Showing posts with label Property Game - To make more money. Show all posts
Showing posts with label Property Game - To make more money. Show all posts
Sunday, March 18, 2012
Punggol potential revealed after studies revealed that around thirty percent of HDB households have monthly income greater than $9000
Property developers believe that Punggol has the potential for private residential development after a new study revealed that around 30 percent of HDB households in the area have a monthly income of S$9,000 or above. Compared with the national average of the other HDB estates, this is four percentage points higher. Research shows that Pasir Ris has the highest number of HDB households earning over S$9,000 per month at 35 percent. Although Punggol is a relatively new estate, it has the largest number of households with university education, which explains the interest of developers in the estate. With their higher income, developers believe that Punggol residents can afford private property. Moreover, 97 percent of HDB residents in Punggol live in four-room or larger units.
Friday, March 16, 2012
Sunday, June 22, 2008
Buyers bidding up shophouses price
June 22, 2008
Buyers bidding up prices of shophouses ! While sales have slumped this year after a strong run, units costing over $5m are attracting strong demand
By Joyce Teo, Property Correspondent
SHOPHOUSES have been a popular choice for investors, as well as occupiers who sought to avoid the hefty office- rent increases that were so rampant last year. But after a spectacular year, shophouse sales have sunk this year due to the cautious mood in the property market.
Nevertheless, new figures released by CBRE Research show that more buyers are snapping up shophouses that cost more than $5 million each. So far this year, $98.58 million worth of properties have changed hands, compared with just above $1 billion worth for the whole of last year.
And since January, deals for shophouses worth more than $5 million each have reached 86 per cent of total sales, or $83.75 million, compared with 64 per cent of total sales or $694 million last year.
GOOD INVESTMENT
For owner-occupiers, shophouses may make good investments, as they could be paying less in mortgage payments every month compared to monthly rent in a prime office building,
Rental yields, ranging typically from 4 to 6 per cent, are often higher than for residential and office units, say property consultants.
'Investors and business owners still see shophouse units as an alternative to alleviate the current supply crunch in the office market,' said CBRE Research's executive director, Mr Li Hiaw Ho.
In the past two years, demand for shophouses has shot up, raising the value of such properties, he said.
For instance, in January this year, a European fund paid $6.88 million for four shophouses in Club Street.
The seller had bought them for $3.6 million in May last year. But not all sellers can make such gains. A lot still depends on location.
Popular with smaller set-ups
Shophouses located near or within the Central Business District (CBD) are highly sought-after as they are usually located near MRT stations, said CBRE Research.
Last month, a fairly small 1,171 sq ft shophouse in Boat Quay was sold for a hefty $5.25 million. Earlier this month, a 1,455 sq ft shophouse in Bukit Pasoh Road went for $6.2 million.
There are cheaper options.
In Tanjong Katong Road, a few shophouses spread over 8,697 sq ft were sold for $8.2 million in March, according to CBRE data.
These same units were previously transacted in July last year for $7.72 million.
'Shophouses tend to attract smaller set-ups, mainly because the shophouses are usually small,' said Mr Li.
'Some hedge funds and investment-related companies also find the units unique, similar to the townhouses which you can find in London,' he added.
Tenants for shophouses in prime locations, such as Amoy Street and Telok Ayer Street, are mostly hedge funds, law firms, architectural firms, interior designing firms and art design schools such as Sotheby's Art School, said CBRE Research.
Attractive rental yields
Rental yields for shophouses typically range from 4 to 6 per cent, above the usual residential ones of 3 to 4 per cent, said Colliers International's deputy managing director for agency & business services, Ms Grace Ng.
For owner-occupiers, shophouses may make good investments as they could be paying less in mortgage payments every month compared to monthly rent in a prime office building, property consultants said.
Still, asking rents for shophouses in prime locations have jumped by at least 40 per cent or more in the past year, said Mr Li.
Current rates in the CBD such as Telok Ayer Street are as high as $8 per sq ft (psf) to $8.50 psf a month, up from $5 psf to $6 psf a month a year ago.
This compares with current average rents of around $16 psf for prime office building space.
'Even with rising values and rents, shophouses are still attractive to tenants because of the current office supply crunch,' said Mr Li.
For investors, shophouses may prove to be a better investment than a strata office unit, which gives a typical yield of 4 to 4.5 per cent, he said.
Colliers International is marketing a two-storey corner shophouse in Peck Seah Street, off Tanjong Pagar Road, at an indicative price of $6.1 million. At this price, the buyer of the tenanted property will get a rental yield of 5 per cent.
CBRE is selling a four-storey shophouse in Tanjong Pagar Road. The two existing tenants are paying rents of between $3 psf and $4 psf a month, which give a rental yield of 3.5 per cent.
But the leases will end next year, it said. Whoever buys the property - the asking price is $9 million - can ask for rents of at least $5 or $6 psf, which would give a yield of around 5 per cent.
Buyers bidding up prices of shophouses ! While sales have slumped this year after a strong run, units costing over $5m are attracting strong demand
By Joyce Teo, Property Correspondent
SHOPHOUSES have been a popular choice for investors, as well as occupiers who sought to avoid the hefty office- rent increases that were so rampant last year. But after a spectacular year, shophouse sales have sunk this year due to the cautious mood in the property market.
