REC weekly #123: Is your property investment really giving you returns?

“My property rent is so Low!”

“My property price has not appreciated much!”

These 2 comments have been very common during client meetings over the last few years. Yesterday, I met a client, Ms Tan whom was referred by a friend. Mrs Tan complained that she owns a property at The Luxurie which was not performing well. Upon hearing this, I took out my property analysis spreadsheet and punched in some numbers. I will share more about my findings in this blog post. Before we dive into the numbers, I will share my opinion on how property investors should analyse their property returns.

Gross Rental yield

For investors, rental returns is a key factor to decide whether a property is worth investing or not.

1. Rental provides income for the investor (similar to a dividend) and

2. Provides a margin of safety in bear markets when property prices stay stagnant or trend downwards.

For the above reasons, rental yield is a simple indicator to decide if a property is worth investing. The current gross rental yield in Singapore averages 2-3%. During the financial crisis in previous bear markets, investors could buy properties that have gross yield of 5-7%. As price appreciated more than rents, yields start to compress.

By using this simple investment measure, rental yields of 4% of less are riskier investments. This is because most property investors use leverage (take loans) and interest rates are on the rise, likely to hit 3.5% over the next 2 years, while rental yields remain at 2-3%, when Rental Yield is less than Financing Cost, the investment is basically negative yield.

To calculate Gross Rental Yield, we do the following:

(Rent * 12) / Total Property Cost

Based on the formula, for rental yield to increase, either Rent must rise or Property Cost have to go down. I have written about my opinions about the outlook of rental market and property prices in a previous article, you can read more here.

Capital gains

Every investor hopes that their assets will increase in value over time. The same goes for property investors. You would probably hear phrases like “Property is a sure way to make money”. Unfortunately, I personally think the phrase are flawed and untrue.

Buying real estate for capital gains is similar to buying stocks. When buying stocks, we look for deep value, the potential for higher earnings and returns. The same is true for real estate, we look for value buys that are below market valuation, potential transformation of surrounding, future upgrades to amenities and strong demand. Unfortunately, many property investors I know do not do extensive research before they buy a property. Many tend to buy based on gut feel, nothing wrong with that, but I think the investment environment has changed in Singapore, and buying a property for investment is no longer the same as before.

Over the past 5 years, due to cooling measures, there has been many properties which have not appreciated in value. In fact, there has been some properties that has not seen capital appreciation in the last 10 years as well. These properties had unperformed inflation. If we analyse property returns on a annual basis, many properties tend to underperform inflation, which is similar to keeping your money in the bank.

A good capital gain or return on investment would then be at least 4-5% p.a which Beats inflation and cost of borrowing. Unfortunately, my view is that over the next 5 years, we are unlikely to see much capital gains if any in the Singapore property market.

Case study 1 : The Luxurie 2 bedroom , bought in 2012

Ms Tan bought a 2 bedroom, 7xx sqft unit at The Luxurie, walking distance from Seng Kang MRT. As an investment she wanted to rent out the unit. Initially she had expected to get a higher rent, however rental market has been weak and she has been renting the unit for $2300 per month. She has also refinanced her mortgage to a fixed rate, in anticipation of rising interest rates over the next 2 years.

Purchase Price: $850,000

Stamp duty: 3%-5400 = $20,100

Total cost: $870,100

Loan: 80%, 25 years

Interest rate: 2.3% refinanced

Total equity outlay: 20%+(3%-5400) = $190,100

Based on the above info, I calculate the actual rental returns below

The key to a successful property investment is proper documenting of expense and income. One common mistake most property investors make is to ignore the small costs like taxes and maintenance fees which eats into your return.

A good property will be where the tenant pays for the property. Unfortunately this is not the case for Mrs Tan and many many other property investors in Singapore.

As you know, your mortgage payments has 2 components

1. Principal payment – this actually pays down your mortgage

2. Interest payment – this makes the bank rich

Based on 2.3% interest rates, we calculate the exact principal paid down by the tenant (rental income).

