Herd instinct.
A wise man once told me. An investment should be made cold blooded. No emotions. Pure facts and figures.
Fact:
A suburban condominium selling at $1,700 - $1,800 per square foot is rather expensive. A property at The Sail @ Marina Bay was recently transacted at $1,699 per square foot. If a relatively new 99-year leasehold property right in the heart of Singapore's financial district is sold at a price lower than one in Bishan, the figures do seem a little too odd to ignore.
The option on this property was done in January 2012. Which is not too long ago.
Fact:
The development is about a couple of tens of meters from Bishan MRT station. The actual fact remains that Bishan is still about 8-9 MRT stops from Singapore's business district (City Hall and Tanjong Pagar MRT stations). With that being the case, would Centro Residences, next to Ang mo Kio MRT, be a better buy? It is about 10-20% cheaper and it will obtain it's TOP much earlier than Sky Habitat. I never thought the day would come whereby I used Centro Residences as a comparison as a cheaper alternative. That day has come.
Fact:
Bishan 8 is the closest condominium to Bishan MRT (North-South line). That is the line that gets you to City Hall and Tanjong Pagar. It is also less congested around the entrances of Bishan 8 as compared to the roads around the entrances of Sky Habitat. The likely scenario is that prices of Bishan 8 are likely to go up due to the euphoria generated from the launch of Sky Habitat. Certain units in Bishan 8 went for $929 and 949 per square foot in recent months. Yes the project is older and the design is less appealing than the new Sky Habitat but if it is location that you yearn for then Bishan 8 is your buy! New is never a reason more than a feeling. Every condominium will grow old someday. For a matter of fact, buying a completed project would mean that you are using your purchase now rather than have your money locked up in a certain place awaiting for something which you hope will be as beautiful as what you imagined it to be. Suddenly, Bishan 8 looks appealing.
Fact:
You are locking your money in something that you can only physically own 3-5 years later. With the regulations, this will add one count to your residential property count in your calculation of your buyer's stamp duty and your loan eligibility quantum from the bank. Is it such a fantastic buy that one should commit himself to this development thus potentially forsaking his chance to invest in any other property in the near future? Will there be no other better purchases and that you are sure this is going to be the best project for you/ Hard to tell where the market will go. It is rather resilient but there is perhaps more downside currently than upside.
Fact:
Freehold landed (in the same district) is cheaper. It may not be the same lifestyle as compared to a condominium but then speak to the really rich and most (not all) will tell you that landed is the better buy due to Singapore being land scarce. Condominiums are springing up all over the place and supply is rather overwhelming these days. If you are willing to pay up to $1,800 per square foot for 99-year leasehold air space, shall I interest you in a freehold landed property selling for about $900 - $1,000 per square foot for land space. Oh in addition I shall throw in all the air space above your land as well. Even after you renovate the place, your cost may not reach the same per square foot cost as Sky Habitat's.
Fact:
The property market may be nearing it's peak. I am not saying this because I want the property prices to drop. I have a few properties myself and a drop would not make me feel good. However, for the sake of the next generation. We need prices to remain affordable and appropriately priced. Hope is what drives people to strive for. If you are going to price a 3 bedroom apartment in Bishan close to $2 million, how is the 5 room flat owner in Bishan ever going to afford such a property? The valuation of a 5 room flat is about $600,000. It is a difference of about $1.4 million. It is perhaps too much of a premium to expect Bishan flat owners to afford the upgrade.
However, the development will still sell well. (this is my guess. I may be wrong. We shall see)
Reason:
Some Singaporeans have reached a level whereby they value aesthetics and snob appeal of something over any other practical alternatives. There is a reason why a $5,000 Chanel or Gucci (hope I spelt them correctly) bag will sell when a $30-$50 alternative is available. There is a reason why people splurge on a flashy Ferrari or any other sports car for that matter. It is to show their neighbour that "hey! It's expensive and impractical but I can afford it!" The Singapore market has evolved over time and some Singaporeans value design and aesthetics higher than good value for their money.
Reason:
The developer will have a strong sales force with pushy tactics. There will be "early bird discounts", knocking 10-20% of their list price. They will tell prospective buyers that the discount is for the weekend launch only. If you delay your decision, the price will not be there in the near future. This is prevalent in most of such showrooms. Urgency is created and deals are closed. Let us not forget that the showroom will be extremely grand. This is to invoke the senses to urge the buyer to bring out the check book!Let us not forget that the design of Sky Habitat is rather unique. Perhaps some buyers think that they are willing to pay for such extravagance?
Whatever it is, it will be interesting to see how this landmark project does over the weekend. This is a landmark project in terms of pricing and in terms of design. Barring any governmental rulings and a financial meltdown these few days. Sales figures may surprise a few.
"If you buy things you do not need, soon you will sell things you need" - Warren Buffet
Yours Sincerely,
Daryl Lum
(+65) 9009 8731
visit my website @ www.DarylLum.com
read my blog @ www.DarylLum.blogspot.com