Nevertheless, new figures released by CBRE Research show that more buyers are snapping up shophouses that cost more than $5 million each. So far this year, $98.58 million worth of properties have changed hands, compared with just above $1 billion worth for the whole of last year.
And since January, deals for shophouses worth more than $5 million each have reached 86 per cent of total sales, or $83.75 million, compared with 64 per cent of total sales or $694 million last year.
GOOD INVESTMENT
For owner-occupiers, shophouses may make good investments, as they could be paying less in mortgage payments every month compared to monthly rent in a prime office building,
Rental yields, ranging typically from 4 to 6 per cent, are often higher than for residential and office units, say property consultants.
'Investors and business owners still see shophouse units as an alternative to alleviate the current supply crunch in the office market,' said CBRE Research's executive director, Mr Li Hiaw Ho.
In the past two years, demand for shophouses has shot up, raising the value of such properties, he said.
For instance, in January this year, a European fund paid $6.88 million for four shophouses in Club Street.
The seller had bought them for $3.6 million in May last year. But not all sellers can make such gains. A lot still depends on location.
Popular with smaller set-ups
Shophouses located near or within the Central Business District (CBD) are highly sought-after as they are usually located near MRT stations, said CBRE Research.
Last month, a fairly small 1,171 sq ft shophouse in Boat Quay was sold for a hefty $5.25 million. Earlier this month, a 1,455 sq ft shophouse in Bukit Pasoh Road went for $6.2 million.
There are cheaper options.
In Tanjong Katong Road, a few shophouses spread over 8,697 sq ft were sold for $8.2 million in March, according to CBRE data.
These same units were previously transacted in July last year for $7.72 million.
'Shophouses tend to attract smaller set-ups, mainly because the shophouses are usually small,' said Mr Li.
'Some hedge funds and investment-related companies also find the units unique, similar to the townhouses which you can find in London,' he added.
Tenants for shophouses in prime locations, such as Amoy Street and Telok Ayer Street, are mostly hedge funds, law firms, architectural firms, interior designing firms and art design schools such as Sotheby's Art School, said CBRE Research.
Attractive rental yields
Rental yields for shophouses typically range from 4 to 6 per cent, above the usual residential ones of 3 to 4 per cent, said Colliers International's deputy managing director for agency & business services, Ms Grace Ng.
For owner-occupiers, shophouses may make good investments as they could be paying less in mortgage payments every month compared to monthly rent in a prime office building, property consultants said.
Still, asking rents for shophouses in prime locations have jumped by at least 40 per cent or more in the past year, said Mr Li.
Current rates in the CBD such as Telok Ayer Street are as high as $8 per sq ft (psf) to $8.50 psf a month, up from $5 psf to $6 psf a month a year ago.
This compares with current average rents of around $16 psf for prime office building space.
'Even with rising values and rents, shophouses are still attractive to tenants because of the current office supply crunch,' said Mr Li.
For investors, shophouses may prove to be a better investment than a strata office unit, which gives a typical yield of 4 to 4.5 per cent, he said.
Colliers International is marketing a two-storey corner shophouse in Peck Seah Street, off Tanjong Pagar Road, at an indicative price of $6.1 million. At this price, the buyer of the tenanted property will get a rental yield of 5 per cent.
CBRE is selling a four-storey shophouse in Tanjong Pagar Road. The two existing tenants are paying rents of between $3 psf and $4 psf a month, which give a rental yield of 3.5 per cent.
But the leases will end next year, it said. Whoever buys the property - the asking price is $9 million - can ask for rents of at least $5 or $6 psf, which would give a yield of around 5 per cent.
Monday, May 19, 2008
Not too late to cash in on Singapore Office Boom
Not too late to cash in on Singapore office boom !
Demand and rentals likely to stay healthy as supply remains limited, say analysts
By Fiona Chan, Property Reporter
RARE INVESTMENT: There are probably fewer than 350 office and industrial buildings in Singapore available for sale on a strata basis.
The housing market in Singapore has started to turn bearish and investors are duly retreating from residential properties and property-related stocks.
But there are other classes of properties that may be worth a look for those still seeking to profit from property investments.
Offices seem the most obvious choice. The segment is still going strong even in the current market malaise, fuelled by a persistent supply crunch and strong demand for space from expanding businesses.
Investors may fear they have missed the boat, with office prices having soared 32.6 per cent last year alone. Growth in prices and rents has also started to moderate.
However, property consultants say it may not be too late to cash in on the office boom.
Demand is likely to stay healthy in the short- to medium-term even as new supply remains limited. Only one million sq ft of new space will be completed this year, according to Corporate Locations, which helps companies lease office space.
‘There is currently an excess of demand over available space,’ said Mr Moray Armstrong, executive director of office services at property consultancy CB Richard Ellis, in a recent report.
‘Landlords will still be able to achieve high rents on rent reviews or lease renewals, due to the absence of alternatives for occupiers.’
Property firm Colliers International also still sees ‘immense potential upside’ in office rents and values, noting that office values are still about 27 per cent lower than their peak in the mid-1990s.Buoyant yields
Recently, office prices have started to flatten out with fewer transactions taking place. Rents, however, are projected to keep rising at least until 2010, when more substantial space comes onto the market.
