Freehold still 'the preferred choice'

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#1
The Straits Times
Nov 10, 2011
PROPERTY INVESTMENTS
Freehold still 'the preferred choice'

Study shows price gains for these homes outpace those with 99-year lease

By Esther Teo

FREEHOLD home prices have proved more resilient in recent months than those of 99-year leasehold properties, according to a new report.

Credo Real Estate found that price gains for freehold condominiums and terraced homes have outpaced those for similar homes with 99-year leases since the third quarter of last year - a period marked by cooling measures and economic uncertainty.

For example, while prices of leasehold condos inched up by less than 1 per cent each quarter in the 15 months to Sept 30, freehold condos averaged quarterly rises of 2.2 per cent.

Freehold condo prices have rocketed 62 per cent in the past 10 years while leasehold condos appreciated 48 per cent in the same period, said Credo.

It is a similar story with landed homes.

While prices of leasehold terraced properties dipped 0.1 per cent in the three months to Sept 30 - the first contraction in at least 15 months - freehold terraced prices shot up 4.9 per cent.

Prices have soared 97 per cent for freehold terraces in the past 10 years compared with 52 per cent for leaseholds, the firm noted.

'Freehold or 999-year leasehold are the preferred tenure for many property buyers as many are concerned that the value of 99-year leasehold properties may not appreciate well when the duration of the leasehold reduces,' the report added.

But transaction volumes and price increases for all home segments have taken a hit since July last year as the market coped with two additional rounds of cooling measures following similar moves in September 2009 and February last year.

More recently, the financial market turmoil and uncertainties surrounding the euro zone crisis have further dampened home buying sentiments.

However, Credo's research and consultancy head, Mr Ong Teck Hui, noted that while buyers should go for freehold properties from a purely investment point of view, 99-year leasehold homes will still be in demand.

'They still have a price advantage over freehold equivalents and many 99-year leasehold projects are located near amenities and transportation nodes,' he added.

'These are crucial factors, especially for upgraders, for whom affordability and convenience rank high on their priorities. Such attributes can be found in sites in or near HDB estates which the Government puts out for tender on a regular basis under its land sales programme.'

The report also noted that freehold and 999-year homes made up the lion's share of the new sales market from 2007 to 2009 - holding 61 per cent to 69 per cent of the market during that period.

This was due to the robust collective sale market in 2006 and 2007 which generated a strong supply in subsequent years.

But this trend has since turned with the Government pushing out a bumper supply of 99-year leasehold state land over the past year to meet demand.

Prices rocketed 18 per cent last year and have risen 6 per cent in the first nine months of this year.

Since last year, new 99-year leasehold homes - excluding executive condos - have made up the majority of new sales. They claimed a 60 per cent market share in the first nine months of the year, up from 50 per cent for all of last year.

Credo noted that after the market slumped during the global financial crisis, the collective sale market posted only a 'modest recovery' last year and this year.

As a result, the net new supply of freehold or 999-year homes from sites sold en bloc since last year stands only at about 3,000 units.

This is dwarfed by the 16,000 to 17,000 99-year leasehold homes that are expected from government sale sites in the same period.

If the government land sales programme remains aggressive, supply of private units will continue being skewed towards 99-year leaseholds, it added.

esthert@sph.com.sg
My Value Investing Blog: http://sgmusicwhiz.blogspot.com/
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#2
"Freehold still 'the preferred choice"
The Truth:
Actually it all depends. Are you buying and holding or buying and flipping and investing? If you can only afford one for your residential purpose, it's obvious. WHY? Your free-hold residence should increase in price 30 or 40 years down the road. Unless it happens to have a war or some other calamity at that time. It may be your $"life saver"$ when you are too old to work. Or your $bonus$ if you have more than enough.
WB:-

1) Rule # 1, do not lose money.
2) Rule # 2, refer to # 1.
3) Not until you can manage your emotions, you can manage your money.

Truism of Investments.
A) Buying a security is buying RISK not Return
B) You can control RISK (to a certain level, hopefully only.) But definitely not the outcome of the Return.

NB:-
My signature is meant for psychoing myself. No offence to anyone. i am trying not to lose money unnecessary anymore.
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#3
property is really strange to me as an investment class. so illiquid and usually ends up taking a huge proportion of asset. Only good thing is that there is leverage given to all people. My experience has been quite good i suppose. Made $250K (after interest for 5 years) from first property. Upgraded to new place,yes freehold, in the last 2 years. I also bought place in Malaysia and sold it at no gain after 3 years. really not worth all the hassle of trying to rent and sell after i bought it....

Now i am wondering whether to add investment property to my portfolio. SG seems too expensive and toppish but at least can control the rental side better i hope... overseas seems more fun but the rental and admin work all more complex. Did attend a few London fair but always uncomfortable as due to hassle. I am comparing property to equity and bonds.

