Rental rates depend on supply, demand

(30-01-2014, 09:50 AM)yeokiwi Wrote:

(30-01-2014, 07:33 AM)Temperament Wrote:

(29-01-2014, 11:18 PM)pianist Wrote: accounting graduate becoming a free lance tutor? seems like a waste
sg public housing are not considered subsidized because they are mark to market

Yes! Many of us think you are right. But tell it to HDB or Mr. KhawBKB, they will say you are wrong. It has been debated, argued by one or more then one opposition members in Parliament, and outside Parliament. The G had even challenged anyone to try to build HDB flats to see whether HDB has subsidy or not. So far has anyone think it is feasible(aka can make money)? IIRC.

Then who stay Tiong Bahru and who stay SengKang?

I want Orchard road. can?

Agree with yeokiwi.
If they dont mark to market, the existing flat owners will make noise that they are unable to sell their flats at the price they want because the government keeps undercutting them. This will pose another set of problems.

(29-01-2014, 10:43 AM)flinger Wrote: However , I seem to have seen that only in neighborhood malls and not so much in city malls. However, malls like Far East Plaza is not your clone mall.

I think as a mall operator one of the consideration would be diversity of tenant and choice and thus rental rates across tenants are very different.

Some tenants are there for diversity and choice and others are there for the profit they provide.

My personal observation (I'm totally not an expert where retail management is concerned) is that it really depends on whether the shop owner owns the shop space or not.

For example, in Lucky Plaza, there are more shops that do not belong to a chain or retail group. And from what I understand, a fair bit of the units in Lucky Plaza are owned by individual owners as opposed to a big company (e.g. CapitaLand) owning the entire mall. So with more owners of retail space, the rental is lower since either the owner of the unit also runs a business or they are forced to rent out at more competitive rates since there are many other choice or units to rent from. Downside is that the mall ends up being dowdy after many years because not all owners may agree to upgrading the common spaces and facades if their business doesn't depend so much on mall traffic (such as the doctors operating a clinic or a hair salon that already has a regular clientele built over the years).

Another factor is whether the Mall Operator has a few regular brands that they're used to working with. For example, in the Capitaland malls, you can always find the usual names (esp with regards to the F&B operators). Whereas, if the operator is a relative smaller player in the market, the rentals seem more affordable to startups. I'm saying this based on a comparison between Westgate (CapitaLand group) and JEM (Land Lease).

In summary,

Majority owner owned units = more diversity (smaller businesses), less upward pressure on rentals, dowdy common areas in long term.

Reit Owned/Fully leasehold units = more big brands (e.g. toastbox, crystal jades), upward pressure on rentals, nice decor, common areas.

Am I more right or wrong?

Malls owned by individual owners may not be able to control the tenant mix. Hard to do mall promotion to attract traffic. Besides the shops may not be owned by operators. The absentee landlords/investors may not care about the overall mall well being. Tragedy of commons.

(30-01-2014, 09:50 AM)yeokiwi Wrote:

(30-01-2014, 07:33 AM)Temperament Wrote:

(29-01-2014, 11:18 PM)pianist Wrote: accounting graduate becoming a free lance tutor? seems like a waste
sg public housing are not considered subsidized because they are mark to market

Yes! Many of us think you are right. But tell it to HDB or Mr. KhawBKB, they will say you are wrong. It has been debated, argued by one or more then one opposition members in Parliament, and outside Parliament. The G had even challenged anyone to try to build HDB flats to see whether HDB has subsidy or not. So far has anyone think it is feasible(aka can make money)? IIRC.

Then who stay Tiong Bahru and who stay SengKang?

I want Orchard road. can?

Yes! i say you are right. But does HDB think so? At least HDB maintains building new flats are subsidised to a certain extend. How much if any?

i was once traveling in a taxi and the taxi driver an ex-building contractor told me roughly the cost of building a 3 room HDB.
So he thought there was profit for HDB building NEW flats.
What subsidy? There was no subsidy for him.

(30-01-2014, 12:02 PM)level13 Wrote:

(30-01-2014, 09:50 AM)yeokiwi Wrote:

(30-01-2014, 07:33 AM)Temperament Wrote:

(29-01-2014, 11:18 PM)pianist Wrote: accounting graduate becoming a free lance tutor? seems like a waste
sg public housing are not considered subsidized because they are mark to market

Yes! Many of us think you are right. But tell it to HDB or Mr. KhawBKB, they will say you are wrong. It has been debated, argued by one or more then one opposition members in Parliament, and outside Parliament. The G had even challenged anyone to try to build HDB flats to see whether HDB has subsidy or not. So far has anyone think it is feasible(aka can make money)? IIRC.

Then who stay Tiong Bahru and who stay SengKang?

I want Orchard road. can?

Agree with yeokiwi.
If they dont mark to market, the existing flat owners will make noise that they are unable to sell their flats at the price they want because the government keeps undercutting them. This will pose another set of problems.

when i posted my comment, was trying to point out that though hong kong or shanghai/china dun have concept of public subsidized housings (unlike singapore), the public housing here are marked to market as well. thus one may compare apple to apple when comparing property prices between these countries and certainly there seems to be room for upward climb in prices for sg property to match those tier 1 cities in china/hong kong..

^^ I am pretty sure that before HDB was corporatized a decade ago it was profitable on a cash flow basis, though not on PnL basis, so govt cash subsidy of around $300m annual IIRC was actually redundant and IMHO a facade. U guys can dig out the HDB past AR.

I think for commercial property, a return to the old system of open bidding with segment restriction HDB as landlord but with no subleasing makes sense

(29-01-2014, 04:47 PM)CityFarmer Wrote:

(29-01-2014, 12:31 AM)specuvestor Wrote: Thanks I see why you salute him then as a foreigner turn PR. Yet he probably hasn't seen or understood how the policy paradigm shift in the past 20 years have hurt Singaporeans as to give such a standard textbook 101 answer to our rental problems.

