FREEHOLD or 99 Year Property.pdf

FH or 99 Year Property?
How to determine the
Right One?

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ideas, suggestions, general principles, examples and other information presented here are for
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SCOPE
1. Is it the Right Time with High Interest rate & possible
recession?
2. SPOT the Right Timing to buy!
3. Steps to determine the Right FreeHold Asset.

Many people are
confuse why
prices are not
coming down and
people pay more?

Why Prices Continue to Increase?
1. No Stocks in the market
2. Demand from Upgraders
3. Recent cooling measure effect
4. Future Land cost
5. Inflation

Average annual sales
(2004 -2021) 2,058 3,634 5,641
Take-up rate (years) 2.93 1.48 0.78
Unsold stock fell to
15,805 units
Region CCR RCR OCR
2021 Q1 7,073 7,724 6,805
2021 Q2 6,839 6,706 5,839
2021 Q3 6,880 5,878 4,382
2021 Q4 5,876 4,306 3,972
2022 Q1 5,585 4,612 3,890
2022 Q2 6,036 5,383 4,386
Unsold Stock has fallen to 15,000+ units as of 2Q2022
Source: PropNex Research, URA
36,839
33,673
31,948
30,162
29,149
27,977
26,483
24,296
21,602
19,384
17,140
14,154
14,087
15,805
Q
1
2019
Q
2
2019
Q
3
2019
Q
4
2019
Q
1
2020
Q
2
2020
Q
3
2020
Q
4
2020
Q
1
2021
Q
2
2021
Q
3
2021
Q
4
2021
Q
1
2022
Q
2
2022
UNSOLD UNITS (EXCLUDING ECS)

This year most
number of
HDB Upgraders
More HDB MOP owners renting as they do not
have budget to pay for ABSD and reimburse
back when they buying new launches.

EC Upgraders are coming too in 2022

ABSD has
caused a
reduction in
Resale Supply.
WHY?

Non-landed home rentals in CCR rose by
10.3% - 19.7% since 2017
Source: PropNex Research, URA REALIS (2Q 2022 data up to May 2022)
+13.7% from
1Q 2017
+10.3% from
1Q 2017
+12.3% from
1Q 2017
+16.6% from
1Q 2017
+19.7% from
1Q 2017
+14% from
1Q 2017
+10.8% from
1Q 2017

Non-landed home rentals in RCR rose by
9.7% - 23.2% since 2017
+9.7% from
1Q 2017
+10.3% from
1Q 2017
+15.1% from
1Q 2017
+14.4% from
1Q 2017
+20.4% from
1Q 2017
+23.2% from
1Q 2017
+17.2% from
1Q 2017

Non-landed home rentals in OCR rose by
6.6% - 27.1% since 2017
+11.2% from
1Q 2017
+6.6% from
1Q 2017
+20.1% from
1Q 2017
+20.2% from
1Q 2017
+25.4% from
1Q 2017
+27.1% from
1Q 2017
+22.3% from
1Q 2017

Dairy Farm Walk
Lentor Hills Parcel A
2022
$1,020 psf ppr
+9.1% +12.2%
Canberra Drive (Parcel A)
Canberra Drive (Parcel B)
Tanah Merah Kechil Link
Ang Mo Kio Avenue 1
Lentor Central
2020/2021
$909 psf ppr
Chong Kuo Road
West Coast Vale
Hillview Rise
Dairy Farm Road
Clementi Ave 1
2018/2019
$833 psf ppr
OCR GLS Residential Average Land Prices ($psf ppr)
OCR GLS land prices over the years

Jalan Tembusu
Pine Grove Parcel A
Dunman Road
2022
$1,324 psf ppr
+12.2% +18.4%
Jalan Bunga Rampai
Northumberland Rd
Slim Barracks (Parcel A)
Slim Barracks (Parcel B)
2020/2021
$1,118 psf ppr
Mattar Road
Silat Avenue
Jalan Jurong Kechil
Sims Drive
One-North Gateway
2018/2019
$996 psf ppr
RCR GLS Residential Average Land Prices ($psf ppr)
RCR GLS land prices over the years

