A Seller's Cautionary Tale From ST Forum 02 Oct 09

[hans]

You are right, to stay in the property game, you need to have the money, holding power and dare to take risk. This round the market made a quick u turn up, what if the maket turn further south for a few more years.

To stay in the private property market game, one always has to have cash on standby to pay the 20% deposit. This is especially since she already knew that the en bloc was coming.

I do not know why the word "stuck" is used to describe properties. In fact, properties is something desirable to be "stuck" with; while cash is not. I would rather say that I am "stuck" with cash in the bank earning miserable interests, while awaiting buying opportunities.

Let's say the above letter writer bought the 797 sf Newton Suites I suggested in February 2007, and then let's say that subsequently Gillman Heights en bloc failed.

She will be "stuck" with two properties, but she will be a very rich and happy woman.

Newton Suites 797 sf was $$876,760 ($1,101 psf) in February 2007 but $1,351,712 ($1,696 psf) today. She would have made $474,952.

On top of that, she still has her Gillman Heights apartment. What is it worth today? Much more.

CaptitaLand paid $352 psf ppr for Gillman Heights and is now able to achieve $1,000 psf. Obviously CapitaLand is the one laughing all the way to the bank.

Imagine if the sale had failed at the Strata Titles Board. What is Gillman Heights worth today? Let's work backwards.

At a sale price of $1,000 psf, subtract $150 psf for profit margin, that's $850 psf. Subtract another $200 psf for construction costs, that's $650 psf.

That means if Gillman Heights were to be put en bloc today, developers can comfortably bid $650 psf ppr instead of $352 psf ppr.

That means the letter writer's Gillman Heights apartment should be worth ($650 / $352) x $887 k = $1,637,926.

She would have:

1. Got $750,926 more for her Gillman Heights apartment.
2. Earned $474,952 for her "kan jiong" replacement property at Newton Suites.

Total earned: $1,225,878 for this whole exercise!

[jlrx]

I have very high regard for jlrx. His/her comments are perhaps the most insightful and to some extent the most intellectually stimulating in this forum.

Investment looks so easy on hindsight.

I'm just curious as to why there is a lapse of consistency between the comment below suggesting investment is nothing more than witchcraft versus how would the Gillman Heights would be enblocker know to buy Newton Suites.

http://forums.condosingapore.com/sho...3952#post63952

No. There is no lapse of consistency.

There is no way we can know whether the market is going up or down. We just have to take a risk, and bear the consequences that come with our decisions.

What I am trying to show is that, if she had stayed invested in the property market, she would not have been priced out of the market.

The letter writer had decided to take a risk by getting "unhedged" from the market (obviously by renting a place) so now that the market had flown away, she writes a letter to complain.

On the other hand, if the market had collapsed totally and The Interlace now sells at 50 cents per sq ft, this lady would probably feel that she is a genius.

Well, he forgot the cold sweat during the Lehman days and perhaps the sleepless nites as well

That's why I cannot stand this lady writer; and all the complainers who write letters to the Straits Times forum.

When we take a position, we must bear all the sufferings that come with it; so that we earn the right to enjoy the successes that may come with it.

This is called "earning your right".

Do those complainers / letter writers know the feelings of investors who lost millions when the market plunged?

This lady (plus all the complainers) has had all the chance to buy during the Lehman days but she did not.

The way she portrays herself as a "victim" of the developer is a distortion of probabilistic event sequences.

I am just trying to show, with my illustrations, what she could have done, but did not.

If she did not, then that was her choice.

[proud owner]

No. There is no lapse of consistency.

There is no way we can know whether the market is going up or down. We just have to take a risk, and bear the consequences that come with our decisions.

What I am trying to show is that, if she had stayed invested in the property market, she would not have been priced out of the market.

The letter writer had decided to take a risk by getting "unhedged" from the market (obviously by renting a place) so now that the market had flown away, she writes a letter to complain.

On the other hand, if the market had collapsed totally and The Interlace now sells at 50 cents per sq ft, this lady would probably feel that she is a genius.



That's why I cannot stand this lady writer; and all the complainers who write letters to the Straits Times forum.

When we take a position, we must bear all the sufferings that come with it; so that we earn the right to enjoy the successes that may come with it.

This is called "earning your right".

Do those complainers / letter writers know the feelings of investors who lost millions when the market plunged?

This lady (plus all the complainers) has had all the chance to buy during the Lehman days but she did not.

The way she portrays herself as a "victim" of the developer is a distortion of probabilistic event sequences.

I am just trying to show, with my illustrations, what she could have done, but did not.