The tenant only pays $530 of the principal, the remaining rent is used to pay your expenses.

Not to forget that Ms Tan is still required to top up $1,000 per month as the rental income does not cover the monthly mortgage payments.

She is now stuck with this Negative Cashflow property.

Below is a chart that shows where the rental income goes to.

As you can see, most of the rental income payments go to your interest payments and cost to keep up the property. When interest rates hit 3.5% or more, the $530 (orange segment) which is currently paying down principal will go to $0. The whole Rent will be used to interest and expense. While your monthly top up will be used to pay principal. Is this a worthwhile investment?

Capital gain is also not seen as the property did not appreciate much. The worst case scenario if a financial crisis hits us will be a 30-40% dip in valuation. The property bought at $850k could be worth less than $600k. This is highly possible as if rental remains at $2300, the new rental yield will be 4.6% which is more attractive.

While, the current valuation of property is around $900k, and with a 2% commission to sell, would likely give Ms Tan a very small profit. She decided to get rid of this underperforming asset as the potential downside far outweighs the upside potential. Even if she had holding power, holding a potential 30-40% loss or up to $300k is not good for her mental state.


It is important to go into the tiny details when investing in real estate. There are many property agents who try to hide such facts as these details are the most important. Over the next 2-3 years, it is safe to say that majority of properties are not performing well and it is better to move into liquid assets. If you like to know my outlook of the property market for 2019, stay tuned for my upcoming article.

REC weekly #0121: Investing your en-bloc proceeds for asset growth in Uncertain times

part 3b enbloc mini series cover

In continuation for the previous article “what en-bloc owners must know about the property market”, this is the final part of the en-bloc mini-series – “Prudent Strategies for Asset Growth”

In this final part, I will share 3 common strategies that en-bloc owners will likely be considering and provide my views in a series of 3 articles.

In the previous article REC weekly #0120, case study 3A, a scenario of buying multiple Singapore Properties was discussed. In this article, I will be discussing about the more prudent strategy based on where we are in the property cycle.

Case Study 3B – Buy a Right Sized Home and invest the rest in liquid assets

Over the last few days, i met a few clients who are waiting to receive their en-bloc proceeds. All of the them had the same question – how to maximise my en-bloc proceeds for BOTH income and wealth preservation.

In my opinion, this strategy is perhaps the most ideal. As we are somewhere towards the end of the property cycle (as of Nov 2018), coupled with global trade tensions and uncertain economy, it is not the right time to make ANY property investments in Singapore. In such an environment, it makes sense to keep your portfolio liquid.

Buying a home is a personal affair, if one needs a larger space, it may make sense to buy a large HDB unit. If a smaller space is preferred, one can buy a smaller condo or HDB as a replacement home. The savvy choice is keep housing costs low and invest in income generating assets that are liquid.

Assuming an en-bloc owner who does not have any other existing properties, buying a spacious 5RM HDB flat would cost around $600k. This would mean $1.4mil left to invest in other assets. To be savvy, it will be wise to keep 20% OR $400k as cash on hand and invest the remaining $1mil. By investing in good quality equities or managed funds, one can get 4-5% returns per annum with relatively low risks, and this is also higher returns than the average gross rental yield of +/- 3%.

By doing this, you would now have

  1. Spacious home $600k
  2. $400k of liquid cash
  3. $1mil of financial assets generating about $50k income /year (not including any CPF you may have set aside in your CPF retirement account)

The key for this strategy is to engage a good remiser or wealth manager to assist you in this process. You may not need to immediately invest into financial assets (Disclaimer: I am not a licensed financial advisor). The advantage of this strategy is that you are liquid and can deploy your money anytime. The figures above will vary depending on what type of home you buy.

If you like to know how you can plan and execute your investment into financial assets, stay tuned for a guest post by one of my buddy, a Wealth Hacker who has been assisting many of my clients with diversifying their investment portfolio. He has also been profitable during the 2007 global financial crisis.