Prices of offices inched up just 1.1 per cent in the first quarter, but rents jumped 7.3 per cent. This indicates that annual rental yields are on the rise and may climb further, property experts say.
Traditionally, yields of office space have been higher than most other types of property. In the last two years, net rental yields for offices largely ranged from 5 to 7 per cent - almost double the usual rental yield for homes, which is about 2 to 4 per cent.
The strong rental yield may also mean that investors can get away without forking out cash for the mortgage payments, said Colliers in a research paper last month.
It said the current fixed interest rate loan for commercial properties is between 4 and 4.5 per cent for the first two years, which means the rent will probably be enough to cover the mortgage instalments.
Higher yields also mean that investors in strata-titled office properties would be able to double their investment in a much shorter time than for homes, said Colliers. It projects 13 to 14 years for offices to reach that stage, compared to 18 to 29 years for homes.Higher risks
With the greater returns from office investments also come greater risks, warns Colliers.
For one thing, it is more difficult to obtain financing, as banks generally lend only 60 to 70 per cent of the property’s sale price or market value, compared to between 80 and 90 per cent for homes. And interest rates tend to be higher for office loans.
Also, buyers cannot use their Central Provident Fund savings to pay for office purchases.
Investors hoping to reap windfall gains by buying older buildings with ‘collective sale potential’ should also be cautious, as the process is much more difficult for office buildings compared to condos.How to buy an office unit?
Obviously, most casual investors are unable to afford entire office buildings. What they usually do is to buy strata-titled office units, which are sold singly. But these properties are few and far between.
There are probably fewer than 350 completed office and industrial buildings in Singapore that are available for sale on a strata basis, estimated Colliers.
Most of these, especially offices, are likely to be leasehold and more than 20 years old. These include Golden Mile Complex in Beach Road and High Street Centre in North Bridge Road, both of which have leases that started in 1969.
Investors looking for newer buildings can check out Suntec City Tower, Southbank at North Bridge Road and The Central near Clarke Quay. Units sold in these buildings between last July and February averaged $2,277 per sq ft (psf), $941 psf and $1,749 psf respectively, said Colliers.
Buyers of office units must first place an option fee of 1 per cent of the property’s purchase price, said Colliers. They have two weeks to decide if they want to exercise the option, by paying another 9 per cent.
After that, the buyer’s lawyer will conduct checks on the property’s title, tax, floor plans, tenancy schedule, and so on.
The sale is usually completed three months after the option is exercised, when the remaining 90 per cent of the price is payable.
Source : Straits Times - 18 May 2008
Demand and rentals likely to stay healthy as supply remains limited, say analysts
By Fiona Chan, Property Reporter
RARE INVESTMENT: There are probably fewer than 350 office and industrial buildings in Singapore available for sale on a strata basis.
The housing market in Singapore has started to turn bearish and investors are duly retreating from residential properties and property-related stocks.
But there are other classes of properties that may be worth a look for those still seeking to profit from property investments.
Offices seem the most obvious choice. The segment is still going strong even in the current market malaise, fuelled by a persistent supply crunch and strong demand for space from expanding businesses.
Investors may fear they have missed the boat, with office prices having soared 32.6 per cent last year alone. Growth in prices and rents has also started to moderate.
However, property consultants say it may not be too late to cash in on the office boom.
Demand is likely to stay healthy in the short- to medium-term even as new supply remains limited. Only one million sq ft of new space will be completed this year, according to Corporate Locations, which helps companies lease office space.
‘There is currently an excess of demand over available space,’ said Mr Moray Armstrong, executive director of office services at property consultancy CB Richard Ellis, in a recent report.
‘Landlords will still be able to achieve high rents on rent reviews or lease renewals, due to the absence of alternatives for occupiers.’
Property firm Colliers International also still sees ‘immense potential upside’ in office rents and values, noting that office values are still about 27 per cent lower than their peak in the mid-1990s.Buoyant yields
Recently, office prices have started to flatten out with fewer transactions taking place. Rents, however, are projected to keep rising at least until 2010, when more substantial space comes onto the market.
Prices of offices inched up just 1.1 per cent in the first quarter, but rents jumped 7.3 per cent. This indicates that annual rental yields are on the rise and may climb further, property experts say.
Traditionally, yields of office space have been higher than most other types of property. In the last two years, net rental yields for offices largely ranged from 5 to 7 per cent - almost double the usual rental yield for homes, which is about 2 to 4 per cent.
The strong rental yield may also mean that investors can get away without forking out cash for the mortgage payments, said Colliers in a research paper last month.
It said the current fixed interest rate loan for commercial properties is between 4 and 4.5 per cent for the first two years, which means the rent will probably be enough to cover the mortgage instalments.
Higher yields also mean that investors in strata-titled office properties would be able to double their investment in a much shorter time than for homes, said Colliers. It projects 13 to 14 years for offices to reach that stage, compared to 18 to 29 years for homes.Higher risks
With the greater returns from office investments also come greater risks, warns Colliers.
For one thing, it is more difficult to obtain financing, as banks generally lend only 60 to 70 per cent of the property’s sale price or market value, compared to between 80 and 90 per cent for homes. And interest rates tend to be higher for office loans.
Also, buyers cannot use their Central Provident Fund savings to pay for office purchases.
