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The recent en bloc sales of huge properties have ‘released’ many hundreds of new home buyers into the property market.

In the short term, the supply of homes will not be able to satisfy the demand.

This will create a ’shortage’ of homes and drive prices of property up.

Visit any showflat and you will find developers selling more small units and fewer medium/large ones.

This is logical because the smaller units are affordable and sellable.

Therefore, those who sell their medium-sized/large apartments in en bloc sales will now have to settle for small units unless they pay extra and buy penthouses or landed property.

For en bloc sales, only prime district and freehold land will continue to attract large premiums.

Developers are willing to offer multi-million-dollar price tags because such land commands a high selling price per unit.

If you gain less than a million dollars from the en bloc sale of your 99-year leasehold estate, it may be financially wise to consider buying a HDB flat. This way, you get to keep some cash in the bank.

Source :  Straits Times - 1 Jun 2007

Lately, I have found myself sucked into an old hobby: scanning property advertisements compulsively, circling those that sound promising and chasing down the leads.

I’m not a property speculator or investor. But I’ve been observing the property scene since the 1990s, and am always mildly infected when property fever hits town.

As an observer from the sidelines, I know the property speculators are back in action.

The action has also filtered down, from the top-end luxury condo market, to the mass market, and is now reaching the Housing Board resale market.

Over the past couple of weeks, I’ve rung up many agents about the units they have on offer. Three times last weekend, I rang to inquire about HDB units advertised, only to be told they were already snapped up the same day the ad appeared.

No wonder there’s a spring in the steps of nearly every property agent.

The mystery of property fever in Singapore has always been why a population with 90 per cent already owning a home, should be so obsessed with property.

There are many theories: that it’s an ‘Asian’ thing; it’s a ‘Chinese’ thing; it’s due to scarcity of land in Singapore.

My addition to these theories is that buying property is rather like gambling, another obsession with many Singaporeans.

You spot the right unit, you buy low, sell high - bingo, you make a big profit.

Many people who buy property never intend to live in it. Instead, they view property as a speculative instrument.

Who are these speculators? Here’s a completely unscientific snapshot, from stories of friends and friends of friends.

1. The speculator wannabe

THIS young executive joined others in the queue for a new development.

He couldn’t believe his luck when he got into the queue before units were sold out.

He maxxed out his credit cards to put down the option money for a condominium.

When the time came to put down the downpayment a few weeks later, he considered borrowing to pay up, but then got cold feet.

He lost several thousands in option money, but saved himself years of debt and worry.

2. Buy and hold

THEY spot properties with good value, make friends with the right agents and get invited to previews.

Their strategy is to buy and hold for a few years, for capital gains. Developments in districts 9, 10 and 11, and new hot spots like the financial district, are their choices.

3. The trader

A BUSINESSMAN bought into shophouses before they became hot properties and sold them for profit of a few million.

With a chronic shortage of office space in the Central Business District, savvy investors will be looking at how to maximise gains in that sector.

4. Consortium approach

THEY get together with a group of trusted friends to pool money and risks.

Property agents with the time and information to sniff out the best deals, may form their own consortiums with their friends.

Strategies may differ: from longer-term holds to shorter-term punts of a few properties a year.

They may buy iconic developments like Marina Bay Residences, banking on its rise in value in two years’ time when the integrated resorts open.

Another group may specialise in suburban 99-year-old condominiums, figuring there is still some upside in price in that segment.

5. Original is best

SOME ’specuvestors’ look out for old landed homes in original condition which they can buy cheap.

Many buyers shun such properties as they don’t want to spend time and money renovating an old property. With a smaller potential market of buyers, the price of such properties is often lower than expected for a home in a particular location.

Smart agents tie up with architects, interior decorators and renovation contractors for good deals to rebuild homes. They buy an old place, refurbish it and sell it quickly for a profit.

In a rising market, they may hold the property and wait for prices to rise before letting it go.

A variation of this group are those who buy old condos they think have good potential for en bloc redevelopment.

6. The Johnny-come-lately

THIS group didn’t have the foresight to start hunting and accumulating assets last year, before the property boom really took off.

Better late than never, they reckon, and they want a piece of the property action before it’s too late. Their theory is that the market may be high now, but there’s still some upside potential in many areas.

The trick is to identify the ‘undervalued’ properties and make a bid for them, and then hope to sell them off a year or two later for a profit when the market climbs further.

The problem is that owners are fully aware of the bullish state of the market, and asking prices have accordingly soared. Many owners in fact are treating their properties like futures, asking prices they think the property can fetch a few months down the road, not today’s.

7. The armchair speculator

THESE are people like me, who follow the property market and spot trends they don’t act on.

Two years ago, I could have told anyone who asked that Newton/Novena was a good buy at about $800 psf. A year ago, I knew those old River Valley condos would rise in value. Alas, I never put my money where my hunches were.

Now? I think Bukit Timah is undervalued. Will I plonk down $1 million I don’t have on that bet?

It’s academic. Armchair speculators don’t actually like to risk their money on anything. They just like the satisfaction of saying: Mmm, I could have told you so.

Source :  Straits Times - 1 Jun 2007

For the past few months, the media has been reporting record breaking en bloc transactions and high property prices.

It seems that everyone is trying to outdo each other in prices.

A discerning buyer will ask: Are the high-priced properties bought up by wealthy foreigners or investors wanting to chase up the market so that they can sell it later at even higher prices?

Are these transaction prices indicative of the overall market?

A discerning buyer should also ask why there is a sudden rush of people changing property, private as well as HDB, at this time.

