Pause for thought on the property front

Thread Rating:
  • 0 Vote(s) - 0 Average
  • 1
  • 2
  • 3
  • 4
  • 5
#1
The Straits Times
www.straitstimes.com
Published on Jan 20, 2013
Small change
Pause for thought on the property front

Overseas and non-residential investments also have their risks

By Lee Su Shyan Money Editor

The agents and other industry players selling non-residential property suddenly find themselves in the box seat, thanks to the latest round of cooling measures.

Anything from shophouses to offices and homes in Malaysia and Britain now look like better bets than homes in Singapore, following the drastic curbs on loans and additional stamp duty that took effect a week ago.

Those investors who had planned to buy homes in Singapore - and who have now been stopped in their tracks - are not lacking in funds. A natural instinct is to go ahead with a purchase simply because the cash is available and the mental preparation to spend has been done.

It's like going on holiday with the plan to buy that handbag, watch or art piece. Even if a chosen piece is too expensive, people are unlikely to come home empty-handed.

Of course, holiday purchases - big-ticket as they may be - cannot be equated with buying that investment property. But with investors already halfway planning to commit, they are more likely to look for an alternative rather than drop all plans and leave their money in the bank.

They should think twice. Buying a home as an investment means finding a suitable tenant and that can be a problem. Shops and offices face those risks and more.

These assets are more tied to the economy than residential property. When times are bad, people will still need a roof over their heads, but when growth slows and consumers stop spending, shops quickly feel the pain. A shop may go out of business because of a poor location or if there is more competition or simply because it is selling a product for which there is no demand.

Offices too are dependent on whether companies are expanding and need more space.

Then there are the risks of being just one owner among many. That is less of an issue if you are in a condo, but more pertinent if it is a shop or office building. If you look at older blocks such as Lucky Plaza - bustling nonetheless - or smaller offices such as Maxwell House, you will realise it is not easy to get multiple owners to agree to spend on improving the common areas such as lobbies, lifts, toilets and the like. Few would be willing to spend on joint promotion activities to bring in foot traffic.

Another consideration is how well the property can fare against the likes of the big property giants CapitaLand or Far East Organization in terms of attracting quality tenants.

Plenty of possible negatives, yet investors seem to have put them aside going by the robust year the office and shop sectors enjoyed in 2012.

Shop units in the upcoming Oxley Tower in Robinson Road were snapped up quickly. Spaces, ranging from 118 to 409 sq ft, were sold at between $3,800 and $6,000 psf. Its office units also sold well, as did Paya Lebar Square and PS100, near the Tanjong Pagar MRT station.

Figures from Knight Frank show that the average price of strata shops jumped 28.4 per cent last year while strata offices gained 6.4 per cent.

Investors can always go offshore if Singapore seems too risky these days, but there are perils for the unwary overseas.

The downside of investing in London property, for example, includes the weak sterling and the hefty management fees the agencies charge for managing the property.

There is also the risk that cash-strapped governments in the West will start to shore up their finances by taxing property.

Already buyers have to pay higher stamp duty for more expensive homes in London, while there have been calls for Johor to raise the minimum sum for foreign property purchases. I could argue that if an investor takes a very long-term view, paying that 7 per cent additional buyer's stamp duty for the second residential property here can make sense.

Put another way, the $70,000 payable on a $1 million residential unit when depreciated over a 20-year time frame works out to $3,500 a year. In fact, $70,000 cannot even pay for a certificate of entitlement to buy a new car, which depreciates in value anyway.

But it is early days yet and it may be time for a breather on the property front. Perhaps the equities market can be considered.

sushyan@sph.com.sg
My Value Investing Blog: http://sgmusicwhiz.blogspot.com/
Reply
#2
Quote:Shop units in the upcoming Oxley Tower in Robinson Road were snapped up quickly. Spaces, ranging from 118 to 409 sq ft, were sold at between $3,800 and $6,000 psf.

Buyers snap up shop space in Alexandra Central

Quote:[SINGAPORE] Yesterday's launch of Alexandra Central attracted a huge crowd of buyers, many of whom are likely to have migrated from showrooms of residential properties into retail space.

A source said one shop space on the upper floor of below 200 square feet (sq ft) drew 150 cheques from potential buyers. Overall, all but two of the 116 units - which ranged between 10-103 square metres (108-1,109 sq ft) in size and cost as much as $7,000 per square foot (psf) for space on the first level - were sold by the end of the day.
.
.
Bugis Cube is a freehold development along North Bridge Road. Launched last year, its retail units fetched between $2,900-$6,900 psf.
.
In contrast, Alexandra Central, a 99-year leasehold hotel and retail development, is not located near any MRT station. Sitting at the junction of Alexandra Road and Jalan Bukit Merah, it is next to Ikea @ Alexandra and opposite Queensway Shopping Centre. Anchorpoint Shopping Centre is a stone's throw away.
.
Units on the second and third floors were marketed at about $5,600 and $4,400-$4,800, respectively.
.
.