Investors hoping to reap windfall gains by buying older buildings with ‘collective sale potential’ should also be cautious, as the process is much more difficult for office buildings compared to condos.How to buy an office unit?
Obviously, most casual investors are unable to afford entire office buildings. What they usually do is to buy strata-titled office units, which are sold singly. But these properties are few and far between.
There are probably fewer than 350 completed office and industrial buildings in Singapore that are available for sale on a strata basis, estimated Colliers.
Most of these, especially offices, are likely to be leasehold and more than 20 years old. These include Golden Mile Complex in Beach Road and High Street Centre in North Bridge Road, both of which have leases that started in 1969.
Investors looking for newer buildings can check out Suntec City Tower, Southbank at North Bridge Road and The Central near Clarke Quay. Units sold in these buildings between last July and February averaged $2,277 per sq ft (psf), $941 psf and $1,749 psf respectively, said Colliers.
Buyers of office units must first place an option fee of 1 per cent of the property’s purchase price, said Colliers. They have two weeks to decide if they want to exercise the option, by paying another 9 per cent.
After that, the buyer’s lawyer will conduct checks on the property’s title, tax, floor plans, tenancy schedule, and so on.
The sale is usually completed three months after the option is exercised, when the remaining 90 per cent of the price is payable.
Source : Straits Times - 18 May 2008
Monday, November 26, 2007
Resort Operators putting Hotel Villas for sale and leaseback to raise cash
Nov 25, 2007
Hotel villa purchase with fixed returns, free stays
More resort operators like Banyan Tree are putting up such properties for sale and leaseback to raise cash
HOME-GROWN BANYAN TREE RECENTLY LAUNCHED its Banyan Tree Residences scheme, which offers properties in Phuket (above), Bintan, Bangkok, Seychelles and Lijiang in China for sale.
Prices start from US$440,000 (S$638,480) for villa in Bintan and from US$1.5 million for one in Phuket. More than half of the 46 villas at Karma Resorts in Kandara, perched on Bali's southernmost tip, have been sold, with prices starting from US$600,000.
PROPERTY investors who want to diversify their portfolios should check out some hotel villas, especially those in places they like visiting. More resort or hotel operators are putting up some of their properties for sale and leaseback to raise cash.
This means buyers can invest in a hotel room or a standalone villa for a possibly guaranteed return when they lease it back to the hotel owner. They also have free use of the villa or room for a predetermined number of days a year.
'It is an investment that gives you the added benefit of the resort lifestyle,' said Mr Ku Swee Yong of Savills Singapore.
'It's still a relatively new concept and some investors will be waiting to see if it will take off in a big way before coming in.'
Home-grown resort operator Banyan Tree recently launched its Banyan Tree Residences scheme, which offers properties in Phuket, Bintan, Bangkok, Seychelles and Lijiang in China for sale. Prices start from US$440,000 (S$638,480) for a villa in Bintan and from US$1.5 million for one in Phuket or Seychelles.
Investors can choose to receive a fixed gross return of 6 per cent of the price for six years or one-third of the net room revenue for six years. They also have an option to renew it.
Local interest seems high. Banyan Tree said about 600 people visited its Banyan Tree Residences exhibition last weekend and 40 units - mostly villas in Bintan and Phuket - had been reserved for sale. Potential buyers are given time to check out the actual properties before committing to a purchase.
Mr Richard Skene, assistant vice-president (property) of Banyan Tree Residences, said the number of units reserved in Singapore exceeded the combined reservations gathered from previous exhibitions in Hong Kong, Shanghai, London and Moscow.
Banyan Tree Residences has six Singaporean owners who have a total of 10 residences in Phuket, Lijiang and Seychelles.
A 46-year-old Singaporean lawyer said he bought his Phuket villa for the lifestyle benefits. It is more 'worthwhile' to invest in a villa with regular returns than to pay for a hotel room and not get any money back, he said.
Mr Skene said: 'It's a growing trend that started in the United States with condotels. It's the same principle, and we are the pioneers in Asia.' Condotels are residential apartments leased out on a short-term basis,
Banyan Tree started selling its resort properties about 10 years ago, but it launched the Banyan Tree branded properties only this year. More of such resort or hotel properties with units for sale are now on the market, including St Regis Resort & Residences in Bali, and Karma Resorts, which has outlets in places such as Margaret River in Western Australia, Kandara in Bali and Koh Samui in Thailand.
On Friday, Puravarna Group launched another phase of its villas at Puravarna Phuket, which will open next November. It started selling the villas last year, and more than 30 buyers from Singapore have paid at least $1.9 million each for a property. They will get an average return of 8 per cent for 12 years and free use of the property for 30 days a year.
'Most buyers are bankers or property investors,' said Puravarna's regional director, Ms Christina Liang, adding that the firm offers financing of up to 90 per cent.
At Banyan Tree, owners are entitled to use their residence for up to 60 days a year, and there is no management charge during the rental programme. But forget about personalising your villa and it may not be that easy to sell unless values soar. Also, financing is not a given.
In addition, there may be black-out periods. If you opt for the 6 per cent guaranteed returns at Banyan Tree, for example, you cannot stay at your villa during the Christmas and New Year periods.
