Parc Vista

[DC33_2008]

If that is your main reservation, you should just go for 999LH or FH.

You missed my 2nd part of my post about depreciation rate. I'm just not comfortable with the thought of buying something that will eventually depreciate

[speed]

You missed my 2nd part of my post about depreciation rate. I'm just not comfortable with the thought of buying something that will eventually depreciate

whether you like leasehold or not, this should not be use for yeild computation as it is not reflected correctly.

btw, even for FH property, there are depreciation costs on everything else other than that piece of land.

[hyenergix]

I still feel that long term view of yield should include the land cost that is depreciating due to 99LH. True that the building on top of the land is also depreciating, but that goes the same for 99LH. Some landed properties around Stirling road have little lease left and they are truely cheap.

http://www.propertyguru.com.sg/listi...g-road-2610721

[hyenergix]

Wrong link - the Stirling one was gone some time ago. Here are the others that are reaching end of their lease...

http://www.propertyguru.com.sg/listi...boon-keng-road

http://www.propertyguru.com.sg/listi...-geylang-lor-3

[westman]

Wrong link - the Stirling one was gone some time ago. Here are the others that are reaching end of their lease...

http://www.propertyguru.com.sg/listi...boon-keng-road

http://www.propertyguru.com.sg/listi...-geylang-lor-3

The example as provided are HDB units?
Do you think owners of HDB untis can seek for enbloc?

[BB]

Buying a home: freehold vs leasehold

NICHOLAS MAK examines how both tenures perform in rising and falling markets as well as in collective sales


THE question of whether to own freehold or leasehold property seems a perennial one, with pros and cons shifting with market cycles and new trends. Here, we examine the issue from the perspective of both a home owner and investor, and see how both tenures perform in rising and falling markets as well as in collective sales.

The chief attraction of 99-year leasehold property is that it is typically priced lower than a comparable freehold property. As a result, they are popular with HDB upgraders as entry-level private properties. Most mass-market homes are 99-year leasehold condominiums, with prices ranging from $500 per sq ft to $900 per sq ft. A typical family-size apartment could cost anything from $600,000 to $1.2 million.

For investors, leasehold properties usually offer a higher rental yield because of their lower capital cost. However, the higher yield merely compensates the owner for the decaying lease.

One of the more apparent disadvantages of owning a 99-year leasehold property is that the length of the lease is contracting daily. All else being equal, this would result in falling property value. However, certain external factors could slow the decline in value, such as if the property is sought after by tenants or buyers. This could be due to a prime location, improving infrastructure (such as a proposed MRT station nearby), or good amenities or popular schools in the vicinity.

When it comes to collective sales, there are usually fewer opportunities for them with 99-year homes. One reason is that many of them are still relatively new and in good condition. Thus, the owners do not feel any urgency to sell their homes collectively.

A more pertinent reason is that the premium payable to the government to top up a 99-year lease is quite high, based on the existing formula. And since developers factor the premium as part of the total land cost, the higher the premium the less the owner of the ageing leasehold would get in any collective sale.

As such, collective sales are not attractive to many owners of 99-year leasehold apartments unless the expense of maintaining their ageing properties are so high that a collective sale becomes the cheaper alternative.

A key benefit of owning freehold real estate is that the land value does not generally depreciate in the long term. Although all properties are subject to market fluctuations, the price of freehold land tends to be more stable than that of leasehold land over time. However, the value of a freehold property could still decrease over time due to the depreciating value of the ageing building. Over the long term, while the value of freehold land may increase or remain little changed, the value of the building would decline.

One factor that supports the value of freehold land in Singapore is its scarcity. Since all the land sold by the government is leasehold, the amount of freehold land would not increase. In fact, it might shrink over time if the government makes acquisitions of such land.

Another advantage of owning a freehold property is the potential of a windfall from a collective sale. If the value of the freehold land increases while the value of the ageing building declines, it could reach a stage where the redevelopment value of the property is worth more than the utility value of the existing building. As a result, the property owners may find a collective sale of their property to a developer to be highly profitable.