REC weekly #0120: Is it the right time to buy investment properties in Singapore?

In continuation for the previous article “what en-bloc owners must know about the property market”, this is the final part of the en-bloc mini-series – “Prudent Strategies for Asset Growth”.

In this final part, I will share 3 common strategies that en-bloc owners will likely be considering and provide my views in a series of 3 articles.

When enbloc owners receive their sales proceeds (or anyone striking a windfall from the stock market or lottery), it will be tempting to spend money quickly. This psychology is common, but is not a good idea. Some en-bloc owners will consider buying 2 properties – one as a replacement home, another for investment.

Case study 3A – Buying multiple Singapore Properties

A few of my clients told me that they want to buy 2-3 properties in Singapore when they get their en-bloc proceeds, what investment properties in Singapore should they buy?

The short answer is – this is not the time to buy investment properties in Singapore (unless it is a very good deal).

The usual me – being data and finance oriented, was tempted to take out my laptop and go through with them financial calculations and the numbers. However, instead of going to such details, I explained about where we are in the property cycle. I hope that this explanation will be informational for everyone. If you still are wondering about the financial numbers after reading this article, feel free to discuss with me further.

Where we are in the property cycle?

After being a real estate and stocks investor for about a decade now, reading countless books by Ray Dalio, Howard Marks, Warren Buffet, etc, and speaking to already seasoned investors, something that they all agree on is that they cannot predict the market, but they sure do need to know where we are in the market cycle. I too cannot predict the market, but understanding where we are in the market will give us an idea what to do.

Here are some facts about the market now:

1. Some property agents and even property buyers are saying – it’s time to buy because as Warren buffet says, be greedy when others are fearful. Perhaps this is being misused. There is less people buying now due to the cooling measures and people also worried that asset prices are overvalued. There is no blood on the streets, those words are best said in 2007/2008. Not now.

2. Investors are afraid that future generation cannot afford housing and fear of missing out (FOMO), they think prices will continue to go up indefinitely. I think that asset prices are inflated and the government won’t cause the prices drop, the global economic crisis will. When people think prices will continue to go up indefinitely, I start to worry.

3. Many property buyers today forgot about the financial crisis that happened. Perhaps they did not experience it first hand, or believe a crisis won’t happen again. I quote our MAS Chief, Ravi Menon’s words, he says that the risk of financial crisis is present, it is like energy, it is just converted from one form to another. In short, the next crisis is likely to happen, it just looks different from the previous one.

The above 3 points lead me to think that the psychology of investors are driven by optimism, trust in the future and less worried about risks. We are probably almost at the end of the property cycle.

Based on the above information and the property market outlook written in the previous article, buying an investment property in Singapore may not be a good idea. If you have not read my previous article, here is the summary.

We are currently in an investment climate of rising interest rates, stagnant rents and oversupply due to huge en-bloc redevelopment units coming onto the market.

With risk free investments (Fix Deposit rates closing on 2%) and gross rental yields at close to 2% and slow capital appreciation coupled with global trade tensions, it is prudent to hold more liquid assets. Some may remember, not too long ago, when the property markets were not overheated, some studio or 2 bedroom units had 5% gross rental yields. Today, the average yield is at 2.5-3%. Prudent investors will look at rental yields and decide how much they should pay for the units. After all, no investor wants to hold on to an asset with low returns. For rental yields to rise, 1 of 2 things must happen. Rents must rise or asset prices must go down.

Rental market outlook

Rents are unlikely to see any sustained rise due to vacancy rate of 7% here. There just isn’t as many expats here today compared to the good times in 2010-2013. In a recent catch up with a client at Club Street, a restaurant manager came to have a chat with us and he mentioned that the crowd at Club Street has shrunk. Many of the frequent Caucasian expats who like to hang out there seem to have gone back. My first reaction was, perhaps these expats could be hanging out somewhere else. However, on second thought, perhaps this is indeed a sign that we have lesser expats here due to the tight immigration policies by the government. Even if the government attracts more talents to work here, the economy will have to remain healthy and we are facing competition with other tech hubs in Asia. Given the above assumptions and information, I believe that rents will remain depressed for the next few years.