Hotel villa purchase with fixed returns, free stays
More resort operators like Banyan Tree are putting up such properties for sale and leaseback to raise cash
HOME-GROWN BANYAN TREE RECENTLY LAUNCHED its Banyan Tree Residences scheme, which offers properties in Phuket (above), Bintan, Bangkok, Seychelles and Lijiang in China for sale.
Prices start from US$440,000 (S$638,480) for villa in Bintan and from US$1.5 million for one in Phuket. More than half of the 46 villas at Karma Resorts in Kandara, perched on Bali's southernmost tip, have been sold, with prices starting from US$600,000.
PROPERTY investors who want to diversify their portfolios should check out some hotel villas, especially those in places they like visiting. More resort or hotel operators are putting up some of their properties for sale and leaseback to raise cash.
This means buyers can invest in a hotel room or a standalone villa for a possibly guaranteed return when they lease it back to the hotel owner. They also have free use of the villa or room for a predetermined number of days a year.
'It is an investment that gives you the added benefit of the resort lifestyle,' said Mr Ku Swee Yong of Savills Singapore.
'It's still a relatively new concept and some investors will be waiting to see if it will take off in a big way before coming in.'
Home-grown resort operator Banyan Tree recently launched its Banyan Tree Residences scheme, which offers properties in Phuket, Bintan, Bangkok, Seychelles and Lijiang in China for sale. Prices start from US$440,000 (S$638,480) for a villa in Bintan and from US$1.5 million for one in Phuket or Seychelles.
Investors can choose to receive a fixed gross return of 6 per cent of the price for six years or one-third of the net room revenue for six years. They also have an option to renew it.
Local interest seems high. Banyan Tree said about 600 people visited its Banyan Tree Residences exhibition last weekend and 40 units - mostly villas in Bintan and Phuket - had been reserved for sale. Potential buyers are given time to check out the actual properties before committing to a purchase.
Mr Richard Skene, assistant vice-president (property) of Banyan Tree Residences, said the number of units reserved in Singapore exceeded the combined reservations gathered from previous exhibitions in Hong Kong, Shanghai, London and Moscow.
Banyan Tree Residences has six Singaporean owners who have a total of 10 residences in Phuket, Lijiang and Seychelles.
A 46-year-old Singaporean lawyer said he bought his Phuket villa for the lifestyle benefits. It is more 'worthwhile' to invest in a villa with regular returns than to pay for a hotel room and not get any money back, he said.
Mr Skene said: 'It's a growing trend that started in the United States with condotels. It's the same principle, and we are the pioneers in Asia.' Condotels are residential apartments leased out on a short-term basis,
Banyan Tree started selling its resort properties about 10 years ago, but it launched the Banyan Tree branded properties only this year. More of such resort or hotel properties with units for sale are now on the market, including St Regis Resort & Residences in Bali, and Karma Resorts, which has outlets in places such as Margaret River in Western Australia, Kandara in Bali and Koh Samui in Thailand.
On Friday, Puravarna Group launched another phase of its villas at Puravarna Phuket, which will open next November. It started selling the villas last year, and more than 30 buyers from Singapore have paid at least $1.9 million each for a property. They will get an average return of 8 per cent for 12 years and free use of the property for 30 days a year.
'Most buyers are bankers or property investors,' said Puravarna's regional director, Ms Christina Liang, adding that the firm offers financing of up to 90 per cent.
At Banyan Tree, owners are entitled to use their residence for up to 60 days a year, and there is no management charge during the rental programme. But forget about personalising your villa and it may not be that easy to sell unless values soar. Also, financing is not a given.
In addition, there may be black-out periods. If you opt for the 6 per cent guaranteed returns at Banyan Tree, for example, you cannot stay at your villa during the Christmas and New Year periods.
Sunday, November 11, 2007
Property Wealth: Do consider Shops as well..
Nov 11, 2007
PROPERTY: Consider shop units for rental yields
Prime units offer yields of 3.5%-5% but they don't come cheap, especially in Raffles Place, Orchard Road
SMALL INVESTORS OR RETAIL OPERATORS looking for strata-titled shops in the Orchard Road belt can check out Far East Plaza (above). Some owners of prime units there want more than $10,000 psf, but units on other floors can be had for $4,250 psf.
SHOPPING, already a national pastime, is becoming even more popular, if rising retail rents and capital values are anything to go by.
Not only are the rents and values in the traditional shopping belt of Orchard Road on the up and up, but those in the business district of Raffles Place have also risen considerably.
This is good news if you are a landlord. For those aspiring to become one, shop units are an option if you have at least $500,000 lying idle in the bank.
Property consultants say retail rents in Singapore are on the rise, with double-digit growth expected for prime shop units in Orchard Road and Raffles Place.
A recent study by property consultancy Cushman & Wakefield showed that the capital values of shops in Raffles Place have risen by 23 per cent in the past two years.
Shops at The Arcade, a 77-year leasehold property in Raffles Place, were sold recently at about $1.5 million to $2.65 million, which works out to between $4,900 per sq ft (psf) and $5,300 psf.
And prices are still climbing, with asking levels now hovering at between $6,000 psf and $7,000 psf, depending on the size of the shop and its location within the building, said Mr Donald Han, the managing director of Cushman & Wakefield in Singapore.