If she did not, then that was her choice.

she did mention that she wanted to buy back the same location ... which the developer promised to give them (GH owner) first chioce ...

hence she probably kept the money from the enbloc and waited for the launch ...

[andy]

No. There is no lapse of consistency.

There is no way we can know whether the market is going up or down. We just have to take a risk, and bear the consequences that come with our decisions.

What I am trying to show is that, if she had stayed invested in the property market, she would not have been priced out of the market.

The letter writer had decided to take a risk by getting "unhedged" from the market (obviously by renting a place) so now that the market had flown away, she writes a letter to complain.

On the other hand, if the market had collapsed totally and The Interlace now sells at 50 cents per sq ft, this lady would probably feel that she is a genius.



That's why I cannot stand this lady writer; and all the complainers who write letters to the Straits Times forum.

When we take a position, we must bear all the sufferings that come with it; so that we earn the right to enjoy the successes that may come with it.

This is called "earning your right".

Do those complainers / letter writers know the feelings of investors who lost millions when the market plunged?

This lady (plus all the complainers) has had all the chance to buy during the Lehman days but she did not.

The way she portrays herself as a "victim" of the developer is a distortion of probabilistic event sequences.

I am just trying to show, with my illustrations, what she could have done, but did not.

If she did not, then that was her choice.

Ok I think you went for an extreme example, right? Even Warren Buffet couldn't have thought of hedging with Newton Suites But of course, she should have hedged. Absolutely no question about that. Or the sales enbloc contract should be void when the cooling period greater than 1 year. Or the price should be adjusted and reconsidered.

However what I have found, some ppl in the last collective sale cycle who didn't buy also did not buy when Lehman collapsed. They were waiting for the market to fall. This is because noone one expected SG property to track the STI without lag. Not even Kwek, FEO or Mah.

There is a web site that tracks country income versus housing affordability from 1990 to now. Singapore is on it. It is absolutely riveting reading

One more thing. Straittimes job is to create advertising revenues is based on publicity and the best way is to put together a dramatic story. Fact or assumption is not the point

[hans]

Ya, she thinks capital land will sell back to her at $520psf

she did mention that she wanted to buy back the same location ... which the developer promised to give them (GH owner) first chioce ...

hence she probably kept the money from the enbloc and waited for the launch ...

[Regulators]

u r wrong bout ur safe haven. Put 500k in the bank n in time to cme ur money gets eroded by inflatn. For pty, prices tend to get adjusted upwards with monetary inflation n not forgeting u can sell 4 profit or rent for income. Apart frm liquidity, money in bank is of little use other than to satisfy ur kiasiism. I cant say the same for stocks but u hv to be astute to be a stock investor. I hv frends who make a lot of money in stocks for a living n there r also others who sweat n hv sleepless nites just buying 20k of stocks. To each his own but my safe haven is pty

yeah you have a point.

I think i should not do anything because investing in property is such a risky thing esp with so many banks having problems these days. It is worse if you have 2 or more properties.

If i don't make a single mistake, i won't have sleepless nights or be drenched in cold sweat thinking about my losses. It's better to have a peaceful life in singapore.

Easier to put the money in the bank or stocks so that they will be safe and the returns from these instruments are better.

Will take your advice.

[jlrx]

Ok I think you went for an extreme example, right? Even Warren Buffet couldn't have thought of hedging with Newton Suites

I did not go for an extreme example. I am just quoting one example.

In fact my own example would be even more spectacular, but I don't wish to reveal the location for confidentiality reasons.

We can take another example far away from Newton Suites, i.e. Costa Del Sol #27-18, 1,475 sf.

Transacted 8 Jun 2006 at $1,163,000 ($788 psf).

Transacted 30 Apr 2007 at $1,388,000 ($941 psf).

Transacted 31 Aug 2009 at $1,888,000 ($1,280 psf).

The percentage increase is similar to Newton Suite's (unfortunately I can't find any transaction bought in Feb 2007 and sold in Aug/Sep 2009).

I chose Newton Suites because they have small units of 797 sf with investment amount very close to what that Gillman lady got from her en bloc, whereas the amount at Costa is quite large since they have larger units.

she did mention that she wanted to buy back the same location ... which the developer promised to give them (GH owner) first chioce ...

hence she probably kept the money from the enbloc and waited for the launch ...

She probably betted that the market would go down so that she can buy back The Interlace from CapitaLand at $520 psf or below.

Since she had placed such a bet, then she must accept the results.

After my own en bloc, some owners decided to keep the money in the bank and wait because they thought the market would go down so they could scoop up some cheap deals; while others like me quickly bought a "kan jiong" replacement property.

