Let me introduce to 2 different private 99-year leasehold condos in the east of Singapore. Both of them are located within the same street in Pasir Ris.
From the map above, the circled one is Livia condo (TOP in 2011) while the other odd-shaped one is D’Nest condo that is scheduled to hit TOP by 31 Dec 2017.
Recently I meet this client that brought D’nest 4 years ago. He wanted to buy Livia condo actually – that was his first choice. His motivation was that he wanted to have a place that was nearby to his children’s schools.
Unfortunately, he didn’t have enough funds to proceed with his initial objective. The Livia condo he wanted to buy costs about $1.3 million.
As he was still keen to have his family to stay in Pasir Ris, he decided to rent a unit within Livia condo instead.
At the same time, D’Nest condo was being launched in May 2013. Since his 1st choice Livia condo was not available, he decided to consider D’Nest condo instead.
He eventually bought D’Nest in 2013 and rented a unit at Livia condo in the meantime to await the completion of D’Nest condo.
Livia vs D’Nest Condo Values In 2017
My client is renting Livia condo while currently awaiting to receive his keys for D’Nest condo.
He asked me to check whether is his D’Nest condo has appreciated in value?
So I showed him this screenshot where there was a recent transaction of someone selling this D’Nest condo (which will only hit TOP in 2018). As this was private property, you can always have a transaction whenever there is a willing buyer and willing seller.
The happy news is this – My client is now sitting on a paper profit of $100K with his D’Nest condo.
How About Livia Condo – his FIRST CHOICE in a Pasir Ris condo?
Out of curiosity, I decided to check Livia condo transactions.
This was the screenshot below.
Livia condo was last transacted at below $1 millon! If we compared 2 units of equal size, the 2013 Livia transaction at $1.345 million has now dropped to $980,000.
Now when I showed my client this, he heaved a huge sigh of relief. He narrowly avoided this potential loss when he chose to buy D’Nest instead of Livia.
What Lessons Can We Draw From This?
You know, we always hear that buying a property is always about LOCATION, LOCATION, LOCATION?
Here we have both condo developments located within the same street called Pasir Ris Grove.
And while one of them has a loss of about $300K, while the other one has a paper gain of about $100K.
This means while LOCATION is important, it then boils down to to other factors that might has been overlooked.
In this case, we can conclude that LOCATION is NOT the issue.
How about timing? Most of the time alot of people wait to take action – they keep sitting on the decision and never dare to pull the trigger. Here we are comparing the market pricing in 2013 and 2017.
This is not a timing issue – where most people will wait for market sentiments to “improve”.
In any case, WAITING for marketing sentiment to improve will only result in further erosion of your purchasing power due to inflation.
For comparison basis, renting at Livia condo for 3 years cost only $120K. But the depreciation at Livia was over $300K for the same period.
The 2 Key Success Factors For Property Investment That Is Often Overlooked
The first key factor is the ENTRY PRICE. In this case, Livia’s 2013 prices probably has reached its peak price. Those sellers knew it was time to exit after making a certain profit.
In a bullish optimistic market, almost anyone can make money. You just need to buy low enough and exit before becoming too greedy.
But in the current market where the sentiments are mixed, taking the correct steps to ensure a profitable investment…. well it doesn’t look so clear-cut anymore?
This is where past experience and in-depth knowledge on property comes in handy.
The second key factor is the CORRECT PROPERTY. Basically, which product are you purchasing? Is D’Nest far more superior than Livia? Again, there are no clear-cut reasons actually. Livia had older larger layouts while D’Nest was built with smaller new layouts.
What I hope to illustrate and highlight in this example is that the “typical” rules do not always apply. It is far more essential to seek the knowledge of someone who is well-versed and experienced in various property transactions.
When there are so many private condo developments in the market, how are you to decide which one will result in a successful & potentially profitable transaction?
This is especially so when making the wrong choice can be highly dangerous and too expensive to bear.
If you are looking to make a choice in a condo development and have unanswered questions, you are welcome to contact me for a no-obligation consultation.