It is akin to the genius at LTA/MAS increasing the car loan tenor to 10 years and 100% quantum so that COE prices can be more affordable.

Time to disagree again.

Standard answer doesn't always mean wrong answer. Sometime, the simplest answer is the answer.

IMHO intelligence is giving simple textbook answer without a full appreciation of the big picture. We see a lot of youthful intelligence in new graduates. Like my kids passionate and energetic about their games, but unable to understand or appreciate their environment, usually "disturbing the peace"

However wisdom is the ability to derive simple answer in complexity, AFTER understanding the interactions of the circumstances and stakeholders, taking the optimally correct route. That's why as we age we get wiser, not increase intelligence, though some never seem to crossover IMHO

That's why I am inherently skeptical of statistics as I am not wise enough to know or understand the underlying assumptions, even with a maths and finance background.

(30-01-2014, 03:46 PM)specuvestor Wrote:

(29-01-2014, 04:47 PM)CityFarmer Wrote:

(29-01-2014, 12:31 AM)specuvestor Wrote: Thanks I see why you salute him then as a foreigner turn PR. Yet he probably hasn't seen or understood how the policy paradigm shift in the past 20 years have hurt Singaporeans as to give such a standard textbook 101 answer to our rental problems.

It is akin to the genius at LTA/MAS increasing the car loan tenor to 10 years and 100% quantum so that COE prices can be more affordable.

Time to disagree again.

Standard answer doesn't always mean wrong answer. Sometime, the simplest answer is the answer.

IMHO intelligence is giving simple textbook answer without a full appreciation of the big picture. We see a lot of youthful intelligence in new graduates

However wisdom is the ability to derive simple answer in complexity, AFTER understanding the interactions of the circumstances and stakeholders, taking the optimally correct route. That's why as we age we get wiser, not increase intelligence, though some never seem to crossover IMHO

That's why I am inherently skeptical of statistics as I am not wise enough to know or understand the underlying assumptions, even with a maths and finance background.

Agreed. I am not an expert in property. I would rather think the author is belong to the latter, base on his track record.

Quote:Yes! i say you are right. But does HDB think so? At least HDB maintains building new flats are subsidised to a certain extend. How much if any?

i was once traveling in a taxi and the taxi driver an ex-building contractor told me roughly the cost of building a 3 room HDB.
So he thought there was profit for HDB building NEW flats.
What subsidy? There was no subsidy for him.

1. Most common belief of how a HDB should be priced
Price of HDB = Construction cost + admin cost

2. Gov belief of how a HDB should be priced
Price of HDB = Construction cost + admin cost + land cost

So, which equation do you think is correct or suitable or reasonable?

My belief is that the flats all over Singapore had different levels of demand by citizens of Singapore and therefore, land cost must be factored in to make it fair to the rest of the Singaporeans. I am fine with the 2nd equation.

But, "land cost" is subjective. So, if you are debating on what is the correct pricing of the land, I have no answer. However, if you think that the current gov is always overpricing the land, you can make your views known or make your vote counts.

But, saying that the HDB price is simply equal to construction cost + admin cost is not going to work.

(29-01-2014, 10:31 PM)corydorus Wrote: One thing probably is most of us put the pressure on ourselves. There are 3 rooms Flats available.
Need to stop enslaving ourselves if we can't afford, and lives within one mean. And life will be much happier.

Well said Cory, well said.

Years ago, I happened to work in the construction industry. Based on figures back then, it cost us about $100k to build each four room flat. But each 4 room flat was sold at a much higher price.

We do not include cost of land because most of the land was acquired under the Land Acquisition Act, from farmers and other kampung villagers. Land was acquired at a very very low cost, in comparison to cost of land when it came to leasing it back to citizens in the form of homes and malls. My grandparents had their huge kampung home acquired at low cost, and were given a four room HDB flat in exchange. Some land was acquired in the 1960s, and only developed after 2010. You can work out for yourself how huge those profits can be.

We do not include cost of infrastructure because those roads and utilities were built using taxpayers monies. They were not build using the private funds of politicians, or from donation drives by private citizens.

Hence, many of us in the construction line are very skeptical when HDB keeps insisting that the flats are sold at a subisdy. Of course, the key point would be how HDB defines 'subsidy' - at a real financial loss, or a loss in opportunity to sell at an even higher price.


This is Singapore. We don't call ourselves a 'fine' city or pay-and-pay for nothing. Hardly anything here is subsidized.

(31-01-2014, 12:01 AM)yeokiwi Wrote:

Quote:Yes! i say you are right. But does HDB think so? At least HDB maintains building new flats are subsidised to a certain extend. How much if any?

i was once traveling in a taxi and the taxi driver an ex-building contractor told me roughly the cost of building a 3 room HDB.
So he thought there was profit for HDB building NEW flats.
What subsidy? There was no subsidy for him.

1. Most common belief of how a HDB should be priced
Price of HDB = Construction cost + admin cost

2. Gov belief of how a HDB should be priced
Price of HDB = Construction cost + admin cost + land cost

So, which equation do you think is correct or suitable or reasonable?

My belief is that the flats all over Singapore had different levels of demand by citizens of Singapore and therefore, land cost must be factored in to make it fair to the rest of the Singaporeans. I am fine with the 2nd equation.

But, "land cost" is subjective. So, if you are debating on what is the correct pricing of the land, I have no answer. However, if you think that the current gov is always overpricing the land, you can make your views known or make your vote counts.

But, saying that the HDB price is simply equal to construction cost + admin cost is not going to work.