Some developers looking to acquire residential land for development may also prefer freehold land to ageing 99-year leasehold property because freehold land would not require the payment of a hefty premium for extending the lease.

For all these reasons, freehold residential properties are generally priced higher than 99-year leaseholds. The price range of freehold non-landed properties is also wider than that of comparable leasehold properties. Depending on the location, freehold property prices could vary from $600 psf to $4,000 psf or more. The majority of high-end residential properties are freehold.

For investors, one disadvantage of freehold property is the lower rental yield, a function of the higher cost of the property.

Also, while freehold properties have a higher likelihood of a collective sale than their leasehold counterparts, that can prove to be a double-edged sword. The property boom of 2005 to 2008 whipped up a collective sale frenzy. But some property owners who sold for a windfall found they could not get a replacement home in the same location from their proceeds. As the collective sale boom was powered by surging property prices, by the time en-bloc property sellers received their proceeds, the prices of comparable replacement homes would have moved out of reach.

Now, we look at the price performance of freehold and leasehold properties. Although freehold properties are usually priced higher than their leasehold counterparts, their rate of appreciation does not always outperform.

There were two property cycles between end-1998 and mid-2009. The first market boom, which started at end-1998 and ended in mid-2000, was a bottom-up price recovery. Demand started in the mass-market sector and moved up to the mid-tier and finally the high-end segment.

During this 18-month period, the average price of 99-year condominiums rose faster than that of freehold homes. The average price of freehold condominiums grew by 38.2 per cent, while the average price of 99-year leasehold condominiums surged by 46.2 per cent.

But on the way down, leasehold home prices also fell more steeply. On the downcycle between mid-2000 and the first half of 2004, the average price of leasehold condominiums fell 26.1 per cent, steeper than the freehold price decline of 17.6 per cent.

The most recent boom that lasted four years from mid-2004 to mid-2008 started with high-end property and gradually filtered down to the mass market.

Even when the mass-market sector started to pick up in 2007, the momentum in the high-end segment did not let up. As a result, freehold condominium prices jumped by an impressive 64.7 per cent on average, while the average leasehold property price rose some 50 per cent.

When the property market here started to contract in mid-2008 due to the global financial crisis, freehold condominium prices fell 26.5 per cent year on year, just slightly more than 99-year leaseholds, which dropped by 23.8 per cent.

What this study shows is that if the upswing in the property market is bottom-up, leasehold condominiums could outperform freehold ones. Conversely, if the boom is top down, freehold condominiums would deliver superior results. However, this study also illustrates that the faster the rise, the harder the fall. So in a top-down property boom, owners of freehold condominiums who had enjoyed a sharper price appreciation should be nimble enough to lock in their gains before the downtrend sets in.

In comparing freehold and leasehold residential properties, there is no conclusive evidence to show that one is better than the other. Ultimately, the decision boils down to budget and preference.

The writer is a real estate lecturer at Ngee Ann Polytechnic


[FONT='Times New Roman','serif'] [/font]

[hyenergix]

The example as provided are HDB units?
Do you think owners of HDB untis can seek for enbloc?

Maybe HDB/HUDC or private. The HDB enbloc is called SERS, which is just as good as the private property enbloc. But this is decided by HDB not the owners.

[BB]

Chasing away leasehold worries

The key to a wise property choice lies in buying to suit your budget and preference

By Jessica Cheam


The wait lasted nearly half a year.

Since I exercised the option to buy my first new home some time last August, I had eagerly awaited the day I could move in, pop open a bottle of champagne and bask in the smell of my freshly painted walls.

That day finally arrived just in time for New Year's Day - the beginning of a whole new decade - and I was understandably excited.

But just before and after The Big Move, I was besieged by a phenomenon I had never thought about: post-purchase cognitive dissonance (PPCD).

I'm not making it up, really. Cognitive dissonance is defined as a condition of conflict or anxiety resulting from one's actions. And PPCD is when, after buying something, you feel that an alternative would have been preferable.

