Singapore Buyers Got Misled Into Investing Into Malaysia Johor Properties Under Private Lease Scheme- Slim Hope of Winning Civil Suit.

It is shocking when I read the news that some fellow Singaporean buyers are in legal dispute with a Malaysian developer over the form of ownership of Johor condo purchases. Apparently, these fellow Singaporeans have bought into a property under a "Private Lease Scheme (PLS)" that is unique in Malaysia but not in Singapore property market. It is akin to being a tenant as all the rights associated with ownership are missing and the only rights is to be able to stay in the condominium apartment for 99 years. You need to seek permission from the Developer to sublease or re-sell the unit.  

1. What is PLS?

Under such a scheme, the Malaysian developer retains ownership of the property and you essentially have a long-term rental agreement and NOT TRUE ownership. One thus does not have full ownership rights such as voting on condo management or selling the property freely. 

2. Where is the Disputed Residential Properties?

According to the Edge, some residential properties in Medini, an area within Iskandar Puteri in Johor, were sold in 2013 and 2014 under a PLS and not as 99-year leasehold condominiums. 

3. Statutory Claims Limit in Civil Suit as well as Signing the Sales & Purchase Agreement with Eyes Wide Open

3(i) Considering now is 2024 and that this matter is only raised up now, there will also be an issue of statutory expiry of civil claims lawsuit which is 6 years in Malaysia. Can affected PLS Singaporean buyers even file the suit in the first place on being misled into paying for a PLS instead of a normal purchase?

3(ii) Also, even if they raise a claim successfully, how do these buyers argue their way out of an agreement that they have signed with eyes wide open in the first place?

Parting Thoughts

I thought that investing into Malaysian assets can become extremely risky if one is not careful in the due diligence process. Nonetheless, even if one is very careful, we should not forget about the constantly changing policy by the Malaysian government (depending on who is in power). We have seen the aftermaths of the 1998 CLOB issue where many Singaporeans lost their hard earn money overnight due to political risk. We have also seen Forest City which was marketed to many folks in China and Singapore as a 2nd residential home under special visa stay programme but which Mahathir's government subsequently reversed hence turning it into a ghost city. 

Moreover, even if there are capital gains of 100% in say 10 years, the depreciating currency based on historical trend against SGD will mean that the investment gain will be be wiped back to zero. Therefore, buying into Malaysian property is definitely more for staying or living in rather than as a form of investment. 

To put it bluntly, I think that the affected Singaporeans on PLS have very little room to maneuver to get the ownership title restored and will just be incurring more unnecessary legal fees expenses. The only stakeholder that will surely benefit the most will be the Malaysian lawyers. 

Why Tan Kin Lian Keep Talking About Buying Apartments in Malaysia Forest City? Is He Out of His Mind?

 

Not sure why my Facebook will frequently show me Tan Kin Lian’s post. He has been talking about Forest City I recalled from 2017 till now. So what if Forest City is freehold condo and cost just S$300K relative to S$1.5Mil+ Singapore condo right now? Beside the issues of foreign exchange depreciation risk as well as ghost town issue, the MM2H (Malaysia My Second Home) scheme is also fraught with the ever changing political climate risk. One moment Malaysia politicians welcome foreigners like Singaporeans and Chinese and then the next moment they may just decide to ban foreigners or raise up the anti-foreigners sentiment to score political points. 

Hence I am shocked that he even mentioned that it maybe a good idea for retirees to sell one’s property in Singapore and then use part of the proceeds to buy an apartment in Forest City. One will always be a second class citizen in other countries and that is the cold hard truth. 

Interesting Posts of the Week In Our Blogosphere Community.

Hi Folks, this is going to be a short post for sharing. Recently came across 2 interesting and thought provoking posts in our Blogosphere Community:

1. "Coping With The 32% Decline In Dividends" (By Towards Barista FIRE)

I have been following Barista Fire here as both of us subscribed mainly to the dividend investing approach and he has been generous online in sharing his journey towards financial independence. Our mate from “Towards Barista Fire” has shared some strategic move execution in order to address the inevitable problem of dividends cuts that will sooner or later arise due to uncontrollable marco-economic events such as the (i) 2020 COVID pandemic on most businesses and (ii) the 2022 sudden interest rate hike environment that lead to devastating impact on REITs dividend distribution. 

For those who are about to embark on “Barista” Fire, it will be good to have a quick perusal on the 2 strategies that he has mentioned in particularly on the 2nd strategic execution method to address the volatility or lumpiness in the dividend investing approach- please see his interesting thoughts and post here. 

2. "Just sold at record high!" (By Property Soul)

Nice post and warning given by Property Soul especially with regard to the “myth” from news media that Singapore properties has always appreciate in value and keep setting new record high prices. She has also shared the forgotten mid-1990s era where many over-zealous property buyers bought at the peak of the property cycle and then took 20 years to break even their purchase. In addition, all the "hoo-hah" of ever record property selling price that appears in the media one should take it with a pinch of salt. 

I am apprehensive about the indomitable confidence of some property agents and property YouTubers in the buy and upgrade private properties to make money and achieve financial independence. Apparently, Singapore property will always appreciate in prices. It is also asserted that the purchase of 2 private properties (1 for own family living and 1 for rental investment income+ capital appreciation) is a “proven” way to succeed in Singapore. 

Parting thoughts

My current wishlist is for interest rate cuts to start materialising soon from the US Federal Reserve before most of my holdings in REITs start to disintegrate into oblivion. Powell has recently told the House Financial Services Committee that he expects interest-rate cuts to come this year. He echoed those comments on Thursday before the Senate Banking Committee, saying that cuts "can and will begin" this year- so let's keep our fingers crossed.