Property price outlook

Property prices currently as what Minister Wong (Minister for MND) mentioned in a recent redas meeting, “we are already seeing significant headwinds in the external environment, with trade, with global economy slowing down, with interest rates likely to go up. On TOP of that, within our domestic market, more supply is coming on stream”. His words sums up the question on where are are in the economic and property cycle. It will not be wise to think that property prices will only go up.

If rents are unlikely to go up, then for investments to be attractive, asset prices have to go down. The question now is – how low will asset prices drop in a financial crisis?

REC Views

Buying multiple properties in Singapore for investment with en-bloc proceeds is not recommended. Due to oversupply of residential properties in Singapore, rising interest rates and global economy slowdown.

REC weekly #0119: What every en-bloc owner MUST know about the property market

Delivering the continuation to a previous post “en-bloc owners will make the worst decision of their life…” this is Part II, continuation of the mini-series.

In order to curate the best option for property owners and buyers, we first need to understand the current property market cycle.

The environmental factors of the Singapore Property Market 

The Singapore Government apparent intention is to have rising property prices with income growth (2-3%), if any at all. This needs to be inline with inflation to allow housing to be affordable. This would mean that it is against policy for high property price appreciation. Coupled into an environment of rising interest rates, this is a consequential double whammy for Singapore property investors in a low yield environment.

It is often noted that buyers and investors purchase Singapore properties for capital gains, and lesser intent for rental yield. Now that capital gains are being squeezed, in light of the cooling measures. The current environment is much less conducive for property investment. Furthermore, there are events that could be waiting for us in 2-3 years time, namely, the next global economic downturn or crisis.   

Many industry stakeholders say that we are in a new up-cycle currently and the government had pulled the brakes. In my opinion, we are still in the up-cycle which started in 2009-2010 after the subprime crisis. However, we are also likely heading towards the end of the cycle. The 15-month decline in residential property prices was not a down cycle per se, but was more likely an anomalous correction caused by the implementation of cooling measures. The property market indicators and internals show that we are heading towards the end of the property up-cycle. We may be 6-12 months away from the start of the ACTUAL slowdown or slump.   

What does Singapore need to spur a growing property market?  

A. Rental Market

For the Singapore rental market to improve, a few things must happen:

  1. Expats will need better expat packages. Due to slowdown in economy, many expats have lower housing budgets and this has affected the rental market.
  2. We will need more expats to come in, so that demand for rental units can go up and vacancy rates can go down. My personal opinion is the government will allow talents we need (data science, blockchain, AI, cyber security, etc) but it will take time to attract these talents because Singapore is not the only country and also it will take time for foreigners to flow in.
  3. Increase in rental demand from en-bloc owners who will rent a home temporarily before purchasing their new home or while waiting for their new home to be ready. This is however only a short term increase in rental demand and is unlikely to be sustainable.

B. Property Price

For property prices to improve, these things need to happen:

  1. There must be an increase in overall investor demand. This means cooling measures have to be relaxed for both foreign and local demand.
  2. Foreigners need to start buying more units. In 2010, foreigners bought up many properties here causing prices to spike. Today, Indonesian buyers have slowed down due to the tax amnesty introduced. China buyers find it difficult to bring money out of the country due to capital controls, which is their government’s way of controlling their exchange rates. These challenges, coupled with cooling measures hinder the foreigners from buying Singapore properties. Chinese and Indonesians are the top foreign buyers for Singapore properties, the slow down in their purchases affect property price appreciation especially in the luxury segment. With both the ‘gates’ of Singapore and the foreign countries closed, the days of foreigners flooding in are over, at least for now.
  3. Local demand also needs to increase. With an aging population in Singapore, purchase decisions may change, when most property owners 10-20 years ago were young, property owners then can be more aggressive. The situation now is different as most property investors are at or close to their retirement age. The younger population, may not be as bullish on property investment. There are many other investment vehicles with the rise of robo-advisors, carefully selected overseas properties and cryptocurrencies. Real estate as an asset class, is just one of the many options. Especially when many think that real estate is a hedge against inflation, only to see their properties appreciate slower than inflation after expenses.

