.

But what do I know?

Eg developer has 100million set aside for land. If the land is bought over at 150 million, the financing is for 50 mil, but if the cost is now 300 million, they need to borrow 200 million and the financing costs increases by 4 times.

that is true. but the above list is already in psf terms. e.g. Treasure at tampines definitely costs a lot more in quantum even though it is the lowest psf vs some of the small projects in the list yet the psf needed to breakeven is still the least.

[Kelonguni]

that is true. but the above list is already in psf terms. e.g. Treasure at tampines definitely costs a lot more in quantum even though it is the lowest psf vs some of the small projects in the list yet the psf needed to breakeven is still the least.

Every $5-6 increase in land cost psf leads to $7-8 increase in breakeven price. Financing considerations (interest x number of years to finance) should be able to account for some if not all of the difference.

[bargain hunter]

Every $5-6 increase in land cost psf leads to $7-8 increase in breakeven price. Financing considerations (interest x number of years to finance) should be able to account for some if not all of the difference.

noted. so its potentially the interest cost.

[sginvestor]

noted. so its potentially the interest cost.

CDL bought the whistler grand land at $800 psf, but launch at $1,350 psf...

probably the bare minimum mark-up to cover costs etc is $550 psf.

just add $550 psf to any of the land cost psf, if you can get launch price cheaper than that... you have a good deal!

[Kelonguni]

Not so straightforward.

If developer puts in more dough for land, they also expect higher returns (inclusive of opportunity costs lost). Else, if they finance through borrowing, they have to pay the bank or investors the interests for a much larger sum as well.

It’s never free money. If not, everyone can be a developer.

CDL bought the whistler grand land at $800 psf, but launch at $1,350 psf...

probably the bare minimum mark-up to cover costs etc is $550 psf.

just add $550 psf to any of the land cost psf, if you can get launch price cheaper than that... you have a good deal!

[Arcachon]

Not so straightforward.

If developer puts in more dough for land, they also expect higher returns (inclusive of opportunity costs lost). Else, if they finance through borrowing, they have to pay the bank or investors the interests for a much larger sum as well.

It’s never free money. If not, everyone can be a developer.

Baseline.

Very high already, Southbank less than that.

Since the seller had purchased the unit direct from the developer at $549 psf in 2006, the sale has yielded an annualised gain of 11% over the past decade.

[sginvestor]

Baseline.

Very high already, Southbank less than that.

Since the seller had purchased the unit direct from the developer at $549 psf in 2006, the sale has yielded an annualised gain of 11% over the past decade.

very high? does that mean you agree $550 psf is a good margin?
take a look at at one of the new launch mortgage documents, the min selling price expected by the lender is $1,650 psf(which is again, $550psf over $1,100psf land cost)

so if the market is soft, don't expect any outlandish prices to be set by the developer

i'm vested but i ain't Pollyanna...

[Kelonguni]

People who think increase land cost by 100psf just means increase breakeven by 100psf need to rework the Math.

What is often not recognised is the interest lost if the developer had instead placed the funds in an account that generates interests and protects against financial stress. Or the financial risk and stress the developer undertakes to borrow from banks or investors the additional 100psf x gross floor area, incurring additional interest payment x years of loan, which impacts the ultimate breakeven price.

[bargain hunter]

CDL bought the whistler grand land at $800 psf, but launch at $1,350 psf...

probably the bare minimum mark-up to cover costs etc is $550 psf.

just add $550 psf to any of the land cost psf, if you can get launch price cheaper than that... you have a good deal!

as was the discussion earlier, the higher the land cost e.g. > 800psf, the higher the bare minimum mark-up. even for the same % margin, higher psf is needed because interest cost and comissions will take up more psf.

[Arcachon]

1) Land Cost: 629 mil
2) Premium (DC charges): 288 mil

Total Land cost = 629 + 288 = 917mil

3) Financing Cost (7% of land cost): 64mil

4) Legal + Taxes (10% of land cost): 92mil

5) Marketing Cost: 8mil

6) Construction Cost: 272mil

Total Construction Cost: (3) - (6) = 272 + 8 + 64 + 92 = 436 mil

(436mil / 389,236) / 2.8 = 400psf/ppr

The 389,236 sq ft site in Hougang is zoned residential with a gross plot ratio of 2.8 and could yield around 1,000 units.

Thus Developer's estimate breakeven is approximately 842psf + 400psf + misc (usually 50psf) = 1292psf/ppr





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[Arcachon]

Basically, site coverage of maximum 40% is based on the Land Area and not the total GFA.

For Florence Residences, the
The Site Area = 389,236sqft or 36,161sqm.
GFA = (389,236sqft or 36,161sqm) * 2.8 (plot ratio)
Total GFA = 1,089,860sqft or 101,250sqm.

Using the previous ruling of 70sqm.

Developers can build up to 1446 units on average.
(Thus by the developer building 1410 units, they have not maximized the potential of the land)

40% is the boundary of which they are allowed to build-up. Thus 60% will be landscaping and the other 40% (including the build-up, will be the majority of the GFA used to build the units)

However, I discourage the fact that u want to talk abt 'redevelopment'. I wouldn't recommend because, in today's context, land cost a lot more than construction to a large extent as compared to previously in the 1980s,1990s. Developers are also hungry to maximize profits today as well. Thus they have, to a very large extent, maximized much of the GFA.

Unless you are confident that the Plot Ratio was to increase from 2.8 to 3.5/4.2/5.6 for eg, we do not have substantial facts to support any redevelopment potential today.

Furthermore, we are located adjacent to Kovan/How Sun landed.

[sginvestor]

as was the discussion earlier, the higher the land cost e.g. > 800psf, the higher the bare minimum mark-up. even for the same % margin, higher psf is needed because interest cost and comissions will take up more psf.

okay, but let's see what's the launch price and we will know...

i have already cited 2 cases

there're both fixed and variable costs
in economics, we further study that as long as sellers can cover their variable costs and part of the fixed or sunk costs, they can continue to operate

[bargain hunter]

okay, but let's see what's the launch price and we will know...

i have already cited 2 cases

there're both fixed and variable costs
in economics, we further study that as long as sellers can cover their variable costs and part of the fixed or sunk costs, they can continue to operate

i do agree that if you can find something that's 500+ above the land cost, its probably close to their bare minimum. just that for higher psf land cost projects like those freehold and/or CCR ones, then its unlikely that they would sell at just 500+ above land cost.