In fact, you go through a rationalisation process in your head, questioning all the factors that made you decide to buy the said thing, and wonder if it was all one big mistake.

You see, in my quest for a spacious, affordable home somewhere in the suburbs, I had bought a 99-year leasehold apartment.

I surprised myself because I have traditionally been on the side of freehold property in the freehold versus leasehold debate.

I know the typical arguments for both sides of the case but I never gave it much thought till I became a home buyer and the cold, hard, facts were staring me in the face.

I had started off looking at freehold properties but, when it came down to dollars and cents, I realised that the difference between a freehold and leasehold apartment of the size I wanted was more than $150,000 and it made a big difference.

I took the plunge.

Today, my 1,650 sq ft property has 85 years left on its lease. After spending every penny my other half and I had on renovations and furnishings, we were thrilled the day we moved in.

Everything was gleaming and it felt good that we owned everything we saw.

But this lasted only a few days.

Acutely aware of the new depths my bank accounts had plunged to, I was overcome by an attack of PPCD during lunch with my mother one day while shopping for cutlery.

Mum, I asked, did I make a bad move sinking all my money into a property that will take me 30 years to pay off? And at the end of 99 years, would be worth absolutely nothing?

Also, given the price I'd paid for the property, is it likely that I could even break even on costs if I wanted to sell my apartment a few years later?

I was panicking, and convinced that nobody would buy my apartment when I want to sell it. I would incur a huge loss on it - something I wouldn't be able to live down as a property reporter.

In an attempt to alleviate the symptoms of my PPCD, I spoke to some property analysts for an objective assessment of my choice to invest in a leasehold home.

This is the list of factors to consider that I eventually came up with:

1. Affordability

The major advantage of a leasehold property is that it is cheaper and offers a first-time home buyer a good opportunity to get on the property ladder without financial stress.

2. Yield

Leasehold homes also typically give you a higher yield compared to a similar freehold property as you can command the same rent but your capital outlay is lower.

3. Depreciation, and factors that will compensate for this

The main drawback is that the value of your property depreciates with age. I have now come to accept this fact, but there are some factors that can influence the rate of depreciation, such as location, quality of amenities and transport network.

For those contemplating a leasehold home, is it near an MRT station? Is your estate slated for major upgrading?

Thankfully, I thought, my new home will benefit from the upcoming Bukit Timah MRT line.

4. Collective sales

Leasehold properties typically receive less proceeds as developers have to pay the Government a fee to top up the lease, unlike for freehold properties.

I'm personally not one for collective sales. But it is comforting to know that even an old leasehold estate such as Farrer Court could command a premium of $2.15 million per home when it went en bloc.

5. Historic figures

Looking at property cycles in the last decade, analysts say the rate of appreciation of freehold homes does not always outperform that of leasehold homes.

In general, the numbers show that in an upswing, leasehold properties tend to gain more, although in a downturn, they also fall more rapidly - meaning prices are more volatile.

So if you buy a leasehold property and intend to hold on to your home for some time, you could easily choose to sell in an upswing instead of a downturn.

All in all, I felt my anxieties dissolve when I realised that my leasehold home was affordable, will give me a reasonable yield if I choose to rent it out, and would likely appreciate - or hold - in value when transport networks are improved.

Analysts say there is no conclusive evidence to show one is definitely better than the other, and that the decision you make depends mainly on budget and preference.

I now realise that my home, which I love because it has four bedrooms and is surrounded by four different nature parks, was really the best choice for me, given what I could afford.

My mum, in her infinite wisdom, said: 'If history is anything to go by, you'll be fine.'

My parents recently sold an HDB flat in Jurong after my grandmother who lived there passed away. It had aged 20 years since they bought it, yet they sold it at a price far higher than what they paid for it.

See? Why worry so much, my mum chided, HDB flats are also leasehold and their values go up every year.

It was a good point. I decided then I would just enjoy my first home, day by day

[tericia]

Chasing away leasehold worries

The key to a wise property choice lies in buying to suit your budget and preference

By Jessica Cheam


The wait lasted nearly half a year.