Singapore Property Market Will Always Rise Fallacy And What Many Property Gurus Never Warn You.

It has been a very busy 2 weeks meeting up with clients and visiting project site. With age catching up on me, so does my energy level it seems and one gets tired very easily....haha. Today I am going to touch on the gravity defying crazy Singapore property market as I find it shocking that there are still many young couples rushing into the market and snapping up mass market condo Outside Core Region (“OCR”) for S$2Mil plus 3 bedder at 947sqft. Worst still, some are playing the buy 1 condo for (i) own stay and another 1 for (ii) investment game and heavily leveraged up. Do skip reading further if one is upset by this topic which is just me venting my personal thoughts.

1. Fallacy belief that in Singapore, prices of property will always shoot up and never drop due to “scarcity” of land.

Many people also believed that for Hong Kong with limited land space, its property price will keep going up. However, HK property price has already slumped to its lowest in 7 years with more than 20% decline since its peak of September 2021. Property market is cyclical in nature and all countries undergo boom and bust in terms of its economy-this is the natural rule of the universe. Nothing flourish perpetually- take a look at China which escaped the 2008 Global Financial Crisis relatively unscathed but currently facing a bear market for its 3rd year with rapidly worsening unemployment among its fresh university graduates.

Singapore property market has already been in a boom status for more than 14 years in particularly the recent run up in price created the impression that buying property is a sure way to generate lots of wealth in Singapore. Once the economy tanks and one gets retrenched or paycut, it can lead to the ultimate financial disaster of a life-time. 

2. Look at the Standard Terms and Conditions ("STC") of Borrowings instead of just the T&C inside the letter of offer from the banks for property financing.

Unless one is super rich, most middle-income folks are actually taking up banking bank loans of up to 75% of the property’s market value. For S$2Mil OCR private property, there are many folks taking up loans of S$1.5Mil which seems to be the current norm.

The interesting part here is that if the Singapore property market were to correct by 10% to 20% downwards in valuation, this will mean S$150K to S$300K diminution in property value. Theoretically speaking, this in itself will trigger the Security Margin breach clause and the bank can actually choose to request for immediate top up of the “deficit” or exercise its right to force sell one’s property at the worst possible market doldrum time. Many folks seemed to have missed this critical T&C which is stipulated in the "Standard Terms and Conditions Applicable to Banking Facilities" accompanying any letter of offer by the bankers.

Extract from DBS STC

So far, I have not seen any banks exercised this clause during crisis, but having it is like the Sword of Damocles hanging over one's head. Note that this is actually worse than buying stocks using margin financing as most folks are super over-leveraged when it comes to property which is perceived to be safer or carry the same risk as holding stocks but as you can see above, this is strictly just a fallacy- property purchase using 75% leverage is highly risky,  

Parting Thoughts

Housing to me is just for a roof over one's head. Buying into a property at the wrong time can lead to life-long financial ruin. Personally, I will diversify my investments into other asset classes rather than wholly going into holding on to multiple properties. Also not a fan of UK properties and those companies such as I Quadrant. For now, I hope that the musical chair continues and don't stop. Take care and good luck!

(P.S: Updated 29 Jan 2024- During the 1990s dark period of Asian Financial Crisis, apparently, Singapore banks did ask their client to top up cash or face foreclosure due to significant decline in property valuation- please see below comment for sharing by Bro Henry. I thought that this is a rather good reminder for folks to consider whether they have covered all areas in their own property financial purchase decision.) 

Interesting Postings On Websites & Blogs Over the Weekend- 2nd Investment Property and Flaws in General Dividend Investing Mindset.

I thought that it is rather interesting to see 2 "related" posts over the weekend. One post is on a couple in their 40s who earns S$280K per annum and thinking of getting a bigger second private property for own stay and then letting out their existing property. The thing is that there seems to be some folks who are keen to pursue their dream of owning a private property for own stay and then having another private property for passive income purpose. The other post is by Kyith from Investment Moats over the weekend on flaws to watch out for in adopting the Dividend Income approach for retirement which makes a lot of sense. There is a part from the post on some folks who based their retirement entirely on the local banking trio (DBS, OCBC & UOB) for dividend income and exposes the danger lurking in the corner for doing so.

What is common/related among the 2 posts?

Rental income and dividend income are similar in the context that for retirement planning, both serves as a "passive income stream". So the point that I am making here is that for folks whose main future income stream comes mainly from one single retirement source which is a local investment property, there is simply just too much concentration risk.

Private property prices in Singapore is absolutely crazy for me, let alone buying a second property and taking up huge mortgage in order to derive a rental income stream from it and then get saddled in  over-concentration country risk (unless one is super rich to buy many properties in different countries and also other form of investments).

Recently, I met-up an old buddy for dinner-he was from my University days who lived in a HDB with his family. He got too much cash on hand from his bonuses over the past few years. As he does not want to invest in unit trusts and stocks which is "too volatile and risky for him", he decided to opt for a "safer and proven" investment route, that is, a 2nd property for investment in district 10 (1 bedder with  half of it financed via mortgage), jointly invested with his wife, at cost of S$1.2 Mil- imagine the ABSD of 12% on that property which would have been a whopping S$144K donated to the Singapore government. 

Parting thoughts

I thought that what Kyith has posted is a good wake up call for all not just in dividend investing but also those who dabbles solely in rental properties for income. How many advertisements or You-Tube videos have we seen thus far that calls for de-coupling and the purchase of second private property to make capital gains and rental income? 

Please see the following posts:

1. We Make S$280K Per Year And Are In Our 40s. Can We Afford To Decouple And Buy A Second Property? - by "Stack"

2. 9 Strong Points to Why I Say, the Dividend Income Retirement Mindset is Not a Good Retirement Risk Management Model.- by Investment Moats

Selling Away All Stocks On Hand To Buy Second Property In Singapore For Investment.