Where are we in property cycle? 

image 1 - private residential property index

Source: URA, REC Research

The property price index chart from 2009 to present can be read in two different ways. In 2017 during the strong en-bloc wave, there were talks that we are entering a brand new uptrend cycle and are turning around from a downtrend. This refers to the black arrows of 1->2->3 on the chart (Uptrend 2009 to 2013, Downtrend 2013 to 2016, New Uptrend 2016 to present). My personal view is that we have been in the same cycle which started in 2009, as seen with the red arrow. We are still in the same cooling cycle that started in 2009 and the 2013 to 2016 was a mere correction.

This is important because reading the cycles correctly will lead to different outcomes and projections. The property uptrend started in 2009 after the sub-prime crisis and next year 2019 will be the 10th year. This would be a good time to review where we are in the property cycle and be well positioned for what is ahead.

My view is that we are at or moving towards the end of current property up cycle. Let us look at a few critical facts about the property market (some of which I have mentioned in my previous article that was very well received – “5 facts you must know before your next property investment”)

Currently, we see that there is

  1. Real oversupply issues that will be present from 2021-2023, it is similar to facing a resistance block in a stock uptrend.
  2. There are affordability issues faced by the middle class to buy a private condominium.
  3. What is most critical and can directly affect demand supply balance is government policies, the cooling measures. The cooling measures that were implemented on 5th July 2018 were the strongest. Some analysts said the cooling measures were like using a butcher knife to kill a chicken. It is important to identify what the government wants to achieve from the cooling measures, too much cooling measures and property prices decline which will cause property owners to be unhappy. No cooling measures could mean runaway prices that will likely cause properties to be unaffordable for many Singaporeans.

After the introduction of the latest cooling measures, the government said that they want property prices to rise in line with income growth. The cooling measures were strongly directed at property developers more than property buyers as it is the developers that caused higher prices (from en-bloc sites) and higher GLS bids. Lets take a look at how this works.

image 2- illustration of aftereffect of en-bloc

Source: URA, The Business Times, REC Research

Take the popular Amber Park en-bloc in Oct 2017 for example. In a The Business Times article, an analyst noted that the redeveloped Amber Park would have a selling price of $2600 to $2700psf. Before the en-bloc was successful new launches such as Amber Skye and Marine Blue were selling at $2000psf price point (New Amber Park will sell at 30% premium). Nearby, The Esta and One Amber had units selling for an average of $1400psf before the en-bloc of Amber Park, months after, similar units were transacting at $1800psf (a 30% increase in price). These units at One Amber are still almost $900psf from the future selling price of Amber Park. Assuming we discount this amount, due to cooling measures, Amber Park may have a sale price psf of $2500psf ($700psf higher from One Amber $1800psf). This reflects a 38% price gap between the old and new. For average prices to move closer towards Amber Park’s new prices, assuming property prices follow income growth rates of 2% p.a, it would take almost 20 years (simple compound) for average prices to reach $2500psf.

I strongly believe that the government introduced the recent strong cooling measures in attempt to prevent further price increase that is attributed to developers redeveloping the sites. After all, imagine that developers will be making their usual double-digit profit margin that consumers will be paying for.

The latest cooling measures have also signaled that the current en-bloc cycle is approaching the end. We could see a few more good value sites en-bloc. After which the en-bloc wave should be cooled down. This is also a preventive measure from the government to cool the en-bloc market which will cause a massive supply increase as for every one unit en-bloc, about 3-4 more units are re-created.

What should you consider to do?