I’ve personally encountered people paying $100,000 cash above valuation for a five-room HDB apartment which is 20 years old. Word gets around. Now almost every seller in the same district is asking for absurd cash amounts, regardless of the condition of their flat, just because someone sold it at a premium. This is pure greed.

For the buyer looking for a HDB apartment now, I have these to say:

Don’t let kiasuism rule your head and make impulse purchases that are way above market value.

Property valuators have a bird’s-eye view on the valuation of an apartment. Trust their assessments, they are the experts. Don’t pay more than 5 per cent above valuation.

Don’t pay more than you can afford to, or you’ll pay for it for a long time. Interest rates are not as good as before. You can end up paying twice your buying price.

Learn from history - don’t fall into the same trap many did six years ago, when they paid more than half a million dollars for a five-room HDB apartment.

Don’t buy when everybody is buying. If you can wait, hold out.

Know the HDB rules. You have to pay the cash above value, plus 5 per cent cash of the selling price, plus stamp duty and lawyers’ fees.

Finally, no matter how ‘good to move in’ a condition the flats are, there will always be some level of renovation that needs to be done. Toilet bowl replacement is mandatory for me.

Source :  Straits Times - 1 Jun 2007

I REFER to the reply by HDB’s Dr Chong Fook Loong, ‘HDB remains committed to the Punggol 21 vision’ (ST, May 22). One reason cited for the lack of facilities in Punggol is the ‘lack of a critical mass’ of flats.

However, as can be seen from the overwhelming oversubscription for the recent eco-precinct project (Treetops, where 3,356 applicants vied for 712 flats), there is actually a very large demand for good-quality flats in the Punggol area.

Dr Chong mentioned that HDB would ‘announce other new projects in Punggol later this year’, presumably under the Build-to-Order (BTO) system.

I would like to suggest that instead of inviting applications for these new projects, the HDB could replicate the Treetops project in other precincts nearby and offer them to the 2,644 unsuccessful applicants of the Treetops.

The HDB, as well as these flat applicants, would then not have to go through another round of BTO applications, thereby saving time and cost for everybody.

Unsuccessful Treetops applicants would also not have to submit a fresh application and incur the non-refundable $10 application fee again.

The added advantage is that HDB would be able to fill up three to four precincts almost immediately, and achieve its desired ‘critical mass’ in Punggol more rapidly.

Source :  Straits Times - 1 Jun 2007

Number of new hires has doubled at some agencies from a year earlier

The continuing boom in home prices is proving profitable not only for property sellers and speculators, but also for property agents.

Many brand-new recruits with no previous experience are now jumping into the market in the hope of making a quick buck from the current boom.

This has led to property agencies around the island beefing up their army of agents, with some doubling the number of recruits from a year ago.

DTZ Debenham Tie Leung, for instance, has signed up nearly 500 new agents since January - twice that in the same period last year.

It now has 2,500 agents in its resale division, said Mr Thomas Lee, the unit’s executive vice-president.

Another agency, OrangeTee, said agent numbers have gone up by a third to about 1,200 now.

‘Today, we average 50 or 60 new agents a month, compared with 30 or 40 last year,’ said Mr Steven Tan, the executive director of OrangeTee’s residential division.

Knight Frank, on the other hand, has almost doubled its entire agent force.

It took on 300 agents over the last year, bringing its total team to slightly over 650, said Dr Tan Tee Khoon, the director of Knight Frank’s associates division.

Not all of the firm’s recent hires are new to the industry.

Many are former agents who eased out of home sales during the property downturn, but who are now back in business as active agents - which often means closing at least one deal a year.

With the property market going at full steam, it has become a lot easier to broker a deal now than two or three years ago, said Mr Marcus Chu, senior vice-president of ERA Singapore, who oversees the firm’s agent recruitment.

‘Right now, properties are easier and cheaper to sell,’ he said.

Growing buyer demand means that agents now take a shorter time to sell a property, so they can spend less on marketing it.

ERA’s agent numbers have grown by about 20 per cent over the last year, Mr Chu added.

They now weigh in at more than 5,000 registered agents and more than 2,000 active ones.

Its new hires come from diverse and sometimes unexpected backgrounds.

Apart from the usual retirees, salespeople and administrative staff, ERA counts among its new agents a former hairstylist and a former civil servant.

An increasing number of white-collar professionals are also taking to real estate, said Dr Tan of Knight Frank.

‘We have a good number of mid-career professionals joining us from IT, marketing, insurance and even a couple of former lawyers.’

Another agency, PropNex, has taken on teachers, accountants, and even an actor, said Mr Eric Cheng, its senior division director.

The firm, which added more than 1,000 new agents in the last five months, recorded a 40 per cent jump in sign-ups compared with the same period last year.

PropNex is also recruiting more staff with university degrees. The number of agents with a degree has risen 15 per cent in the first four months of this year over last year, it said.

The agency also said its agents’ success rate has increased. One out of every three new agents can close a deal in their first month on the job, compared with one out of every six previously.

Mr Cheng recounted the story of a 23-year-old polytechnic graduate who earned a $137,000 commission on a single sale in her second month. He has also seen agents make more than $1 million in commission a year.

But most agencies warned that new agents should not expect to make huge profits immediately.

‘We tell totally brand-new agents with no experience that from six months to a year, they may have to live off their savings,’ said Dr Tan. ‘This is to caution them against this lofty, illusory idea that because they are in real estate, they make big money straight away.’

Added Mr Cheng: ‘I always say that if you want to be serious in real estate, you must have $10,000 in your bank to fuel the first three to six months.’

Source :  Straits Times - 1 Jun 2007