Increasing land costs in RCR and OCR
>$2,300 PSF >$2,300 PSF
>$2,400 PSF
>$2,400 PSF >$2,400 PSF
>$2,500 PSF
>$2,100 PSF
>$2,150 PSF
>$2,000 PSF
>$1,900 PSF

Existing CCR Land Sites ($psf ppr)
Source: PropNex Research, URA, Media Reports
Note: Green bars indicate selected sizable collective sales in the region
*Development is Freehold in tenure
*
*
*
* * *
*
*
*

Source: PropNex Research, URA realis
SARS
DOT COM
BUST
GFC 2013 Cooling
measures
Source: PropNex Research, URA, Data.Gov
Average prices of Non-landed new home sales ($PSF) vs CPI
COVI
D-19

Rising costs of new launches across different
unit sizes (Islandwide)
Source: PropNex Research, URA REALIS

Non-landed new home sale market
(Average sales prices)
SARS &
DOT COM
BUST
GLOBAL
FINANCIAL
CRISIS (GFC)
COVID-19
PANDEMIC
Source: PropNex Research, URA Realis (*2Q 2022 data up to 28 June 2022)
COOLING
MEASURES
Jan 2013 ABSD + LTV
June 2013 TDSR

Interest Rates are
Increasing, should we
buy when Interest Rate
is Low or High???

Correlation between PPI and Interest rates
1 2 3 4
2016/17
2018/19

LAKEVILLE PARC RIVIERA –
SOLD IN 2016/17

Seaside Residences & Stirling Residences
– Sold in 2018

The Smart Leverage on the Bank
Estimated Interest for 3 years = Est $15K
base on progressive stage 5

The Smart Leverage on the Bank

People Should not Focus on
Expenses, focus on setting aside
money to buy and accumulate assets.

Inverse relationship between interest rates and median rentals
from 2011 and 2020
Source: PropNex Research, URA Realis (rental data for 2022 up to May 2022), ABS

Question should we
buy new or resale?

Source: PropNex Research, URA Realis (*Q2 2022 numbers up to 30 April 2022)
Median Resale Prices ($PSF)

$1365psf
$1198psf
$1338psf
Costa Del Sol Transaction
$1500psf

Twin Vew
Launched in
2018 when
Interest Rate
is 2.5%

Should we buy when
Volume of Transaction
is high or low?

New home sales volume
4222
2011 – 2020 10-Yr Average: 11,503 units
2001 – 2020 20-Yr Average: 10,559 units

$1305psf
$1741psf
$2325psf
$1638psf
$436psf
$584psf
$1020psf

Non-landed home sales volume
(2022 vs 2021)
-45.4%
YOY -24.4%
YOY
-33.9%
YOY
-31.1%
YOY
-22.7%
YOY
-44.4%
YOY
+7.1%
YOY

Questions
• Do you agree that FH should be price more
expensive than 99 by 20 to 30% more in the same
zoning?
• Will you buy a FH or 99 if the price for FH is same
or cheaper than 99 in the same zoning?

Freehold Premium
Source: Business Times, 8 Sept 2021

How to SPOT
using GAP
Analysis to
determine a FH
Development

Case Study on how
to SPOT Property
using the Right
Strategy.
Brand New FH,
CCR, D10, MRT,
from $25xxpsf

Apply the Right Strategy
1. Safe GAP
2. Potential Upside
3. Risk

Assume same zone
99 Year of a New Launch
FH of a New Launch
Both prices are very close, which
one will you buy?
vs
99 or FH?

New Launches for 99 Years in CCR are
selling above $24xxpsf to $38xxpsf

New Launch FH Transaction in D9 & D10

CCR New Launch (99) Transacted? Avg $28xxpsf
Hyll @ Holland CCR (FH) @ $25xxpsf
CCR New Launch (FH) Transacted? Avg $3xxxpsf

Assume same zone
Price of a RESALE (FH)
Price of a New Launch (FH)
Both prices are very close, which
one will you buy?
vs
Resale or NL?

