Pssst, want to buy 'fraction' of a condo?

[mr funny]

http://www.businesstimes.com.sg/sub/...52174,00.html?

Published September 28, 2009

Pssst, want to buy 'fraction' of a condo?

Firm marketing shares in apartments; industry watchers still wary

By EMILYN YAP


(SINGAPORE) A new way of selling condominium units here has emerged amid the recent resurgence in the property market.

Registered three months ago, Primespace Investments Pte Ltd is marketing 'shares' in apartments to investors with at least $62,000 to spare.

It has two studio units available - one at One-North Residences in Buona Vista and the other at One Shenton near Raffles Place.

While Primespace says it is selling 'fractional ownership', investors will not own the properties directly. The apartments will be bought and held by other private limited companies, and what investors pay for are shares in those vehicles. BT understands investors will not lodge caveats on the properties.

Each of these companies' share capital will be split into 15 lots. An investor has to pay $62,000 for one lot in the company which owns the One-North unit, or $110,000 for one lot in the company that owns the One Shenton unit.

After the share capital is allotted to investors, Primespace will continue to manage and rent out the properties. It says it will distribute rental income to investors every year, and it is offering a guaranteed yield of 5 per cent for the first year of investment. If an apartment's value increases by 'a certain level (usually 40 per cent)', Primespace will sell it and share the profit among investors.

Investors who wish to cash out before the homes are sold can sell their shares to other people. Or they can turn to Primespace, which says on its website that it guarantees repurchase of the shares 'after a minimum commitment period (two years for most projects)... at fair market value less a re-marketing fee.'

The idea of pooling funds to invest in property is not new here - many friends and relatives already do it. But Primespace's business is uncommon in that it lets strangers invest jointly in condominium units. It works like an unlisted property trust, which is more familiar to investors in countries such as Australia.

Primespace says its model allows those who 'could not otherwise afford or choose to purchase' property to still invest in it. Property consultants BT spoke to agree this is an advantage, especially in light of the downturn. But they also point out the drawbacks of investing in such private vehicles. For instance, investors may not have much say over the management, leasing and maintenance of the apartments, and they may find it hard to trade their shares.

Market watchers also urge investors to do thorough research. 'Reputation, years of related experience and the track record of the offering company is critical,' said Cushman & Wakefield Singapore managing director Donald Han. 'Investors are depending on its capability and experience to generate maximum returns,' said Mr Han.

Primespace's website offers no details about its management. The firm is registered with the Accounting and Corporate Regulatory Authority and records show its director is Trisha Suresh, who could be 24.

The Consumers Association of Singapore (Case) executive director Seah Seng Choon said the investment model is not regulated and investors need to be cautious. For example, they should ensure that companies offering 'fractional ownership' cannot sell more than the agreed number of shares.

Chesterton Suntec International research and consultancy director Colin Tan says there are more safeguards for investors in listed real estate investment trusts. Those invested in private vehicles 'may have to resort to costly litigation if things don't pan out the way they expected,' he says.

BT contacted Primespace to find out more about its business, but the firm declined to comment.

[focus]

gOOD Idea!

Anyone here interested to setup a pte ltd to buy property?
We will disband after the sales?

[dtrax]

You wanna become bernard madoff of Singapore?

[focus]

I don't mind if I can reached Billions !

But seriously, I am nto talking about the company in the article.
I am more interested in the concept of pooling money to invest.

Isn't it better to pool and invest in 1 high end , then to go alone and invest 1 mid-tier? ..And though the gain might be lowered but the risk is also spread.

or is it Not workable?

Actually, i attended this ERC's Andy Ong's wealth creation seminar(the free one) and he mentioned we can pool our money and he says just make sure have contract black and white. Seems like he have been donig it with his friends that way.

[teddybear]

Can do with friends & relatives but still have agreements & rules first to avoid disputes.

I don't mind if I can reached Billions !

But seriously, I am nto talking about the company in the article.
I am more interested in the concept of pooling money to invest.

Isn't it better to pool and invest in 1 high end , then to go alone and invest 1 mid-tier? ..And though the gain might be lowered but the risk is also spread.

or is it Not workable?

Actually, i attended this ERC's Andy Ong's wealth creation seminar(the free one) and he mentioned we can pool our money and he says just make sure have contract black and white. Seems like he have been donig it with his friends that way.

[dtrax]

Even with family and relatives can be troublesome... I seriously think it would not work out leh, rather invest in REITs. Besides given the current market and startup cost of min $62k with such low returns, potential high risk and does not give me the real feel of owning my property. Also the terms and conditions will probably be drafted to benefit the company

[mr funny]

http://www.businesstimes.com.sg/sub/...27140,00.html?

Published October 1, 2009

From 'fractions of condo' to a new tack

Primespace is now trying to sell 2 other properties by tender

By EMILYN YAP


(SINGAPORE) A company which was marketing 'shares' in condominium units just a few weeks back has adopted a new tack, and is now putting apart-ments up for tender.

Following a model similar to that of an unlisted property trust, Primespace Investments Pte Ltd initially promoted 'fractional ownership' in two studio apartments, one at One-North Residences and another at One Shenton.

As BT reported on Monday, the apartments would be bought and held by other private limited companies, and investors would pay for shares in those vehicles. This is an unusual way of selling residential property in Singapore.

Each of the vehicles' share capital would be split into 15 lots. A lot in the company holding the One-North unit would cost US$62,000; a lot in that which owns the One Shenton unit would cost US$110,000.

Primespace has since revamped its website, which is no longer marketing 'fractional ownership' in condominium units. It is now trying to sell two other apartments through tender. This is again an uncommon sale method.

One apartment is a two-bedder at One Shenton and the other is a three-bedder at Treasure Place off South Buona Vista Road. Interested bidders can obtain the tender documents or find out more about the units only by sending Primespace an email message.

Bidders will have to mail the tender documents and deposits back to the company.

Primespace is also inviting property owners to register their units for sale via tender. An interested seller has to set a reserve price, and the unit would be considered sold at the end of the tender exercise once the highest bid exceeds this price.

The company claims that properties can be 'sold faster and at a better price' through this route, as compared with the usual way of getting property agents to market units.

Primespace will charge a commission fee of 0.8-1 per cent of the final sale price. Property agents can charge anything from 0.5-2 per cent depending on the home's popularity and sale price.

The claim that properties sell faster and better through tenders is debatable, says a property market insider. A lot depends on how actively the company promotes the apartments, and how attractive the units are to draw bids, he says.

Ngee Ann Polytechnic real estate lecturer Nicholas Mak adds that the speed of sale also depends on the duration of the tender. He points out that companies conducting tender exercises will have to make sure that they can enforce the bids which come in.

Nevertheless, selling apartments through tender would seem less complicated than selling 'fractional ownership' in them, he says.