However, before you rush out to buy one as an investment, you should know that there are very few retail units available for sale to individuals.
And those in popular malls do not come cheap.
Commercial properties are typically traded on an en bloc basis to institutional or investment companies. In any case, most are beyond the financial reach of individual or smaller investors.
'Less than 5 per cent of the commercial stock here are strata-titled,' said Mr Han. A strata title gives you ownership of a small piece of a bigger property. As a result, many small companies or retail operators tend to buy strata-titled shops for their own use instead of renting one.
Strata-titled retail properties can be found in buildings such as The Arcade, International Plaza right next to the Tanjong Pagar MRT station, and Tanglin Shopping Centre in Tanglin.
In the Orchard Road area, strata-titled retail properties include Far East Plaza, Lucky Plaza, Orchard Plaza and Orchard Shopping Centre.
Shop units typically range in size from just 200 sq ft to as much as 1,000 sq ft, with values starting from $500,000, said Mr Han.
Net yields can range from 3.5 per cent to as much as 5 per cent a year, depending on the property's tenure, location, age, tenant mix, whether it is facing the road or the main concourse and so on, he said.
Some buyers might be able to buy a strata-titled unit with an existing tenancy. But shop units with a low rental rate and a long tenancy term might not fetch market prices. In contrast, a unit that is for sale with vacant possession might be able to achieve premium pricing.
Mr Han said vacant units attract both owner-occupiers as well as investors who wish to lease out the space at competitive rates, particularly in a rising market. At Far East Plaza, asking prices have increased significantly, in line with rising rents, said an agent familiar with the sale transactions there.
The highest-priced deal to date was done recently at slightly over $11,000 psf for a 269 sq ft shop, which works out to about $2.96 million. An investor bought the shop and is leasing it out to a shoe retailing business, the agent said.
Current asking prices for shops at Far East Plaza start from as low as $4,250 psf for a fifth-floor unit, which works out to around $850,000.
But a few owners of prime units there are asking for more than $10,000 psf; last year, such units could be had for $7,000 psf to $8,000 psf, the agent added.
Summary of the tips:
Tips on buying a shop
Get a reputable agent to search for the right property in the right location. Retail units are scarce and hard to come by, and not all agents have stock.
Get a bank's valuation first and secure financing.
Check with the management corporation to see:
1) If the seller still owes the corporation any maintenance fees; and
2) If there are upgrading plans as the new owner might have to bear the costs.
Verify what uses the premises can be put to. For instance, for food and beverage outlets or restaurants, you need to get approval from the relevant authorities. Know what you're buying.
If the unit is tenanted, get the tenancy agreement, and check that deposits are in place and tenancy terms protecting the landlord's interests are watertight.
Try to negotiate for a few units within the development, so that you can get a better feel for the price and perhaps work out a better deal.
Get an experienced lawyer to advise you on specific issues. For example, you will have to pay 7 per cent in good and services tax (GST) if you buy from a GST-registered vendor. One way you can offset this is by incorporating your own GST-registered company.
Get an estimate of the fit-out costs. If the unit requires renovation, make sure the purchase price and renovation budget combined are within your limits.
Source: Cushman & Wakefield
PROPERTY: Consider shop units for rental yields
Prime units offer yields of 3.5%-5% but they don't come cheap, especially in Raffles Place, Orchard Road
SMALL INVESTORS OR RETAIL OPERATORS looking for strata-titled shops in the Orchard Road belt can check out Far East Plaza (above). Some owners of prime units there want more than $10,000 psf, but units on other floors can be had for $4,250 psf.
SHOPPING, already a national pastime, is becoming even more popular, if rising retail rents and capital values are anything to go by.
Not only are the rents and values in the traditional shopping belt of Orchard Road on the up and up, but those in the business district of Raffles Place have also risen considerably.
This is good news if you are a landlord. For those aspiring to become one, shop units are an option if you have at least $500,000 lying idle in the bank.
Property consultants say retail rents in Singapore are on the rise, with double-digit growth expected for prime shop units in Orchard Road and Raffles Place.
A recent study by property consultancy Cushman & Wakefield showed that the capital values of shops in Raffles Place have risen by 23 per cent in the past two years.
Shops at The Arcade, a 77-year leasehold property in Raffles Place, were sold recently at about $1.5 million to $2.65 million, which works out to between $4,900 per sq ft (psf) and $5,300 psf.
And prices are still climbing, with asking levels now hovering at between $6,000 psf and $7,000 psf, depending on the size of the shop and its location within the building, said Mr Donald Han, the managing director of Cushman & Wakefield in Singapore.
However, before you rush out to buy one as an investment, you should know that there are very few retail units available for sale to individuals.
And those in popular malls do not come cheap.
Commercial properties are typically traded on an en bloc basis to institutional or investment companies. In any case, most are beyond the financial reach of individual or smaller investors.
'Less than 5 per cent of the commercial stock here are strata-titled,' said Mr Han. A strata title gives you ownership of a small piece of a bigger property. As a result, many small companies or retail operators tend to buy strata-titled shops for their own use instead of renting one.
Strata-titled retail properties can be found in buildings such as The Arcade, International Plaza right next to the Tanjong Pagar MRT station, and Tanglin Shopping Centre in Tanglin.