At this point, the upside potential of property investment is small compared to the potential downside. Property owners should consider reducing risk, repositioning to liquid financial assets and more importantly, avoiding being over leveraged.

Buying in the wrong part of the cycle could mean that you will need to wait for 8-14 years for your property to breakeven. This would mean a huge opportunity cost. If an investor breaks even in 8-14 years, you lose yearly inflation rate and potential gains. This is a MASSIVE loss. Risks can be reduced if an investor chooses the right property particularly when buying in the latter of the cycle. Of course, there are also homebuyers who do claim that they do not mind sitting on a loss making property, this is the mentality and preference of the minority of homebuyers. It is noteworthy to know that there are opportunistic plays in any part of the cycle, accentuating that property selection is the most important aspect of property investment.

In Part III of this mini-series, we will discuss what you can actually do to actively manage your and maximize financial portfolio that will be boosted by en-bloc proceeds. Stay tuned!

As always, please read my disclaimer here.

REC weekly #0118: En-bloc owners will make the Worst Decision of their lifes…

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Firstly, to all en-bloc owners whose apartment(s) had completed the en-bloc process before the latest 5th July cooling measures,


They struck a windfall that many envy, before the en-bloc market slowed down (or “crashed”).

There are currently more than 5000 en-bloc owners, and they will be making the worst decision of their lives… IF


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Getting en-bloc is like striking the lottery (think TOTO or 4D) or hitting a multi-bagger stock investment. Often, en-bloc owners get about double for their unit compared to what they could get if they sold on the open market. For example, Florence Regency was selling for around $900k in 2017 before the successful en-bloc and each owner received about $1.8mil. That’s a good 100% extra profit. With that much cash on hand, there is a possibility to over-commit on their next housing plan. 

‘Easy come easy go’ as people say, happens. I’m sure you have heard about people selling 2 condos to buy that dream Semi-detached house, only to sell it 5 years later due to having a serious health issue or due to loss of jobs during a financial crisis. This was exactly what happened to one of my client’s family during the 2003 SARS period. Exercising financial prudence and not being over leveraged can help prevent such events from happening to you. 

En-bloc owners who decide to buy a property that cost much more than the money they received will be faced with risk from over leveraging. Often, parents also buy properties for their children with the proceeds from the en-bloc. It is crucial to exercise financial prudence in those purchases as the debt obligation, if any, would rest on their children who are most likely young adults between 24-30 years old.

We will be reviewing a real case study that happened in after the Gigantic 2007 en-bloc wave in another article. Stay tuned for that. 


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Selecting the right property is a whole topic by itself, and particularly a topic that I am passionate about and do research on a daily basis. Property investment today is a different ball game from the past, where you could close yours eyes, buy a property and probably make a fortune later (remember that $300k freehold landed). We need to understand that those days are over. If you want your property to at least appreciate with 2.5% inflation, property selection is more than just buying beside amenities like a MRT station,etc.

Mr Tam, a seller I served in 2013 whom needed to sell off his condo urgently, asked me why his brand new condo, Foresque Residences did not see capital gains while his friend who bought a unit at Waterfront Waves during the same period saw their property appreciate by more than 15%. This proves that 2 properties bought at the same time in different location can have totally different outcomes. Buying a property that performs badly can be detrimental to a property owner if there is a need to urgently sell off the unit.

As most en-bloc owners today are at or near retirement age, the “last” home they buy will be VERY important. At this stage in life, the search for an investment grade home diminishes, en-bloc owners will want a house that they love and comfortably retire in. Unless these en-bloc owners do not intend to pass the property down to the next generation, then, the investment value of the property will not be a priority. The key factor to keep in mind is, when selecting a property, one needs to consider who will be the buyers buying their unit when they need to sell the property years or decades later because what you like may not be what someone else likes. If you purchased a property that may have low demand in the future, you or your children will find it either difficult to sell off your property or the property will not see much price appreciation (if any). This consideration is very often overlooked by both buyers, as well as their advising realtors.

