“We are searching for our next property…”
“But every one looks so nice…”
“How to choose?”
This is one question I have been asked a lot recently. Being spoilt for choice, a lot of my readers who contacted me have seen many projects, but are unable to decide or couldn’t really find something they are able to commit to.
I think this is very normal.
If you doesn’t have a clear idea of what you are looking for, it is very difficult to find. Even if it is right in front of you, you might still missed it. Once you have a clear mental checklist, and you know what to lookout for, things will become much more clearer.
In this article, I shall use my recent closing at Avenue South Residence as an example to share about how I look at a development for my client. What are some key factors that we considered in our checklist.
So, what is it about Avenue South Residence that we feel is right for my buyer who bought a 3 bedder unit there?
In fact, after their first visit, they brought their parents along to validate their decision on a second visit and they like the property too.
Here’s a disclaimer, again I am not saying that Avenue South Residence is the best property and everyone should get a unit. Everyone is different and has different needs, wants and financial position. There is no 1 size fits all.
I just hope that by sharing the thought processes that we went through and how we analyst a property, you can gain some clarity and get some reference points.
Let’s begin with a little introduction on Avenue South Residence.
56 Storey twin towers with five blks of 4 storey conservation block, a child care centre, 8 commercial units and a total of 1074 residential units.
Developer: UOL, UIC and Kheng Leong
Location: Silat Avenue
Tenure: 99 Years leasehold
Total Units: 1074 Residential Units
Here’s some factors we considered before deciding on this project (It is almost impossible to find a perfect property….if a property is so perfect, the price confirm not perfect ????????????.
We just need to checked what’s more important to us.
- Holding period (How long do we want to hold the property is critical)
- Location
- Entry Price
- Upside Potential
- Differentiation and Appeal to Future Buyers
Holding Period
Very few buyers realised that their intended holding period is critical in their property selection. While it is true that most of the property does exhibit a jump in price at TOP, what is also true is that after the TOP excitement, the property could enter into a time of stagnation if the property market stays flat.
With transformation, there is a much higher chance that the price can continue to appreciate even when the overall market stays flat.
Here’s an article I have written on this https://choosetherightproperty.com/2020/05/22/when-you-sell-your-property-is-critical-to-your-profit/
For Avenue South Residence, even after the inital TOP excitement, the prices there should still be able to benefit from the Greater Southern Waterfront transformation.
This is a plus point for buyers who intent to hold the property long after TOP.
Eg, a buyer buying for own stay, someone paying ABSD and unlikely to cash out at TOP because of high entry cost, an older buyer who might have difficulty getting loan or flexibility in the usage of CPF.
Location
The location of Avenue South Residence might not be very appealing for some right now. It doesn’t have a lot of amenities. Comparing to another nearby project Stirling Residences or even One Pearl Bank which has more amenities.
The question is this, convenience vs upside possibility, which is more important for you? We all value and priorities differently. Most important is that it fits into the blueprint of what you want for the family.
Typically, property prices would have already priced in existing MRT, malls, amenities etc if the project is in very close proximity to such existing convenience. In fact, most of the time the land price is already higher to begin with as developers are more confident and probably faces more competition in the bidding.
On the contrary, when a project is not so convenient for now but have future transformation, the price of the property usually will not fully factor in these future transformation and convenience. Developer also tends to be more cautious in their bidding. These typically translate to more profit margin for the buyer.
This could be a strong selling point for buyers who are willing to trade off some current convenience for potential growth.
Avenue South Residence is very near to the Greater Southern Waterfront Transformation and stands to benefit from the transformation down the road.
Entry Price
If Entry Price is wrong then no matter how nice or how compelling is the story, it is unlikely to see profit.
Let’s take a look at the Lowest entry price at Avenue South Residence and some comparable projects for the 3 bedders.
Avenue South Residence Land price and Breakeven Price
15% profit margin will be $1930psf
#3 unit (decent view) is selling very very close to breakeven price.
Price of future launches in the vicinity
With 15% profit, developer will have to sell approximately $2291psf
Chinatown Plaza
Chinatown Plaza (freehold) breakeven is approx $2530psf, 15% profit will be approx $2909psf
Upside Potential
As always, I would like to emphasis again that this are potentials based on probability and I always want to be very careful when we come to this part. It is purely based on my opinion and research. What is equally important is the entry price, (which I covered before this) which determines the downside risk.
You have probably heard of developer increasing price as they sell (usually). There are a few encouraging factors for this developer to do so when they feel is appropriate.
As this project is only about 50% sold and developer has only increase the price very marginally, there is a very high chance they will do so a few more rounds as they still have a lot of runway to do so.
They have been selling pretty close to their breakeven price in order to move units and gain sales momentum, as such, there is a good chance they will want to increase prices later on to increase their margin (some sort of Dollar Averaging Strategy).
Avenue South Residence is also situated very near to the Greater Southern Waterfront Transformation and should be able to benefit from it as the Transformation takes place.
Proximity to CBD, Rail Corridor, SGH, centralised location, 56 storey tall, this project should be a strong consideration for future buyers looking for a property in this area.
Differentiation and Appeal
Standing at 56 storey tall this, this attention grabbing project offers uncommon lifestyle to residences with 18 Sky Gardens and Sky Courts. There is also 4 function rooms on the 56 floor.
Rail Corridors (Right at the side gate)
The Rail Corridor is a former railway line that stretches 24km north to south of Singapore. The future Woodlands North Coast and Greater Southern Waterfront areas will be linked by this trans-island green artery. Now a “green corridor”, it will be transformed into a community space that links 1 million people within 1km of the Rail Corridor. When the Rail Corridor is connected by 2021, it will spur the development of surrounding lands and rejuvenation of older districts.
Can you see the Rail Corridor right at door step?
Complimentary Discussion
There is really no one size fits all project.
This project may or may not be suitable for you.
What’s important in searching for the right property is to understand your objectives, needs and your best option.
During my discussions with my clients, this is a very important stage. Very often, I helped them to see critical points that they missed, or help them understand that certain items on their checklist is really not so important.
Once we are very clear about what they want and need, we will have a very clear idea of what should be on our checklist and which projects can be considered.
We will be able to explore a shortlist of properties without getting confused and distracted by factors that might not even be crucial.
If you need a detailed analysis for your next purchase, drop me a message via WhatsApp.