In the Orchard Road area, strata-titled retail properties include Far East Plaza, Lucky Plaza, Orchard Plaza and Orchard Shopping Centre.
Shop units typically range in size from just 200 sq ft to as much as 1,000 sq ft, with values starting from $500,000, said Mr Han.
Net yields can range from 3.5 per cent to as much as 5 per cent a year, depending on the property's tenure, location, age, tenant mix, whether it is facing the road or the main concourse and so on, he said.
Some buyers might be able to buy a strata-titled unit with an existing tenancy. But shop units with a low rental rate and a long tenancy term might not fetch market prices. In contrast, a unit that is for sale with vacant possession might be able to achieve premium pricing.
Mr Han said vacant units attract both owner-occupiers as well as investors who wish to lease out the space at competitive rates, particularly in a rising market. At Far East Plaza, asking prices have increased significantly, in line with rising rents, said an agent familiar with the sale transactions there.
The highest-priced deal to date was done recently at slightly over $11,000 psf for a 269 sq ft shop, which works out to about $2.96 million. An investor bought the shop and is leasing it out to a shoe retailing business, the agent said.
Current asking prices for shops at Far East Plaza start from as low as $4,250 psf for a fifth-floor unit, which works out to around $850,000.
But a few owners of prime units there are asking for more than $10,000 psf; last year, such units could be had for $7,000 psf to $8,000 psf, the agent added.
Summary of the tips:
Tips on buying a shop
Get a reputable agent to search for the right property in the right location. Retail units are scarce and hard to come by, and not all agents have stock.
Get a bank's valuation first and secure financing.
Check with the management corporation to see:
1) If the seller still owes the corporation any maintenance fees; and
2) If there are upgrading plans as the new owner might have to bear the costs.
Verify what uses the premises can be put to. For instance, for food and beverage outlets or restaurants, you need to get approval from the relevant authorities. Know what you're buying.
If the unit is tenanted, get the tenancy agreement, and check that deposits are in place and tenancy terms protecting the landlord's interests are watertight.
Try to negotiate for a few units within the development, so that you can get a better feel for the price and perhaps work out a better deal.
Get an experienced lawyer to advise you on specific issues. For example, you will have to pay 7 per cent in good and services tax (GST) if you buy from a GST-registered vendor. One way you can offset this is by incorporating your own GST-registered company.
Get an estimate of the fit-out costs. If the unit requires renovation, make sure the purchase price and renovation budget combined are within your limits.
Source: Cushman & Wakefield
Sunday, November 4, 2007
Buying Completed Homes as an avenue to create more wealth?
Nov 4, 2007
Buying completed homes gives investors instant rental income
Such cash inflow can help to cover mortgage payments and lowers one's portfolio risks
PROPERTY investors love new launches - they can get their hands on a unit fresh off the plans and hope for huge overnight gains. But long-term investors would do well to also check out completed properties that can generate an immediate rental income.
'Too many people are overweight in their investment portfolio in terms of new launches,' says Savills Singapore director for marketing and business development, Mr Ku Swee Yong.
'To lower one's risks, part of the portfolio should be income-producing.'
That will give investors a certain amount of income from property even during a short-term market dip, he says.
Although Singapore's market is currently buoyant, it has its ups and downs as any homebuyer over the past 10 years knows only too well. For those buying on a progressive payment scheme, the instant income from a completed property could help cover mortgage payments.
Completed properties with attractive rental yields
This option has become more attractive with the recent axing of the deferred payment scheme, which puts buying a completed property on a level playing field with buying an uncompleted one.
Buyers will have to take out a loan sooner since they can no longer defer the bulk of the payment for an uncompleted property until completion. When it comes to getting a mortgage, it may not necessarily be easier to get a loan for a completed property compared with an uncompleted one.
OCBC Bank says it does not differentiate between completed and uncompleted property. Still, in line with the pickup in home prices, the rental market has shot up across the board, making the purchase of a completed property for rental gains more worthwhile. Official data showed that rents of private homes rose by 11.4 per cent in the third quarter, making a 32.2 per cent rise between January and September.
Completed properties are generally more 'reasonably priced' compared with new launches, says one investor.
A recent Jones Lang LaSalle study found that the gap between new sale prices and resale prices is at a record high. But this is likely to narrow as buyers find it less attractive to buy new developments when habitable resale homes at more affordable prices are readily available, it said.
A tip from a seasoned investor: Consider projects that will get their temporary occupation permit within the next three to six months.
'These projects would have been launched about three years ago when prices were low,' he says, so their sub-sale prices will usually be lower than those of new launches.
'Another advantage is that you will be the first landlord and have the privilege of charging rental based on the current market rate,' he adds.
'There's no point taking over a lease that has two years to go and that was based on old, lower rental rates.'
As a guide, properties offering a rental yield of at least 3 per cent are a safe bet, says Mr Ku. These can be found in completed properties in city fringes such as Siglap and Balestier.
Bargains are tougher to find in hot areas like Amber and Meyer roads where asking prices have risen so much that yields have fallen below 2.5 per cent, he says.
Some older properties may offer fairly high yields but investors must factor in maintenance costs, consultants say.