Over the last 18 months, I have met and advised more than 30 property buyers at their retirement age. Out of these property buyers, majority said they wished that their property still would appreciate in value over the long term so that they can pass on a valuable property to their children. Therefore, depending on one’s property purchase goals, property selection is critical.


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The above two points are related to this. Often, armed with suitcases of cash (sales proceeds) en-bloc owners are eager to look for a replacement property because en-bloc owners usually need to move out of their home within 3-6 months notice. They may not be patient enough while looking for a good house, and sometimes succumb to time pressure if they are not able to find that dream house. In 2019, there will be a tsunami of new launches from both Government land sales (GLS) and En-bloc redevelopment.

I have heard and personally know some elderly who bought houses in a rush only to regret 6 months later. In today’s market, a property is almost illiquid in the first few years due to Sellers’ stamp duty payable, therefore it is extremely important to take time to make a informed decision especially if this is going to be one’s final home (I assume that many en-bloc owners in this wave are retirees).


The largest en-bloc wave from 2005-2007 made many property owners wealthy and some not so wealthy. What en-bloc owners do with their proceeds from the en-bloc sale is crucial in determining their future wealth and retirement lifestyles.

Even before I became a broker, I am happy to have been able to assist my family, relatives and even family friends with re-investment suggestions that tremendously benefited them after they received their en-bloc sales proceeds. They bought a good property, diversified their wealth and are today living a comfortable lifestyle. Everyone is different, but if you want to retiree happily, live in a good property that you look forward to go back to after every long holiday, your children and your grand children look forward to gather at every weekend, then taking care of your financial health after an en-bloc is very important. When your financial health takes care of itself, you can focus on your physical health and spending quality time with your loved ones, because we all know – life is short.

Don’t allow yourself or people you care that had their property en-bloc make the worst decision of their life! Share this article with them so that more people are aware. As long as one person benefitted from this article, this article has reached its objective.

Once a development gets en-bloc, there will be people who come by with ideas for property, insurance, investments, etc, all targeting en-bloc owners. Instead of getting swept off with their promises, it is crucial to take time to reconsider and seek third party opinions, and do an overall financial health check and risk scenario assessment. Then revisit these proposals and see if these are suitable.

I hope that Part I of this en-bloc mini-series is informational for you. If you like to find out what you can do with your en-bloc sales proceeds whether or not you already have a house to stay, or have other investments, stay tuned for PART II of the mini-series about “What every en-bloc owner MUST know about the property market”. Click here to read!



The #1 most overlooked benefit of owning a private property in Singapore.

In a recently report by Credit Suisse, titled “HDB flats to be less attractive as buyers look for better store of value“, it was mentioned that home buyers will turn to private residential properties for store value. This has been a topic of discussion with numerous clients lately, in my opinion, this fact is debatable due to objectives of buying the property.

Over the last decade, I have always advocate my friends and clients that if they can afford to buy a private residential property (property selection is also critical), they should seriously consider. Many home buyers may overlook the benefits of having the ability to get a equity loan.

Let’s say you bought a HDB flat at Bidadari for $500,000 and after staying for 10 years, the flat is now valued at $700,000. Simply put (not including interest & transaction fees) you would have profit $200,000. And unexpectedly you need a large sum of money. Assuming this $200,000 would help, you will need to sell your flat in order to cash out your profits as banks currently do not give equity loans for HDB flats.

Image source: HDB

If you had bought a private residential property at Potong Pasir for $1,100,000 and after staying for 10 years, the flat value is now valued at $1,300,000. Similar to the HDB example, you have a $200,000 profit. As you own a private condo, you have the ability to cash out that profit (subject to bank approval). Assuming the bank approve your equity loan, you would have cash out ~$150,000 for your emergency use.

Image source: UOL-The Tre Ver

Now I am not saying that you must or will take an equity loan, my opinion is that having this flexibility and option may give you a lifeline. The best case scenario is setting aside your own emergency fund that is large enough.