Singapore property market earth defying stance is simply incredulous. It is so incredulous that many folks are telling me that it is best to sell away all stocks on hand to buy a 2nd investment property in Singapore.  Look at Tanah Merah, the latest integrated development Seneca Residences is selling at a whopping S$2,072psf on average on launch day itself. AMO Residences in Ang Mo Kio also over S$2,000psf.

 

Then look at the lackluster performance of equities over the past 3 years, no wonder many folks are lamenting that buying and holding property is way better than holding stocks. Even the rising interest rate environment to combat inflation is unable to contain the exuberance of the property bulls of Singapore.

Personally, I am not joining the fray. The only time I will consider property as an alternative investment is when our government removes the Additional Buyer's Stamp Duty ("ABSD") which will be a clear signal that the property market is finally in the doldrums. Or even better, if you are one of the three lucky winners of the S$12Mil Toto Hong Bao Draw last week, then the current out of the world property selling price does not matter anymore. 😅   

Zyanya Review- City Fringe Freehold Condo At Geylang Food Haven And Near MRT Station With Incredulous Price Of S$1,700psf.

While I was on my way to lunch in the Geylang area, I walked past the Zyanya showflat located in a shophouse and thus decided to drop in for a quick visit. Zyanya is a freehold 34 units boutique condominium located in the eastern city fringe location of District 14. This is definitely one of the nearest freehold condominium to Aljunied MRT station. You just need around 5 to 6 minutes to walk from Geylang Lorong 25A to the MRT station. Given the S$2,000plus psf new launch at Lentor Modern and AMO Residence at the Outside Central Region (OCR), Freehold Zyanya at 1,700psf at city fringe (Rest of Central Region- "RCR") appears to be a great steal. In addition, 99 years leasehold developments Sims Urban Oasis and the latest Penrose condominiums in the vicinity area are already asking for S$1,700psf to S$2,000psf. 

Front view

Zoom in front view-level 2 is the mechanised carpark

Side view

Backview

Besides the attractive price on offer for Zyanya, I am going to list down a few other highlights of staying in this well-known city fringe area:

1. Food Haven

Geylang is highly regarded to be one of Singapore's hot spots for famous hawker stalls and street food. One can always savour the famous Geylang fried prawn noodles and Geylang Frog porridges near the comfort of one's home. 

2. Excellent location well connected to other parts of Singapore 

5-10 minutes drive to Kallang Wave Mall, Suntec City, Bugis Junction and City Hall via Nicoll Highway. One can also get onto major expressway PIE or KPE within 5 minutes 

3. Units layout good but unfortunately some stacks facing West and will have afternoon sun

I will put up some of the better 4 bedder and 3 bedder layout below. For 1 bedder and 2 bedder will not be discussing here as the smaller bedder units have already been mostly snapped up by investors that I reckon are looking to rent them out.

4 Bedder + Study-1302sqft

The above is one of the best layout in Zyanya with spacious living room and even space set aside for a study area that can sit two people. Unfortunately, all the bedrooms are facing west and will get the afternoon sun which means that when you return back home from work, your bedroom will feel like a sauna. Since young I have a very low tolerance level for heat- the best I can accept is bedrooms with east facing which only gets the morning sun but this is my own personal preference. I do know of friends who like the sun a lot. 

4 Bedder-1195sqft

The 1195sqft D1 Type layout is my personal favorite as it is the only one with all bedroom facing the east (only morning sun issue). Its relatively smaller quantum for a 1195sqft means approximately S$2Mil for a 4 bedder configuration at a city fringe location.

3 Bedder+Study-1044sqft

Overall layout for the above 3 bedder + study is not efficient and appers to be odd shape to me. The dinning area is also tiny for a 3 bedder. Good thing for this layout is that there is a small area reserved as study area. Balconies are tiny. My thoughts are to pay a bit more to get the 4 bedder instead.

3 Bedder-893sqft

The compact 3 bedder layout for Zyanya is a bit strange. I thought that the junior master bedroom concept with space wasted for an attached bathroom wasted- it could have been better use for a larger kitchen area or even a small study area. Also, all bedrooms are west facing and will encounter the afternoon sun issue.

4. Limited facilities as only 34 units boutique

This is a small development hence of course, the facilities available are lesser than large scale development. But it does have a decent small lap pool of around 13m in length. There are a total of 28 carpark lots which should be more than enough given that there are 1 bedder and 2 bedders units whereby the owner bought for investment purpose as well as being near Aljunied MRT station, there is really not a need to own a car. But I guess the mechanised carparking system maybe an issue here especially if it breaks down  frequently after a few years of wear and tear- it will depend on how well it is being maintained. 

One should also take note that with only 34 units, managing the Management Corporation Strata Title ("MCST") and balancing the mgt funds book will not be as economical in scale relative to bigger developments with 300-500 units. For folks who purchased for own stay, he or she may even have to roll up their sleeve to join the Management Committee of the MCST to take on the laborious job of dealing with contractors, ensure maintenance is well taken care of as well as ensuring statutory compliance.

Zyanya lap pool at 3rd level.

Parting thoughts

If one is looking to resell their units in the short-term to mid term, then one has to be careful whether one wants to buy into a boutique development with only 34 units as there will only be a few transactions available for benchmarking during future resales. But if one wants to stay in the area for a longer term and to get a freehold city fringe home at an attractive entry pricing, then Zyanya may just be the right choice.

The Real Reasons Why The Singapore Government Is Stopping Private Property Owners From Downgrading to Resales Public Housing.