Anchorpoint across the road (freehold mall part of FCT portfolio) is valued at $1129 psf NLA.

CMT's malls are valued on average at $1586 psf NLA and many of them are next to mrt and bus interchange.
( pg 18/44 http://capitamall.listedcompany.com/news...9CAC.1.pdf )
Reply
#3
(23-01-2013, 08:33 PM)swakoo Wrote:
Quote:Shop units in the upcoming Oxley Tower in Robinson Road were snapped up quickly. Spaces, ranging from 118 to 409 sq ft, were sold at between $3,800 and $6,000 psf.

Buyers snap up shop space in Alexandra Central

Quote:[SINGAPORE] Yesterday's launch of Alexandra Central attracted a huge crowd of buyers, many of whom are likely to have migrated from showrooms of residential properties into retail space.

A source said one shop space on the upper floor of below 200 square feet (sq ft) drew 150 cheques from potential buyers. Overall, all but two of the 116 units - which ranged between 10-103 square metres (108-1,109 sq ft) in size and cost as much as $7,000 per square foot (psf) for space on the first level - were sold by the end of the day.
.
.
Bugis Cube is a freehold development along North Bridge Road. Launched last year, its retail units fetched between $2,900-$6,900 psf.
.
In contrast, Alexandra Central, a 99-year leasehold hotel and retail development, is not located near any MRT station. Sitting at the junction of Alexandra Road and Jalan Bukit Merah, it is next to Ikea @ Alexandra and opposite Queensway Shopping Centre. Anchorpoint Shopping Centre is a stone's throw away.
.
Units on the second and third floors were marketed at about $5,600 and $4,400-$4,800, respectively.
.
.

Anchorpoint across the road (freehold mall part of FCT portfolio) is valued at $1129 psf NLA.

CMT's malls are valued on average at $1586 psf NLA and many of them are next to mrt and bus interchange.
( pg 18/44 http://capitamall.listedcompany.com/news...9CAC.1.pdf )

I happened to be walking around that area last December after visiting Ikea. That plot of land used to be SAFRA Bukit Merah. I was indeed very surprised to see a Hotel being built there... got me interested to look at Chip Eng Seng instead...Tongue

Further down from Anchor Point in the direction of Queens condo (next to Queenstown MRT station), there's also a newly completed Office cum Retail place called 'Alexis', IIRC, aro' 4 storeys high. Saw a lot of empty units (maybe cos' newly completed) with many banners of 'For Sale' or 'For Rent'... Maybe will go again in a few months to see if it's so 'hot'...Tongue
Luck & Fortune Favours those who are Prepared & Decisive when Opportunity Knocks
------------ 知己知彼 ,百战不殆 ;不知彼 ,不知己 ,每战必殆 ------------
Reply
#4
(23-01-2013, 09:20 PM)KopiKat Wrote: Further down from Anchor Point in the direction of Queens condo (next to Queenstown MRT station), there's also a newly completed Office cum Retail place called 'Alexis', IIRC, aro' 4 storeys high. Saw a lot of empty units (maybe cos' newly completed) with many banners of 'For Sale' or 'For Rent'... Maybe will go again in a few months to see if it's so 'hot'...Tongue

AFAIK Alexis (marked HERE in map below) is a freehold condo, so those may be empty apartment units you saw then? Smile

BTW ground floor units in Queensway shopping centre nearby appear to be going for around 6-8K+ psf.

[Image: firstmap.jpg]
Reply
#5
(23-01-2013, 10:17 PM)swakoo Wrote:
(23-01-2013, 09:20 PM)KopiKat Wrote: Further down from Anchor Point in the direction of Queens condo (next to Queenstown MRT station), there's also a newly completed Office cum Retail place called 'Alexis', IIRC, aro' 4 storeys high. Saw a lot of empty units (maybe cos' newly completed) with many banners of 'For Sale' or 'For Rent'... Maybe will go again in a few months to see if it's so 'hot'...Tongue

AFAIK Alexis (marked HERE in map below) is a freehold condo, so those may be empty apartment units you saw then? Smile

BTW ground floor units in Queensway shopping centre nearby appear to be going for around 6-8K+ psf.

[Image: firstmap.jpg]

Location looks right. If so, then Level 1 are either shops / office as I saw at least one unit being used as such.

As for old SAFRA plot, a couple of pics which I took....

[Image: alkiti.jpg]

[Image: 301j21k.jpg]



OT, something else caught my attention at Ikea at the payment cashier....Tongue

[Image: 9hhyxc.jpg]

[Image: 2urnjtv.jpg]


Also, the logistic service provider for Ikea Home Delivery,

[Image: 29w6b5t.jpg]
Luck & Fortune Favours those who are Prepared & Decisive when Opportunity Knocks
------------ 知己知彼 ,百战不殆 ;不知彼 ,不知己 ,每战必殆 ------------
Reply


Forum Jump:


Users browsing this thread: 4 Guest(s)