In a recent article on The Business Times titled “Cash strapped Americans leverage their homes to pay bills“, it is mentioned that 24 million Americans had borrowed against their homes (equity loan) in order to repay their bills, send their kids to good universities and even for home improvement. In a country like Singapore where property is our largest asset, it is important to know our options when choosing to buy a home. The ability to take an equity loan depends on several factors like your earning power and price appreciation of your property.

In the next series of articles, I will be sharing how you can improve the chance of buying a property that will see price appreciation. Stay tuned! If you would like to find out more about equity loan you can read more here.

Disclaimer: As always please read the disclaimer provided in this blog.

The 20 year wait for Jurong Lake District (JLD), worth the wait?

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Property investors are often attracted to the government’s masterplan for growth areas. However, it is important to analyze and identify whether a growth area is worth investing in. Jurong lake district is a growth area that attracted many property investors over the past 3 years. Recently, during a lunch with one of my property investors, I was asked for my opinion about the Jurong Lake District. From this conversation, I decided to share pertinent points herein the article, which I hope will benefit my readers.

Firstly, let us look at why people invest in Jurong Lake District (JLD), below are some cited reasons:

  • JLD will be transformed into Singapore’s Second CBD
  • JLD will have new Parks and transform into Lifestyle destination
  • JLD has close proximity to the Tuas Mega Port
  • Invest early – First mover advantage

Some people had bought the area due to High Speed Rail (HSR), barring any u-turn of decision by Malaysia, HSR will be delayed or be cancelled.


Source: Singapore archives, URA (

The following abstract is extracted from the Singapore archive from a speech by Minister Wong during the JLD Masterplan exhibition in 2017. He later commented in 2018 that JLD will be unchanged regardless of HSR outcome, after Malaysia announced that the HSR would potentially be delayed or even cancelled (see image below)


Source: Straits Times- Jul 9 2018

I would agree with what Minister Wong said, that JLD will be unchanged regardless of the HSR outcome. JLD will continue to be part of Singapore’s growth plan and part of Singapore’s most important industrial park locations.

If you think that I am going to say that JLD is not worth to invest in due to not having the HSR, you would be disappointed. In order to analyze this investment, we first have to ask the following:

Question 1 : For investors who bought JLD in anticipation of capital gains from the realization of Jurong being the second CBD… how long would it really take to grow?

In my opinion, the Government will focus to grow our main CBD – Marina Bay, our FinTech and Blockchain hub. Reports have shown that many tech companies have offices in the CBD to attract talents, young millennial workforce and to foster a creative thinking environment. To add on, the government has slated JLD to be ready by 2040, which is a 20-year wait.

Question 2 : With Tuas Mega Port only fully operational by 2040, it is still a question what part Jurong Lake District will play.

In my opinion, Jurong has come a long way from being a swamp to a first world industrial park town. With the currently outlet malls like IMM and shopping malls like JEM and Westgate. However, if one is buying JLD due to the fact that it is near to Tuas Mega Port, and expect many companies to move to Jurong and therefore having more expats or workers wanting to rent properties in this vicinity, it will be wise to reconsider.

An investor would have to think about the type and quality of tenants who will rent in the JLD, the number of expats that will likely stay in the JLD area, and whether properties outside the JLD will offer more value investment. These tenants will only be flowing in closer towards year 2040.

In summary, it is too early to invest in properties in Jurong Lake District vicinity in 2018. The 22 year wait for JLD to become the 2nd CBD in 2040 would be an opportunity cost for most investors.

Without spending too much time to discuss about opportunity cost, just ask yourself how many property cycles you could see in 22 years? How much gains are you expecting from this 22 year wait? Are there other alternate investment choices? Are there other locations to consider for more immediate returns?

Investing in an asset at a location that would provide more immediate returns would be a better choice. If one would like to relook to invest in JLD, perhaps so after 2025 when there is more clarity. In the following articles, I will go through a case study on opportunity costs. Stay tuned.