Any experiences to share?
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#4
all property is for investment whether you staying in it at the same time, when it comes to that, freehold status can be damn with it, I think location is the number 1 consideration Big Grin

if location is 99yrs in a very excellent location with nearby amenities transportation convenience it will attract even more attention to it than freehold and there are many freehold projects that are located in secluded locations with no nearby amenities nothing zero nada. Angry
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#5
My residence is 99 leased and in the CBD.The lease only left 25 years. i can't find a buyer that willing to buy my house for the amount i have paid.
WB:-

1) Rule # 1, do not lose money.
2) Rule # 2, refer to # 1.
3) Not until you can manage your emotions, you can manage your money.

Truism of Investments.
A) Buying a security is buying RISK not Return
B) You can control RISK (to a certain level, hopefully only.) But definitely not the outcome of the Return.

NB:-
My signature is meant for psychoing myself. No offence to anyone. i am trying not to lose money unnecessary anymore.
Reply
#6
(10-11-2011, 09:00 PM)Temperament Wrote: My residence is 99 leased and in the CBD.The lease only left 25 years. i can't find a buyer that willing to buy my house for the amount i have paid.
which residence is that and which area?

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#7
(10-11-2011, 09:00 PM)Temperament Wrote: My residence is 99 leased and in the CBD.The lease only left 25 years. i can't find a buyer that willing to buy my house for the amount i have paid.

25yr maybe not many will buy but if you rent in it out to FT working in CBD I think can collect good rental.

if your is private property good apartment close to amenities rent it out 3k pm x 12 x 25yr smelly smelly also 900k leow Big Grin

Maybe find those investors like to scout for these kind of properties to collect rental Big Grin
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#8
It seems all real estates is an investment that sure make money to some people. Some real estates to some people maybe. All real estates to some people never. i believe even real estates specialists have their fair share of miscalculation or misjudgment even until today. Only novice will make more mistakes. Just like investing in the stock markets. We all cannot escape the learning curve. Though some may learn faster. Yes? No?
WB:-

1) Rule # 1, do not lose money.
2) Rule # 2, refer to # 1.
3) Not until you can manage your emotions, you can manage your money.

Truism of Investments.
A) Buying a security is buying RISK not Return
B) You can control RISK (to a certain level, hopefully only.) But definitely not the outcome of the Return.

NB:-
My signature is meant for psychoing myself. No offence to anyone. i am trying not to lose money unnecessary anymore.
Reply
#9
(11-11-2011, 10:23 AM)Temperament Wrote: It seems all real estates is an investment that sure make money to some people. Some real estates to some people maybe. All real estates to some people never. i believe even real estates specialists have their fair share of miscalculation or misjudgment even until today. Only novice will make more mistakes. Just like investing in the stock markets. We all cannot escape the learning curve. Though some may learn faster. Yes? No?

For property the learning curve is much slower, because:-

1) Property is much more illiquid compared to equities; and involves many more types of transaction costs
2) Property uses leverage, which distorts returns (magnifies returns and also losses)
3) Property cycle is generally much longer and protracted than an equity cycle
4) You don't have many 10-year periods to learn from your mistakes, and assuming you even have one mistake it could wipe out a substantial chunk of your wealth.
My Value Investing Blog: http://sgmusicwhiz.blogspot.com/
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#10
(11-11-2011, 10:33 AM)Musicwhiz Wrote:
(11-11-2011, 10:23 AM)Temperament Wrote: It seems all real estates is an investment that sure make money to some people. Some real estates to some people maybe. All real estates to some people never. i believe even real estates specialists have their fair share of miscalculation or misjudgment even until today. Only novice will make more mistakes. Just like investing in the stock markets. We all cannot escape the learning curve. Though some may learn faster. Yes? No?

For property the learning curve is much slower, because:-

1) Property is much more illiquid compared to equities; and involves many more types of transaction costs
2) Property uses leverage, which distorts returns (magnifies returns and also losses)
3) Property cycle is generally much longer and protracted than an equity cycle
4) You don't have many 10-year periods to learn from your mistakes, and assuming you even have one mistake it could wipe out a substantial chunk of your wealth.

Hi MW,
Thanks for your sharing/reminder. Yes, agree fully, it is different beast from the beast in the stock markets.
WB:-

1) Rule # 1, do not lose money.
2) Rule # 2, refer to # 1.
3) Not until you can manage your emotions, you can manage your money.

Truism of Investments.
A) Buying a security is buying RISK not Return
B) You can control RISK (to a certain level, hopefully only.) But definitely not the outcome of the Return.

NB:-
My signature is meant for psychoing myself. No offence to anyone. i am trying not to lose money unnecessary anymore.
Reply


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