Resale – Leedon Residence Recent Transactions

Resale - Rivergate Recent Transactions

CCR Resale (FH) Transacted? Avg $28xxpsf
Brand New Hyll @ Holland CCR (FH) @ $25xxpsf

Assume Different zone
Price of a RCR New Launch (FH)/ (99)
Price of a CCR New Launch (FH)
Both prices are very close, which one
will you buy?
vs
CCR or RCR?

Recent RCR New Launch Transaction

RCR New Launch (99) Transacted? Avg $25xxpsf
Hyll @ Holland CCR (FH) @ $25xxpsf
RCR New Launch (FH) Transacted? Avg $25xxpsf

Gap between CCR Non-landed FREEHOLD vs 99-yr LH
average new home sale prices ($PSF) have been shrinking
SARS &
DOT COM
BUST
GLOBAL
FINANCIAL
CRISIS (GFC)
COVID-19
PANDEMIC
COOLING
MEASURES
Jan 2013 ABSD + LTV
June 2013 TDSR

Gap between CCR and RCR Non-landed FREEHOLD average
new home sale prices ($PSF) have been shrinking
SARS &
DOT COM
BUST
GLOBAL
FINANCIAL
CRISIS (GFC)
COVID-19
PANDEMIC
COOLING
MEASURES
Jan 2013 ABSD + LTV
June 2013 TDSR

$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
$1,600
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
1Q
2022
2Q
2022
Jul-22
Price
Gap
Average
Unit
Price
($PSF)
Non-landed new home sales average selling price ($PSF)
(CCR vs OCR)
Gap (CCR-OCR) CCR OCR
Shrinking price gap between CCR and OCR new home sales
$734
Source: PropNex Research, URA REALIS (data up to 24 July 2022)
$1,403

$2,278
$2,206
$2,806 $2,816
$2,560
$2,728
$2,798 $2,785
$2,851
$2,801 $2,786 $2,778 $2,807
$2,000
$2,100
$2,200
$2,300
$2,400
$2,500
$2,600
$2,700
$2,800
$2,900
$3,000
2016 2017 2018 2019 2020 2021 Jan-22 Feb-22 Mar-22 Apr-22 May-22 Jun-22 Jul-22
CCR non-landed new sale average unit price ($psf) by year
Stabilizing Average New Home Prices for CCR
CCR average new home sale prices declined in 2020 but has since rebounded in 2021.
As of July 2022, average new sales prices of non-landed homes in CCR is stabilizing around $2,800 psf
Source: PropNex Research, URA REALIS (data up to 24 July 2022)

Latest OCR New Launch Sales
(AMO Residence) @ $2113psf

Latest RCR New Launch Sales
(Liv@MB) @ $2416psf

RCR New Land Bid
10% Profit = $2264psf

Expected Average Price $PSF for New Projects in
2022 (Based on PropNex Projections)
Source: PropNex Research
Region / Property Type 2015/2016 Pricing
($PSF)
2017/2018 Pricing
($PSF)
2019/2020/2021
Pricing
($PSF)
2022 Pricing
($PSF)
Core Central Region (CCR)
2,000 - 2,500 2,600 – 3,200 2,600 – 3,500 2,500 – 4,000
Rest of Central Region (RCR)
1,400 – 1,500 1,500 – 1,700 1,800 – 2,400 2,000 – 2,600
Mass Market Condo (OCR)
950 – 1,000 1,100 – 1,300 1,400 – 1,800 1,600 – 2,000
Executive Condos(ECs) 750 800 - 830 1,000 – 1,150 1,100 – 1,250
HDB Resale (4 Room) 400 – 700 400 – 700 400 – 800 400 – 800
BTO 4 room 250 – 400 250 – 400 250 – 500 250 – 500
OCR 99 Years – Cross $2,000 psf officially or even higher
EC – cross $1,300 psf or even higher with new price tag

Resale 99
Years Txns
$24xxpsf to
$30xxpsf
Resale FH
Txns
$25xxpsf to
$45xxpsf
New Launch
99 Years Txn
CCR
$24xxpsf to
$38xxpsf
New Launch
99/ FH RCR
Txns
$24xxpsf to
$32xxpsf
Transactions at a Glance in CCR
Prices are going at $25xxpsf
for a FH, Brand New, walking
distant to MRT

FREEHOLD or 99 Year Property.pdf

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