First and foremost, this is just a personal opinion piece in case I am going to be shot at by supporters of the Men in White for what I am about to blog here. As usual, I am flabbergasted that our Singapore Government has again come in to make life hard for many ordinary Singaporeans by meddling in public housing policy. This triggered off bad memories with the horrible government policies in public housing just before the 2011 General Election. My friends and I are the generation that had Mr Mah Bow Tan as the Minister of National Development and suffered terribly under the unreasonable housing policies in place then. 

1. BTO flats supply woes
Build to Order Flats (BTO) will only start construction once there is sufficient demand then due to previous bad experience of Mr Mah from excess supply of completed flats. For unoccupied flats after some time, tiles and other finishing apparently tend to spoil easily hence it cost the HDB additional money to make good I was told. Hence building only once there is "confirmed" demand will moderate this. 

As a result, many Singaporeans during those dark days have a hard time getting their flats even after numerous rounds of balloting-it was pretty depressing then. Of course, I understand that there are currently many couples still struggling with the balloting for new flats, however, the current balloting odds have actually improved a lot these days. We have Mr Khaw Boon Wan who took over in 2011 to thank for improving the supplies of public flats after years of draconian slow building under the previous hugely unpopular Mr Mah. 

2. Combined income for qualification of public housing at S$8K per mth for 14 years absurd.

The income ceiling was another huge issue then at S$8K per combined income of a couple. This S$8K per month was not realistic and had been there for more than a decade. Surely, Mr Mah Bow Tan heard of inflation and salary adjustments? He stubbornly refused to increase the eligibility to qualify for public housing despite being asked by the Opposition MPs then as well as challenges from the ground. The reason he gave was then how do we balance the books with extra subsidies given out if the pool of eligible Singaporeans increases. Strangely, he was forced to eat his own words when after the 2011 General Election (where housing has become a huge issue and the ruling PAP garned its lowest vote share of 60.1%), the government finally increased the limit to S$10K. As a matter of fact, the combined income limit ceiling kept getting revised a few rounds  subsequently and is currently at S$14K per mth which is way above the previous long standing S$8K per mth.

The income ceiling revision came too late for many of my batch of friends. Some were forced to buy resales flats and some were forced to buy costly private condominiums. The HDB stance then was simple: if you earn above the income ceiling means you are "rich" hence should not ask for public housing. If you still insist on more affordable public housing, then can always get from the resales HDB market instead of a private property. I find this view very bias and silly. Why is it that many people can get new and affordable HDB flats while those who exceeded slightly the income ceiling of S$8K should only get resales and older flats if they plan to be financially prudent instead of splurging on private properties?

3. Public housing and subsides are to help Singaporeans who are not rich- but why need to build Executive Condominiums with luxurious facilities like private pool, private gym, private function room with tax payers' money?
The Executive Condominium ("EC") scheme is one of the most hypocritical public housing policies I have ever come across. HDB is supposed to help lower income Singaporeans. If so, why do we need EC scheme in the first place?

Let's call a spade a spade. EC is a luxurious property with many facilities and most new 3 bedders cost over S$1.1Mil. If certain batch of Singaporeans crave for luxurious facilities, then they should go and buy them from the private developers without any public grant. The public grant should go back to those who really need them when they buy new BTOs to help them lighten their burden for having a simple roof over their heads. Seriously, I do not see why public funds should be used for subsiding luxurious private properties "to meet the rising aspirations of Singaporeans". In addition, the space set aside for swimming pools and tennis courts in ECs could also have gone back to building more flats on the plot of land being released to help more people struggling with making ends meet in Singapore.

4. Latest government property cooling measure-wait 15mths if want to downgrade to resales HDB

Back to the main issue of the Singapore government imposing a 15mths waiting period before a private property owner can downgrade and buy a resales HDB flat (if you add in extension request by the HDB owner and your own renovation, this can become 24mths in total). There is nothing wrong with Singaporean households that want to downgrade to a resales flat especially if they already did their Maths. Some wanted to stop paying outrageous monthly mortgages on their private properties especially during times of relentless variable interest rate hikes by the bankers while others wanted to cash out for their early retirement. These folks did nothing wrong in forgoing their private luxurious amenities for prudent financial planning. 

I thought that the government should work instead on building more BTO flats which will moderate the demand for resales flat as I know of people who are still struggling at the ballots for new flats and have to look at resales HDB market. Also, we are facing an imminent recession- Singapore is an open economy and what is happening in the United States and China now will inevitably affect our property market adversely eventually.

5. Real reasons why the Government is stopping private property owners from downgrading to HDB

By enacting such unreasonable cooling measure, it appears more to me that the government seems to want to prevent early retirement of folks or to stop people from achieving financial freedom. Once people stop being slaves to their bankers, they will have more time on hand to scrutinize and criticize government policies. Best way to divert people's attention is to make them extremely busy with their bread and butter job to service outrageous mortgages in land scarce Singapore. 

Parting thoughts

So far, we have not seen the roll-back of the numerous previously implemented cooling measures and it looks like the new policy of 15mths waiting period for downgrading by private property owners to resales property is here to stay for the long term. I think that such blanket policy implemented is unfair as it punishes individuals who have decided on financial prudency as well as those private property owners who are already facing financial hardship due to their own personal unique financial circumstances. Personally, this terribly planned policy in the face of upcoming global market turbulence is blatantly absurd. 

AMO Residence Over 98% Sold In A Day- Singapore Property Market Shining Bright In spite of Economic Downturn. Will You Pay S$6K To Service Your Mortgage in Outside Central Region?

