Case study #1: 8 years NO profit??

You probably would have heard or believe that buying a Singapore property is a sure win, as long as you can hold, you will make money.

Unfortunately, this is not true for owners of Vivace, an apartment located in Robertson Quay vicinity.

Here are some info about Vivace.

Source: Squarefoot

In short, it is 999 year leasehold (As good as freehold) development in District 9. The owner, whom is currently a landlord I am representing, bought the unit in 2010 through another agent then.

In 2010, she bought the 441sqft, 1-bedroom unit for S$900k (inclusive of stamp and legal fees) as an investment.

8.5 years later, in October 2018, her unit is valued at the same price she bought. You can refer to the price chart extracted below.

The property has severely under performed the markets as many investors who bought properties in the same time period (2010) actually made huge profits.

If we were to analyse this property investment at Vivace, although the price remained stagnant from 2010 until now, the effects of inflation actually caused her a net loss as her property did not appreciate with inflation.

The weak rental market does not help increase her investment returns either. All in all, the opportunity cost of holding this investment property is massive!

In my opinion, I would attribute this stagnant property investment to entering at the wrong price and investors are not willing to pay a much higher price for resale units there due to Low rental returns, leading to lower demand and transactions.

In conclusion, not all properties perform in the same way. Property investors should not assume that their properties will definitely appreciate and see capital gain with time. Unless you wish to hold your property without seeing profits for a decade, do your due diligence and choose your property investments wisely.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s