Since I exercised the option to buy my first new home some time last August, I had eagerly awaited the day I could move in, pop open a bottle of champagne and bask in the smell of my freshly painted walls.

That day finally arrived just in time for New Year's Day - the beginning of a whole new decade - and I was understandably excited.

But just before and after The Big Move, I was besieged by a phenomenon I had never thought about: post-purchase cognitive dissonance (PPCD).

I'm not making it up, really. Cognitive dissonance is defined as a condition of conflict or anxiety resulting from one's actions. And PPCD is when, after buying something, you feel that an alternative would have been preferable.

In fact, you go through a rationalisation process in your head, questioning all the factors that made you decide to buy the said thing, and wonder if it was all one big mistake.

You see, in my quest for a spacious, affordable home somewhere in the suburbs, I had bought a 99-year leasehold apartment.

I surprised myself because I have traditionally been on the side of freehold property in the freehold versus leasehold debate.

I know the typical arguments for both sides of the case but I never gave it much thought till I became a home buyer and the cold, hard, facts were staring me in the face.

I had started off looking at freehold properties but, when it came down to dollars and cents, I realised that the difference between a freehold and leasehold apartment of the size I wanted was more than $150,000 and it made a big difference.

I took the plunge.

Today, my 1,650 sq ft property has 85 years left on its lease. After spending every penny my other half and I had on renovations and furnishings, we were thrilled the day we moved in.

Everything was gleaming and it felt good that we owned everything we saw.

But this lasted only a few days.

Acutely aware of the new depths my bank accounts had plunged to, I was overcome by an attack of PPCD during lunch with my mother one day while shopping for cutlery.

Mum, I asked, did I make a bad move sinking all my money into a property that will take me 30 years to pay off? And at the end of 99 years, would be worth absolutely nothing?

Also, given the price I'd paid for the property, is it likely that I could even break even on costs if I wanted to sell my apartment a few years later?

I was panicking, and convinced that nobody would buy my apartment when I want to sell it. I would incur a huge loss on it - something I wouldn't be able to live down as a property reporter.

In an attempt to alleviate the symptoms of my PPCD, I spoke to some property analysts for an objective assessment of my choice to invest in a leasehold home.

This is the list of factors to consider that I eventually came up with:

1. Affordability

The major advantage of a leasehold property is that it is cheaper and offers a first-time home buyer a good opportunity to get on the property ladder without financial stress.

2. Yield

Leasehold homes also typically give you a higher yield compared to a similar freehold property as you can command the same rent but your capital outlay is lower.

3. Depreciation, and factors that will compensate for this

The main drawback is that the value of your property depreciates with age. I have now come to accept this fact, but there are some factors that can influence the rate of depreciation, such as location, quality of amenities and transport network.

For those contemplating a leasehold home, is it near an MRT station? Is your estate slated for major upgrading?

Thankfully, I thought, my new home will benefit from the upcoming Bukit Timah MRT line.

4. Collective sales

Leasehold properties typically receive less proceeds as developers have to pay the Government a fee to top up the lease, unlike for freehold properties.

I'm personally not one for collective sales. But it is comforting to know that even an old leasehold estate such as Farrer Court could command a premium of $2.15 million per home when it went en bloc.

5. Historic figures

Looking at property cycles in the last decade, analysts say the rate of appreciation of freehold homes does not always outperform that of leasehold homes.

In general, the numbers show that in an upswing, leasehold properties tend to gain more, although in a downturn, they also fall more rapidly - meaning prices are more volatile.

So if you buy a leasehold property and intend to hold on to your home for some time, you could easily choose to sell in an upswing instead of a downturn.

All in all, I felt my anxieties dissolve when I realised that my leasehold home was affordable, will give me a reasonable yield if I choose to rent it out, and would likely appreciate - or hold - in value when transport networks are improved.

Analysts say there is no conclusive evidence to show one is definitely better than the other, and that the decision you make depends mainly on budget and preference.

I now realise that my home, which I love because it has four bedrooms and is surrounded by four different nature parks, was really the best choice for me, given what I could afford.