AMO Residence located off Ang Mo Kio Avenue 1 ended the weekend of 23 July 2022 with 98.1% of its 372 units all sold out. The average price of units sold is at incredulous S$2,100psf. What a crazy price for Ang Mo Kio. UOL Group and its partners are now laughing all the way to the bank. I can still remember back in 2010 when Centro Residences debuted at Ang Mo Kio Centre- it was going for  an eye popping S$1,200 psf by Far East Organization during launch and many people were saying that is so exorbitant and a record price of over the psychological  barrier of up to S$1,000 psf for sub-urban area. Well, 12 years later, prices for new launch condo at Ang Mo Kio now apparently hit S$2,100 psf. This is paying close to S$2Mil for a compact 958 sqft 3 bedder unit.

Using a loan of S$1.5Mil spread over 30 years for a young couple along and assuming a 2.5% interest rate, this will mean a monthly payment of S$5.9K which means each husband and wife need to cough up around S$3K individually each month to service their mortgage. Total interest paid over 30 years will add up to S$634K.

2.5% borrowing rate simulation

If interest rate continues to increase to say 3.0%, it will mean a monthly servicing of S$6.3K per month. Total interest rate paid over 30 years will be S$777K- I think it is time to buy more shares of DBS, UOB and OCBC listed on SGX which seems to be a better investment. 

3.0% borrowing rate simulation

Well, such pricing is not for the faint hearted folks. Down payment and stamp duties will mean half a million upfront in cash and CPF and not to mention in the current climate of rising bank borrowing rates, it certainly takes great courage to sign the option to purchase. According to property agents, the success of AMO Residence shows that "the market is hungry for attractively priced homes in good locations". Property prices is still a good hedge against inflation according to many people. I am not sure on that. However, I do hope that job losses are kept to a minimum in the upcoming economic downturn and everyone gets to keep their bread and butter. Else it will be extremely painful to support a S$6K per month mortgage. 

Property Investments Seminars Advertisements On YouTube Driving Me Nuts

Not exactly sure what is Marko (and/or something) property investment programme but I was quite disturbed to see frequent Youtube advertisment of it popping out telling me the story from this crying woman. Basically, a woman broke down into tears saying that thanks to Marko (and/or something), she finally managed to move out of her public HDB flat and got to stay in a private condominium as well as to escape the "rat race". Is living in a HDB flat so horrible for her that she broke down into tears just recapping it? Or was it tears of joy from earning lots of money from this property investment programme and now finally flushed with money to buy a private condominium? 

From the advertisement, there is another 22 years old man that says thanks to this programme, he managed to own 2 properties "at such a young age". I think it is better to be modest than to boost about owning multiple properties. I seriously do not think this young man can own 2 properties at such a young age (unless he is really born with a silver spoon in one's mouth). Simple common sense indicates that he must have borrowed tons of money from a bank to finance his properties. Whether the 22 years old man owns 2 properties or the bank is the de facto owners of the properties is only a figure of speech. If the marco-economic conditions meltdown totally and banker came to seize his property for a forced auction at the worst possible time, this young man will be in financial ruin and working as a rat (as aforesaid mentioned by the crying woman) in the rat race for the rest of his life paying off millions in bank loans.

Who dare wins?

I reckon that this Marko (and/or something) investment programme is something similar to the well known iQuadrant teaching people to use leverage to purchase multiple industrial properties. The eventual realised return can go up to 30%-40% per annum if everything goes smoothly in finding undervalued industrial properties for rental out and letting tenants help you pay for the properties while awaiting capital appreciation. Well, high risk high return. Obviously, there are people who have made tons of money from employing such strategies taught by the gurus from these properties investment programmes

Parting Thoughts:

Who dare wins is what I believed in. However, I do disagree with the downplaying of leverage to such an extensive extent on industrial properties to portray them as manageable low risk. 

Personal Updates: Singaporean Venture Into Cambodia Property Investment Horror Story

I guess the horror story began back in 2014 when my wife came back home one evening and told me that she had purchased a USD220K 2 bedroom condominium unit jointly with her sister in Cambodia at a road show. The property agent (let's call her Ms M) was a close friend of both of them and has extolled the virtues of overseas property investment because the quantum involved is so much cheaper than getting an investment property in Singapore. Ms M is a successful property investor who currently owns 3 condominium units in Singapore and has accumulated a high net worth from buying and selling Singapore properties. She has also invested in this particular Cambodian project being jointly developed by Singapore based Oxley Holdings and their Cambodian partner.

My initial reactions

I was rather shocked as my wife did not consult or discuss with me on this big ticket item purchase. Her argument then was that she was using her own money. Basically, it works like that, the money she earned is her money but the money I earned is also her money and need to consult her on major item purchase together (unfortunately this is a 1 way street and how it works in my family.....haha).

In addition, Ms M had mentioned 5 "convincing" reasons to wifey for recommending the purchase:

1. Cambodia is an upcoming country in development;

2. The quantum involved to get a condonimum in Cambodia is lesser than a 5 room HDB flat;

3. Oxley Holdings is a well known developer listed in Singapore;

4. The are 3 years of guaranteed rental at 6% per annum by Oxley Holdings & partner;

5. Ms M herself had already purchased 1 unit of the new project in development.

1. Beginning of horror story- USD bank borrowings is around 8% at that time.

The financing rate quoted by the  Cambodian banks for bank borrowings is incredible. No one sane will dare to borrow from them. This seems to have caught my wifey and sister in law by surprise. When they called up to ask Ms M, she brushed this away as saying that she thought the purchase amount is not a large sum and she has all the way plan to finance it by paying in cash for the instalments and assume they will also do that hence it did not cross her mind.

No choice, wifey and sister in law coughed up the USD220K over in hard cash over the course of the work in progress till completion of the project.  