At that point in time, there was no way we could know the future; but once you have taken a bet, then you have to live with the results of that decision, and not accuse the developer of double-crossing you.

The developer who bought our condo also laughed all the way to the bank and is now offering at twice the psf price and 3 times the psf ppr (just like Gillman Heights/ Interlace), but I am not biting.

[Property_Owner]

We can take another example far away from Newton Suites, i.e. Costa Del Sol #27-18, 1,475 sf.

Transacted 31 Aug 2009 at $1,888,000 ($1,280 psf).

[EBD]

Ya, she thinks capital land will sell back to her at $520psf

Unless you get a one for one promise , ie direct exchange you will never come out on top.

[Property_Owner]

jlrx, what trade are you in? How old are you?

[EBD]

You are right, to stay in the property game, you need to have the money, holding power and dare to take risk. This round the market made a quick u turn up, what if the maket turn further south for a few more years.

Need to be nimble. And go with the facts on the ground. And when they change be prepared to change.

When my place went enbloc in Q2 2008, it was one of the last ones to do so. No one knew for sure of that at the time but the fact was deals were already falling through at tulip gardens etc... Stock markets where already in a 6 month downward trajectory. Property transactions had dried up and prices were dropping.

The credit crunch was in full effect, bridging loans we had been seeking were all being turned down where they were easily available the year before.

If I had blindly remained "hedged" in property and instantly bought at that point it would have been the worst decision possible. We put the money in liquid assets - namely US dollar bond funds. As the sh*tstorm gathered pace, illiquid property in prime districts came down at least 30-40%. Liquid bond funds shot up 20%...... and were liquid! Which was great as we decided there was no where left to go but down at 0% coupons during the height of the mess, we switched to corporate bond funds & some equity funds. In a single day. Try that with property even in the best of times. This switch has given another .... well you should know what has happened to markets since then.

I had been targeting to buy end 2010, all the experts said after Q2 2010 market would bottom. I was caught off guard by the bottom being in March. By end April I decided that even though the turn around made little sense to me, it was real, it had risen 5+% and we bought our replacement.

Not the bottom, but still down 35% from when jlrx would have hedged (instantly after getting the cheque)..... in the mean time had the cash to make some (hindsight) easy pickings and go positive rather than negative.

In an earlier post jlrx said what I did was dangerous. Well thats his opinion and is entitled to it. My opinion was that buying property in a falling market was even more dangerous.
Maybe my risk/reward appetite is greater.


Could the lady from GH done something similar? maybe, maybe not.
Waiting for the developer is the worst thing to do. Trusting them to do the right thing by you is really naive.
To have bought a replacement property, as a hedge, without a confirmed sale of your old place exposes you to all kinds of grief if property takes a downturn, like it did. I met some of these people at the lawyers. At that time it seemed like the downturn could last for years..... and the worry was bleeding them dry.
Looking back from today and saying "see , nothing to worry about"

On GH finally going through..........
Its sales committee chairman Robert Wiener said: 'It's been in limbo for a long time, now it's finally ended.
'It's a huge relief for many owners who had bought second properties and were really worried.'

They hedged and won I guess. If the sale had not gone through they could have ended up bankrupt. The worry was real and you can't put a $ sign on it.

I like property, I'm just not religious on it like some here. It's not the only way to make money. Being flexible and a different plan for different situations is key. Under different circumstances, like at the very beginning of a bull run, I may very well have done the same thing as jlrx suggested.

In fact you can get exposure to commercial and residential property via REITS which are liquid which I have done too.

[cheerful]

I think jlrx did mention to play this kinda 'hedge' one needs to have ready cash for 20% downpayment rite .... the message here is about being responsible for your choice if you have taken a stand

Maybe different instrument suitable for different folks ....

There is no way we can know whether the market is going up or down. We just have to take a risk, and bear the consequences that come with our decisions.

What I am trying to show is that, if she had stayed invested in the property market, she would not have been priced out of the market.

The letter writer had decided to take a risk by getting "unhedged" from the market (obviously by renting a place) so now that the market had flown away, she writes a letter to complain.

On the other hand, if the market had collapsed totally and The Interlace now sells at 50 cents per sq ft, this lady would probably feel that she is a genius.

That's why I cannot stand this lady writer; and all the complainers who write letters to the Straits Times forum.

When we take a position, we must bear all the sufferings that come with it; so that we earn the right to enjoy the successes that may come with it.

This is called "earning your right".