Source: The Straits Times
Photos: Savills Singapore
Friday, September 7, 2007
Fengshui Defence helps couple to AVOID PROPERTY TAX
Fengshui defence helps couple avoid property deal tax
By Selina Lum
A COUPLE who were taxed on the profits they made on a property deal appealed - and have won their case against the taxman.
Their argument in this unusual case: they sold the apartment because of its bad fengshui.
Although Singapore does not have capital gains tax, which is charged on profits from the sale of assets, many people may not know that the Inland Revenue Authority of Singapore (Iras) can tax individuals it deems to have traded in property.
The couple found themselves in that situation.
But they appealed to the High Court, and Justice Judith Prakash accepted their contention that the 1993 sale of the Waterside condo was not a trade - they had been compelled to sell it.
It is believed to be the first time Singapore courts have accepted bad fengshui as a legitimate reason for a property sale in a tax case.
But Justice Prakash did not accept the couple's reason for the sale of another property - a bungalow in Watten Close - which they said they sold after five months to avoid a lawsuit.
Under the Income Tax Act, profits made from property trades are taxable. The Act does not, however, define 'trade', but the courts consider a list of factors when assessing whether a transaction was a trade. The criteria include the motive of the taxpayer, the length of ownership, reasons for the sale and whether the taxpayer has had many such transactions to his name.
In this current case, the couple bought eight properties and sold seven between June 1988 and March 1996. In 1999 and 2000, Iras charged the couple tax on the Waterside apartment, the Watten Close house and two houses in Jalan Sejarah and Chatsworth Avenue.
They had made profits of over $1 million; the tax on that was about $250,000.
The couple asked Iras to review the case but this was rejected in July 2004. They next appealed to the Income Tax Board of Review on all except the Chatsworth Avenue purchase. In December 2006, the board allowed their appeal on the Jalan Sejarah house but dismissed those on the Waterside unit and Watten Close house.
The couple then took the case to the High Court, which heard the case in May. Their lawyer, Mr Nicholas Lazarus argued the couple had bought the properties as homes and sold them for non-commercial reasons.
A fengshui master had told them that the Waterside unit was bad for their careers and for the health of their unborn child.
As for the Watten Close house, the couple said they had a dispute with their renovation contractor, who threatened to sue them for breach of contract, so they hurriedly sold the house.
In her written judgment published yesterday, Justice Prakash said it was clear the couple were believers in fengshui, and noted that their case was supported by the fact that the money from the Waterside flat had gone into buying the Watten Close house.
But she rejected their explanation for the sale of that house as improbable.
Mr Lazarus, who has not decided whether his clients will appeal, said that this case was a timely reminder in the heat of the current property market: 'The law has always been there, but newcomers in the market may be happily buying and selling without being aware of it.'
Source: The Straits Times Singapore
By Selina Lum
A COUPLE who were taxed on the profits they made on a property deal appealed - and have won their case against the taxman.
Their argument in this unusual case: they sold the apartment because of its bad fengshui.
Although Singapore does not have capital gains tax, which is charged on profits from the sale of assets, many people may not know that the Inland Revenue Authority of Singapore (Iras) can tax individuals it deems to have traded in property.
The couple found themselves in that situation.
But they appealed to the High Court, and Justice Judith Prakash accepted their contention that the 1993 sale of the Waterside condo was not a trade - they had been compelled to sell it.
It is believed to be the first time Singapore courts have accepted bad fengshui as a legitimate reason for a property sale in a tax case.
But Justice Prakash did not accept the couple's reason for the sale of another property - a bungalow in Watten Close - which they said they sold after five months to avoid a lawsuit.
Under the Income Tax Act, profits made from property trades are taxable. The Act does not, however, define 'trade', but the courts consider a list of factors when assessing whether a transaction was a trade. The criteria include the motive of the taxpayer, the length of ownership, reasons for the sale and whether the taxpayer has had many such transactions to his name.
In this current case, the couple bought eight properties and sold seven between June 1988 and March 1996. In 1999 and 2000, Iras charged the couple tax on the Waterside apartment, the Watten Close house and two houses in Jalan Sejarah and Chatsworth Avenue.
They had made profits of over $1 million; the tax on that was about $250,000.
The couple asked Iras to review the case but this was rejected in July 2004. They next appealed to the Income Tax Board of Review on all except the Chatsworth Avenue purchase. In December 2006, the board allowed their appeal on the Jalan Sejarah house but dismissed those on the Waterside unit and Watten Close house.
The couple then took the case to the High Court, which heard the case in May. Their lawyer, Mr Nicholas Lazarus argued the couple had bought the properties as homes and sold them for non-commercial reasons.
A fengshui master had told them that the Waterside unit was bad for their careers and for the health of their unborn child.
As for the Watten Close house, the couple said they had a dispute with their renovation contractor, who threatened to sue them for breach of contract, so they hurriedly sold the house.
In her written judgment published yesterday, Justice Prakash said it was clear the couple were believers in fengshui, and noted that their case was supported by the fact that the money from the Waterside flat had gone into buying the Watten Close house.
But she rejected their explanation for the sale of that house as improbable.
Mr Lazarus, who has not decided whether his clients will appeal, said that this case was a timely reminder in the heat of the current property market: 'The law has always been there, but newcomers in the market may be happily buying and selling without being aware of it.'
Source: The Straits Times Singapore
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