2. Property agent Ms M does not seemed to have reminded her clients/friends that there is withholding tax in Cambodia. 

The selling point seems to have been overemphasis on the 6% guarantee rental by the developer for 3 years. Netting off withholding tax on rental, the amount repatriated is a lot lesser. Also, future capital gains (if lucky and not a loss) made by non-residents is subjected to withholding tax of around 20%. 

3. USD rental return subject to much unfavorable forex conversion costs 

To opt for cash received in SGD back in Singapore leads to additional losses in forex markup. The local bank exchange rate is also another interesting weird point. I told my wife and sister in law to open up USD bank account and then use SingX (started by an ex-Citibank banker) for the conversion to reduce the forex conversion loss due to inferior rates.

4. Guaranteed rental scheme ending soon- Oxley Holdings will not renew it due to poor market conditions.

The rental guarantee scheme will come to an end as informed by developer upon its expiry as COVID has wiped out tourism and many expats and the Cambodia economy is in a virtual standstill. An alternative profit sharing scheme maybe rolled out pending indication of sufficient interest from other Singaporean owners to help pay for the monthly maintenance expenses. 

Also, who will help go to the Cambodian government agency to pay for property tax or other administrative matters? 

I guess the matter of exit plan and contingencies were not addressed during the purchase. "Buy first then see how later" will normally lead to eventual headaches.  

5. Lack of networking to find trustworthy property agents in Cambodian market

In the event that the developer "washed their hands off" the renewal of the rental management scheme, investors will need to either find their own tenants or sell off the property on behalf. The problem is the property agent market in Cambodia is not well established yet and there seems to be a lack of regulation. So how does one find a trustworthy agent? 

Language is also a major barrier for effective communication with the Cambodians agents.

As for selling off the property, I was told that even if one lowers the price significantly, there is currently not a lot of expat buyers due to the COVID situation in Cambodia.

Parting Thoughts

I think that property investment in a developing country is a real headache and will not recommend it...simply too much hassle and risk. For those who also have investment properties in Cambodia, maybe can help share your thoughts on the current predicament and possible solutions or networking referral of a good property agency in Cambodia. 

A Game Of Thrones in Condominium Disputes And Filing of Case With The Singapore Strata Title Board

This is a follow-up posting from the last one on "Problems With Living In Singapore Condominiums- Not As Glamorous As One Think It Is". When communication breaks down between residents and the Management Committee of the MCST, all hell breaks loose, in particularly, with many egos being at stake, some estate issues will definitely escalate out of control. This is where a group of very pissed off resident group will get together to campaign to overthrow the incumbent Management Council team by mudslinging on social media and tit for tat went on between the 2 parties This is also whereby some residents will file a case with the Strata Title Board ("STB") to take on their own MCST.

1. Procedure of Filing to STB and whereby all residents gets punished from depletion of management funds in the legal dispute.

From my last posting, one typical problem will be whether 2nd and 3rd car can park for free issue in most condominiums  or whether the MCST can enforce stringent wheel clamping rules against fellow residents.

The proceedings at Strata Titles Boards consist of 4 main stages:

(1.1)  Application: The Applicant will file an application against the Respondent.

(1.2) Mediation: All parties (Applicant and Respondent) are required to attend mediation session(s) fixed by the Board. The matter may stop at mediation if parties resolve the dispute at that stage.

(1.3) Hearing: If the matter cannot be resolved at the mediation stage, the Board will give directions to the parties to prepare for a hearing and fix the hearing date.

(1.4) Post-hearing: The Board’s orders is binding on parties and may be enforced at the Singapore State Courts.

1.1 Cost of Application Stage- Money commences burning

An application fee of S$500 is required to submit the application along with the "prayers" being sought. Prayers here is not referring to the religious prayers but rather a specific request for judgment, relief and/or damages at the conclusion of a complaint or petition. The applicant/applicants will typically hire a lawyer at this stage to help prepare the filing and incur additional cost of between S$3K to S$5K.

At this point, the MCST is known as the respondent. The Management Council Members may also be named by the applicant/applicants individually as additional respondents along with the MCST. To get ready a respond, the MCST will typically incurr legal fees for crafting the respond. This can cost anywhere from S$3K to S$5K depending on the number of issues, its complexity and hours spent by the legal counsel.

 1.2  Mediation- Extra money burnt for legal counsel to attend Mediation session on behalf of Applicants/Respondent

The lawyers representing the applicants and the MCST at this stage will be very happy as they can bill around S$3K to attend the mediation session. 

So applicant wasted S$3K out of their own pocket if they hired legal counsel at this stage and the respondent will also waste S$3K. 

Normally, there will be at least 2 mediation sessions before all stakeholders either resolve the issues or decided that mediation is useless and to move on to full hearing. If there is another mediation session, another S$3K will be wasted at each side.

Therefore, at least S$6K will thus be burnt by applicants and respondent respectively at the mediation sessions.

1.3 to 1.4 Hearing and Post Hearing

There will be an STB hearing cost here as well as individual legal counsel cost. This stage typically cost around S$10K to S$20k for each respective party depending on the number of hours spent by the legal counsel on hearing preparation and submission.

One import thing to note here is that many people have the wrong notion that if they win the STB case, they can get back all legal consultation and mediation costs from the losing party. This is totally wrong concept. Only party to party cost and panel hearing cost can be recovered. To give an example, I have known of MCST who spent S$50K in legal fees overall to defend against the prayers sought by the applicants and won the case but in the end only got back S$10K in cost recovery. 