My mum, in her infinite wisdom, said: 'If history is anything to go by, you'll be fine.'

My parents recently sold an HDB flat in Jurong after my grandmother who lived there passed away. It had aged 20 years since they bought it, yet they sold it at a price far higher than what they paid for it.

See? Why worry so much, my mum chided, HDB flats are also leasehold and their values go up every year.

It was a good point. I decided then I would just enjoy my first home, day by day

An average between an elephant and a mouse will show a solution that is nowhere near the elephant, or the mouse.

Though it is on average true that the value of a leasehold flat declines as it ages, these people who write, generally do not show the traits of an investor. If not, they would also see the price appreciations for 43 year old places at Tiong Bahru walkups, since 2006. As the walk ups ages, the prices still went up.

Like a stock, the purchase is based on many factors. We do not get a stock just based on pricing, unless one is a diehard fan of Adam Mesh, who is a powerful advocate of technical analysis.

Most will still evaluate the business fundamentals, who is in the management, what are the future directions of the company. It is the same for the apartment as each apartment is different, nevertheless free or leasehold.

There are people who made and lost money in both. The forumers who identify averages tend to be just that, averagers. We have to be realistic in understanding the value forumers and writers who are averagers provide. As said in Wallstreet: tell me something i don't already know.

[peterng8]

Hmm.. Parc vista price is climbing up...still got room to go up...notice that less and less people are willing to let go units here? why huh?

[kingkong1984]

U act blur. No recession where can have price down?

[peterng8]

U act blur. No recession where can have price down?

No la,...i am not talking about firesale...I am asking why people not keen in selling theier units now in PV as price is going up now..what are they waiting? only a purported reason, the price is going to up further...

[focus]

Wa... this is puzzling.. nobody buying ? so developer kancheong and want to sell enbloc?

Residence81 @ Lor G Telok Kurau
Selling Enbloc with naming rights.

[hyenergix]

An average between an elephant and a mouse will show a solution that is nowhere near the elephant, or the mouse.

Though it is on average true that the value of a leasehold flat declines as it ages, these people who write, generally do not show the traits of an investor. If not, they would also see the price appreciations for 43 year old places at Tiong Bahru walkups, since 2006. As the walk ups ages, the prices still went up.

Like a stock, the purchase is based on many factors. We do not get a stock just based on pricing, unless one is a diehard fan of Adam Mesh, who is a powerful advocate of technical analysis.

Most will still evaluate the business fundamentals, who is in the management, what are the future directions of the company. It is the same for the apartment as each apartment is different, nevertheless free or leasehold.

There are people who made and lost money in both. The forumers who identify averages tend to be just that, averagers. We have to be realistic in understanding the value forumers and writers who are averagers provide. As said in Wallstreet: tell me something i don't already know.

I disagree.

Singapore's circumstances are unique. Given our decreasing birth-rate, the demand for houses should decline with time, hence the house price should also decline. However, this is greatly affected by immigration policy and lack of foresight by HDB from 2005-2009. The rising tide of sudden population increase lifted all boats, including the 99 LH properties.

Prices are moderating now due to clamp-down in immigration numbers and massive injections of BTOs/ECs and GLS in 2010 and 2011. Once these condos TOP and our population growth slows down, we will see 99 LH in general losing their appeal and price with time.

[tericia]

I disagree.

Singapore's circumstances are unique. Given our decreasing birth-rate, the demand for houses should decline with time, hence the house price should also decline. However, this is greatly affected by immigration policy and lack of foresight by HDB from 2005-2009. The rising tide of sudden population increase lifted all boats, including the 99 LH properties.

Prices are moderating now due to clamp-down in immigration numbers and massive injections of BTOs/ECs and GLS in 2010 and 2011. Once these condos TOP and our population growth slows down, we will see 99 LH in general losing their appeal and price with time.

a very good point that you have stated.

[kingkong1984]

What was taken out can be put back easily. It's that flexible. It all depends on prevailing policies.

Can u be sure no influx again or no major exodus of foreigners? It's all predictions and guess work.