[hans]

Congrats EDB, your trading plan works very well. The key to any investment is to have a trading plan, when to enter and when to exit. And don't blame anyone for your mistakes.

Need to be nimble. And go with the facts on the ground. And when they change be prepared to change.

When my place went enbloc in Q2 2008, it was one of the last ones to do so. No one knew for sure of that at the time but the fact was deals were already falling through at tulip gardens etc... Stock markets where already in a 6 month downward trajectory. Property transactions had dried up and prices were dropping.

The credit crunch was in full effect, bridging loans we had been seeking were all being turned down where they were easily available the year before.

If I had blindly remained "hedged" in property and instantly bought at that point it would have been the worst decision possible. We put the money in liquid assets - namely US dollar bond funds. As the sh*tstorm gathered pace, illiquid property in prime districts came down at least 30-40%. Liquid bond funds shot up 20%...... and were liquid! Which was great as we decided there was no where left to go but down at 0% coupons during the height of the mess, we switched to corporate bond funds & some equity funds. In a single day. Try that with property even in the best of times. This switch has given another .... well you should know what has happened to markets since then.

I had been targeting to buy end 2010, all the experts said after Q2 2010 market would bottom. I was caught off guard by the bottom being in March. By end April I decided that even though the turn around made little sense to me, it was real, it had risen 5+% and we bought our replacement.

Not the bottom, but still down 35% from when jlrx would have hedged (instantly after getting the cheque)..... in the mean time had the cash to make some (hindsight) easy pickings and go positive rather than negative.

In an earlier post jlrx said what I did was dangerous. Well thats his opinion and is entitled to it. My opinion was that buying property in a falling market was even more dangerous.
Maybe my risk/reward appetite is greater.


Could the lady from GH done something similar? maybe, maybe not.
Waiting for the developer is the worst thing to do. Trusting them to do the right thing by you is really naive.
To have bought a replacement property, as a hedge, without a confirmed sale of your old place exposes you to all kinds of grief if property takes a downturn, like it did. I met some of these people at the lawyers. At that time it seemed like the downturn could last for years..... and the worry was bleeding them dry.
Looking back from today and saying "see , nothing to worry about"

On GH finally going through..........
Its sales committee chairman Robert Wiener said: 'It's been in limbo for a long time, now it's finally ended.
'It's a huge relief for many owners who had bought second properties and were really worried.'

They hedged and won I guess. If the sale had not gone through they could have ended up bankrupt. The worry was real and you can't put a $ sign on it.

I like property, I'm just not religious on it like some here. It's not the only way to make money. Being flexible and a different plan for different situations is key. Under different circumstances, like at the very beginning of a bull run, I may very well have done the same thing as jlrx suggested.

In fact you can get exposure to commercial and residential property via REITS which are liquid which I have done too.

[jlrx]

jlrx, what trade are you in? How old are you?

Hmmm ...

Must be a bit secretive in forums.

Some of the people here are not very friendly ...

In an earlier post jlrx said what I did was dangerous. Well thats his opinion and is entitled to it. My opinion was that buying property in a falling market was even more dangerous.
Maybe my risk/reward appetite is greater.

I still think that what you have done was dangerous. Like what this girl is doing.



Just a misstep, and you could end up like that Gillman lady - priced out of the market.

The property market is very merciless, once you are left behind, it's very difficult to catch up.

Congrats EDB, your trading plan works very well. The key to any investment is to have a trading plan, when to enter and when to exit. And don't blame anyone for your mistakes.

I think he is EBD and not EDB ...

EBD has a trading plan, which is great!

However, some people like that Gillman lady has a "letter-writing plan", which I do not think too highly of.

[DarthRevan]

She probably betted that the market would go down so that she can buy back The Interlace from CapitaLand at $520 psf or below.

Since she had placed such a bet, then she must accept the results.

This I have to agree. "Life is simple, you make choices & don't look back".

[wqmai]

This I have to agree. "Life is simple, you make choices & don't look back".

Life is like a box of chocolate.

[tericia]

u r wrong bout ur safe haven. Put 500k in the bank n in time to cme ur money gets eroded by inflatn. For pty, prices tend to get adjusted upwards with monetary inflation n not forgeting u can sell 4 profit or rent for income. Apart frm liquidity, money in bank is of little use other than to satisfy ur kiasiism. I cant say the same for stocks but u hv to be astute to be a stock investor. I hv frends who make a lot of money in stocks for a living n there r also others who sweat n hv sleepless nites just buying 20k of stocks. To each his own but my safe haven is pty

Hi Regulator, i was being sacarstic in my reply. Many thanks for actually writing back.