Property in Singapore: How do you spot a good buy

FOCUS ON ENTRY PRICE, NOT FUTURE SELLING PRICE

Daniel Wong, associate group director at Propnex Realty, strongly advocates the position that property investment should not be a gamble.

"Many think that how much you make from a property investment is at the point of sale, but what many are not aware of is that it is already determined at your point of purchase. It is important to know the value of the house you are buying into."

He explains that one should get a house at the current value or below value, not higher; you should not buy a property hoping that future transactions will support it. For example, if a project's transactions are at an average of $1,000 per square foot (psf), anything lower, like $900psf, is a good buy. You should never buy it at $1,100psf and hope that it will hit $1,200psf in the future.

To help you decide on your buying price, David Ng, senior associate marketing director of Propnex Realty, recommends checking the historical psf price trend to see if it's going upwards, downwards or flat.

"Check out the latest transaction prices per square foot in the last six months to understand the current market price range." The data is available on URA's website (www.ura.gov.sg).

LOOK FOR VALUE, NOT CHEAPEST PRICE

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Daniel likens it to buying a bread at the price of flour. Properties that come with freehold lease or are near to MRT stations usually command a higher premium, compared to 99-year leasehold projects and those that are not near MRT stations, in the same location.

He says: "If you can spot premium properties offered at the price of non-premium properties, you can be sure it is a must-grab."

Some investors buy near international schools and are prepared to pay a premium for that 'guaranteed' rental income from a ready pool of tenants.

However, Low Po-Yu, senior marketing director of ERA Realty Network, advises that you should not look at just that one aspect. Some schools rent buildings, and might possibly move away.

Instead, consider the big picture and look for other criteria that contribute to good rental and capital yield in future.

LOOK OUT FOR GOVERNMENT DEVELOPMENT PLANS

All three agents agree that for a property to have potential for capital growth, it is important that there should be transformation in that area. They advise buyers to study the URA Masterplan to spot which areas the Government will be developing, as money will be spent on infrastructure, transport and amenities. "All these promote growth in that area, which brings about capital gain," says Daniel.

David adds: "If you're a savvy investor, by studying what's going to happen in those areas, you'll realise that the current prices are likely to be driven upwards when those infrastructure changes come to fruition."

He cites the example of The Sail @ Marina Bay. A 936 sq ft unit cost around $910-$1,065psf in December 2004. "If you talk to agents from that time, they'd reminisce about how slow it was to sell this 99-year leasehold condo during a market downturn. So much so that buyers even had the choice of prime Marina Bay-facing units!"

However by January 2007, following the launch of Marina Bay Residences (MBR) next door with 980 sq ft units transacting around $2,309-2,405psf, The Sail's prices shot up to $1,659- $2,199psf. "Buyers were content to buy at levels slightly lower than MBR. And some owners were content to do subsale to enjoy the profits."

The main shot in the arm for the price growth was the announcement of the Marina Bay Sands integrated resort. David says that if you look at the Marina South Masterplan, there are five plots of land slated for residential development, right next to Gardens By The Bay, surrounded by the sea coast, near Marina Bay Sands, and boasting a new downtown lifestyle. Will they be priced low? "My opinion is that they will be premium living condominiums, with a premium price tag to match."

However, he has his eye on Marina One Residences. "I believe that buyers who take the first mover advantage will benefit from the upcoming Marina South developments. It's sensibly priced from around $2,200psf, has a reputable developer, a famous architect and is linked to malls and four MRT lines. The upside here is highly stacked in its favour," shares David.

If the Marina Bay area is too fancy-schmancy for you, Po-Yu suggests that investors look west, at Jurong, which is Singapore's second Central Business District. There are many exciting developments planned, with the new Cross Island line and the Jurong Regional Line linking you to the rest of the island, from Tuas mega port to Changi Business Hub. "There is a lot of upside there," notes Po-Yu. Projects near Jurong, such as Clementi and West Coast, are all enjoying the ride as they benefit from the improved amenities and, thus, increased capital gains.

BE READY TO ENTER THE MARKET

There is always a golden window of opportunity to buy an undervalued property. "However, what is good for you is usually good for everyone, meaning everyone is ready to grab it when they see one," says Daniel.

Make sure that you are ready to pounce when you see a good deal. This means knowing your financial standing and doing your loan assessment beforehand, so that you can commit easily, rather than scramble and lose an undervalued unit to someone else.

If you find units asking for less than the current market price range, chances are you've spotted an undervalued property. But do ask yourself why they're undervalued, cautions David.

This article was first published in Home & Decor.