Summary

A typical STB case may thus cost up to S$20K to S$30K for applicants and respondent respectively depending on the number of prayers and the complexity of the issues. This is a lose lose situation as this means that S$40K to S$60K would have been wasted by both parties. The only winners out of this will be the legal counsels. Unfortunately, such incidents are not isolated. There are many people with different personalities and principles living in any estate. Residents should thus participate actively in the Annual General Meeting and ensure that they elect their council members wisely. 

Most importantly, more residents should step forward to take up the thankless job of being a management council member lest the council is left in the control of an extremist group of residents who can then make numerous house rules to turn the entire estate into an army camp or prison which will have negative repercussions such as the estate getting into multiple lawsuits with vendors at Small Claims Tribunal/State Courts or cases lodged by fellow residents at STB. 

Problems With Living In Singapore Condominiums- Not As Glamorous As One Think It Is.

 

After buying a brand new condominium and waiting for the construction to reach Temporary Occupation Permit stage typically requires 3-4 years for an average 600 unit size development. Of course, many residents could not contain their excitement upon receiving their keys and moving in after renovating their dream home. But this is where the nightmare will start. 

1. Dealing with hardcore smoker neighbours staying above or below your unit smoking every 2 hours at Balcony

Many condo residents were sold by their property agent the idea of Alfresco dinning by utilising the balcony space. Hence they have planned for dinning tables to be shifted to the balcony area in order to free up inner space and a bigger allowance for the living room.  Alfresco is a style of dining that is casual and often offer a party-like ambience and looks cool. 

However, some condo residents are in for a rude shock when they discover that at lunch or dinner time, they often have to breathe in cancer causing harmful second hand smoke coming from their neighbours staying directly at the unit above them or under them. The effect of the second hand smoke is so bad that any units within a radius of 2 floors (approximately 6m) from that chain smoker unit will have second hand smoke drifting into their balcony.

Hence it is a fallacy to believe that upgrading from HDB to a EC or private condominium will mean the end of the 2nd hand smoke issue. This second hand smoke issue will never go away unless one purchases a landed property. Hence I am always amused when I hear property agents marketing Alfresco dinning to their prospective buyers at showflat. 

2. Lack of good talents who wants to volunteer to join the Management Committee after the end of the 1st year
During the 1st year, the developer will run the condo along with the appointed Management Agent. However, by the end of the 1st AGM, the MCST is supposed to elect its own Management Committee ("MC") members. Most of the good residents will not want to volunteer. In the Singapore SAF full time national service context, these are "extra duties" which snaps up valuable time especially for residents who are still working.  There is also no remuneration for being in the MC to look after the estate. One will also have to deal with countless complaints (where some are utterly unreasonable) and fellow residents demanding to be served by the MC in all their requests. Hence most residents do not want to take up such thankless job. 

Those who joined will have a few types, namely, (i) truly altruism folks (this group is a rare breed), (ii) power crazy folks, (iii) resident associated with the People's Association or government grassroot and (iv) residents who need to get their children into the primary school of their choice- type (iv) is actually a subset of type (iii) as the objective is to form the "Neighbourhood Committee" to promote grassroot outreach into the condo.

3. Carparking Woes

This is the most frequent issue in all condominiums. If there are insufficient carpark lots, this will create a problem. If there are ample carpark lots, this will also still be a problem and headache. The insufficient carpark lot scenario think everyone understands why it is a problem. So let me elaborate on why a condo with ample carpark lots will also be a big problem. 

In most condominium, carparking house rule will stipulate that every owner will be entitled to 1 carpark lot. Then there will be units without cars and units with multiple car ownership. Those with multiple cars will assert that since there are ample lots, they can park unlimited cars in the condo to save on thousand of dollars of annual season parking. The other non-car owner group will be unhappy and demanded that this is unfair as maintenance such as carparking surface epoxy paintings and carpark barriers maintenance is unfairly borne by them hence they will demand second car parking charges. 

Once the root of all evil (money) surfaced, then World War 3 will begin in the Condo estate. Hence if during the 1st AGM, the carparking and registration rule is not converted into by-law, some of the owners with multiple cars will start to "play around with the Ënglish" in order to argue the best case scenario for themselves.

Parting thoughts:

I am not sure whether the Singapore dream of "upgrading" to a condominium is really considered an upgrade in the first place considering the numerous woes of communal living in a private estate. The price of private properties have been quite resilient throughout this major recession unlike the 2008 property market crash. Still, many Singaporeans have been rushing to snap up a unit and will probably spend the next 25-30 years working tirelessly to support their banker. 

(P.S: Please also "Follow" me on Facebook-Investment Income For Life.)

Woodleigh Residences Offering Up Till S$250K Worth Of Discount- Property Prices Finally Going Down?

I received a promotional email yesterday (5th August 2020) on upcoming weekend sales discount of up till S$250K for a unit at Woodleigh Residences.  Is property price finally softening? This COVID-19 recession sure is different from the 2008 Global financial Crisis for properties. I recalled that properties price crash by 30% to 40% then. But the Singapore property market appears resilient during this COVID-19 period with only slight decline in prices so far. This is incredible. No wonder Germaine Chow of iQuadrant keeps saying in her advertisements that property prices do not fluctuate as wildly as the stock market (Anyway, I am having an overdoes of Germaine Chow-she keeps popping up on my YouTube videos-would appreciate if anyone can provide technical tips on how can I disable her advertisements). 

S$250K VVIP discount is a lot. Anyone thinking of getting a unit at Woodleight Residences? Or more discounts coming? Well, this appears to be good news for consumers but bad news for SPH shareholders. 

Sengkang Grand Residences Mixed Integrated Development at Buangkok MRT

Sengkang Grand Residences is one of the most anticipated new launch of the year. This development  is directly linked up with Buangkok MRT station and it has a hawker centre and retail mall inbuilt into it. Residents living in Sengkang Grand will enjoy convenient access to all these amenities right under their home. 