[peterng8]

What was taken out can be put back easily. It's that flexible. It all depends on prevailing policies.

Can u be sure no influx again or no major exodus of foreigners? It's all predictions and guess work.

you are right, as long as to sustain or improv singpaore econoomies, with less childbirth annually, what can the garmen do to have enough propulation? more FTs la...

[kingkong1984]

What was taken out can be put back easily. It's that flexible. It all depends on prevailing policies.

Can u be sure no influx again or no major exodus of foreigners? It's all predictions and guess work.

Haha coe taken out and put back liao. May not cross 100k ever.

[peterng8]

JLD is in the news today and MR LIm is implying that the price hopefully will not be pushed up further with this news that confirm JLD is a commitment again by garmen again....Condo that is near Lakeside MRT, JE MRT and Boon Lay another long term investment blue eye kids...

[Regulators]

govt has made commitment several times regarding punggol since 1996. We will see whether their latest promises for the punggol residents work. I give you another 5 years and the place will still be a crap estate.

JLD is in the news today and MR LIm is implying that the price hopefully will not be pushed up further with this news that confirm JLD is a commitment again by garmen again....Condo that is near Lakeside MRT, JE MRT and Boon Lay another long term investment blue eye kids...

[DaytonaSS]

govt has made commitment several times regarding punggol since 1996. We will see whether their latest promises for the punggol residents work. I give you another 5 years and the place will still be a crap estate.

Govt are building tons of HDB there. Selling the location to young singaporeans! Forum bro de-selling the place, quickly get out due to the jia luk population from across the sea.

[hyenergix]

govt has made commitment several times regarding punggol since 1996. We will see whether their latest promises for the punggol residents work. I give you another 5 years and the place will still be a crap estate.

Punggol stuffs are really decoys to get people to buy the HDBs there to alleviate the constraints in the cities. At least JLD has companies and factories to support the price growth. My feel is there will be significant growth over the years at JLD but not as grand as what people imagine or agents selling. The grandest will still be the Marina Financial District.

[westman]

Punggol stuffs are really decoys to get people to buy the HDBs there to alleviate the constraints in the cities. At least JLD has companies and factories to support the price growth. My feel is there will be significant growth over the years at JLD but not as grand as what people imagine or agents selling. The grandest will still be the Marina Financial District.

If JLD can be perceived as good as AMK, suffice liao.

[kingkong1984]

If JLD can be perceived as good as AMK, suffice liao.

Needs time. JLD can be the next tampines. Needs time. Should get those nearer to jurong east area.

[proud owner]

Needs time. JLD can be the next tampines. Needs time. Should get those nearer to jurong east area.

i feel ..the success depends alot of the transport system

punggol will suffer becos its supported by circle line ...

Jurong .. part serves by main line ...the rest are circle line

tampines is main line

so i think punggol and jurong will lose out ...

[taggy]

i feel ..the success depends alot of the transport system

punggol will suffer becos its supported by circle line ...

Jurong .. part serves by main line ...the rest are circle line

tampines is main line

so i think punggol and jurong will lose out ...

punggol is north-east line leh, where got circle line

[proud owner]

punggol is north-east line leh, where got circle line

with interchange at D Ghaut ? the walk within the station is damn long

[westman]

i feel ..the success depends alot of the transport system

punggol will suffer becos its supported by circle line ...

Jurong .. part serves by main line ...the rest are circle line

tampines is main line

so i think punggol and jurong will lose out ...

Tot JE, CG and L are main line? Also, JE also serve NE line, thus better than Tampines i'n my opinion.

[peterng8]

Tot JE, CG and L are main line? Also, JE also serve NE line, thus better than Tampines i'n my opinion.

I drive but when I free, I like taking mrt around to have a feel...NS and EW are main lines.

lake side, chinese garden and Jurong East is EW line, it is the first mRT mian line and the oldest followed by NS line than the rest...

I am looking forward for the J cube to be up next year and the construction work is around 50% now.

[kingkong1984]

Look for interchange. Tats all. Massive potential when they intersec.