As this is a CDL and Capitaland joint development, one can be assured of the quality of luxury finishing of their purchased home. 

Prices are expected to start from S$1,600psf plus and estimated pricing as follow:
(i) 1 bedder + study: S$798K;
(ii) 2 bedder: S$998K;
(iii) 3 bedder: s$1,498K and
(iv) 4 bedder + flexi: S$2.1Mil

There are a few points here that prospective buyers need to be aware of:

1. Car parking might be an issue- Only 80% of parking lots provided for residents

Total residential units in this development is 680. However, parking lots available are only 544 on level 3, Mezzanine A and B. In other words, only 80% parking lots are provided. The property agents will tell you that many units to be purchased are for investors who will rent out to tenants. Hence these tenants of smaller units will not be driving and only taking MRT. 

I just think that this is very strange for a luxury development as if one can afford paying almost S$1Mil plus for a 2 bedder and above, the residents here will most likely also own a car. As a matter of fact, some may even own multiple cars.  Also, how about visitors of residents to the development?

This may lead to future animosity among residents in the 2nd year AGM after the MCST is formed. Have seen a few cases of such disagreements being surfaced even for 1 to 1 parking with regard to how parking lots are allocated.

Do bear in mind that property agents will not be living in this development after your TOP. So best to get some clarity on how the developer and their first year management plan to resolve this issue.

2. Lack of privacy- Some blocks have up to 10 units per floor.

As the number of floors is only around  8 to 10 levels, the developers have squeezed many units into the 9 blocks in order to get to the 682 units.  Some blocks will have up to 10 units on the same floor while most of the others will have 8 units. The ideal case for private exclusivity is 4 per floor. 

Potential buyers will have to assess whether they are fine living with so many neighbours living together on the same floor. It maybe best to avoid the block with 10 units per floor during selection. 

Potential buyers of Sengkang Grand residences will also need to see whether they are comfortable with the number of lifts serving all units in one block. This is especially so during the morning rush hours when parents are sending kids to school or going to work.

3. Unit Layout- 2 bedders and 4 bedders here are better than 3 bedders in terms of functional usage.

This point can be personal and depends on whether you are a balcony lover. For me, I do not like balcony in the Master bedroom as it is a waste of space. I would rather have this balcony space moved to the living room area to be combined into 1 bigger balcony space than having a space that is neither big nor small for usage. To me, balcony in a master bedroom is just a white space.

Hence I think that the 3 bedders layout is a no no to me. 

4. Facing of some blocks is East and West

In Singapore, I would suggest folks go by the general convention to go for North-South facing units and skip the blocks that have either morning or afternoon sun. If no choice and have to choose a East-West facing block, then go for the stack that only have morning sun (East facing) so that when you come back from work in the evening, your home does not feel too hot and warm which may agitate one especially after a hard and stressful day at work already.

Summary

Overall, Sengkang Grand Residences is a very good development. Since CDL and Capitaland have bid over S$1 billion for the site, their breakeven price is around S$1,500psf. Hence, selling at S$1,600psf plus as a starting base is considered a good price for a new integrated development. For me, at this price, my personal preference would be to buy a cheaper resales unit at Punggol Watertown which has the mega mall Punggol Waterway Point right at the doorstep and also comes with Shaw Cinema.

One Pearl Bank Averge Selling Price At 2400psf And Sold 160 Units At Weekend Launch!

One Pearl Bank and its close proximity to 3 MRT lines and other amenities say a lot about its superb location. The two curved towers design of One Pearl Bank is simply grandeur and will no doubt become the new iconic landmark of Outram and Chinatown area in 2023. Capitaland has once again shown why it is one of the top developers in Singapore.

One Pearl Bank has 774 units spread over two magnificent towers and the developer will raise it 21 metres above the ground level to elevate the greenery flow from Pearl’s Hill City Park in order to merge the continuity flow with the iconic building. Lush landscaping of 135,000 shrubs, plants and flowers will be planted throughout the development and a footpath will be built to directly link it to Pearl’s Hill City Park. Also, based on URA’s Masterplan 2019, Pearl’s Hill City Park will be connected to Fort Canning Park through the Singapore River. 

The facilities available are also impressive with 2 swimming pools (main pool and a children’s pool) among the lush landscaping. There is also the standard gym an 24 hours security. Concierge service is also available for residents. This is truly awesome and I am very impressed by the dazzling level of architecture that integrates all elements into this entire development.

Personal thoughts:

How I wish I could grab a unit at this luxurious & iconic development but alas, the price tag is at around S$ 2,400psf on average. Capitaland managed to sell an eye-popping 160 units over the recent weekend launch (considered a magnificent feat relative to the sales figures of other newly launched projects). Out of these, 87% of units sold are one bedroom and two bedroom probably due to the lower price quantum. The 3 bedders and above made up only 13% of sales. So I am not sure whether this points to an overarching weakness in the overall local property market. However, one thing is for certain, even if the price does drop 20% or 30% in the event of a recession, I will still not be able to afford it…haha. I still think that private property prices in Singapore are super expensive. 

People kept comparing Singapore to Hong Kong and some even remarked that Singaporeans are a lot luckier than Hong Kong residents as, at least, our local properties are so much more affordable. Well, I do not really agree, I think that it is crazy that Singaporeans need to work 25 years to 30 years to pay off the mortgage. We are more of a slave to the banks.

So do you think that the launch of One Pearl Bank and its sales of 160 units reflect the beginning of an upbeat property market or the sales will splutter with the emergence of more bad news from the Singapore economy? Will you rush in to buy a unit for investment before all the 1 bedder and 2 bedders sell out?