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Is Singapore Property A Good Investment?

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Is it common for you to hear this statement whereby property is a safe investment and a good hedge against inflation? I’m sure some point in time you may have heard this. The question is, have anyone actually put this statement to the test?

We are into June 2015 and I am going to test this statement by getting unbiased information from URA and SRX from 1Q2005 to test this.

We will test District 9 properties to see which are the top 5 private apartments that comes in tops and also what is the price difference as compared to today.

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Tenure: All

Project: All projects in District 9

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Table 2:Top 5 Projects sales and rental performance.

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Table 1: SRX Analyzer results shows the Top 5 capital gain projects in District 9.

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Some may be surprised at the results because of the names of sometimes unheard of developments are taking the top spot. Strictly statistically speaking, we noticed that it is the lesser popular projects that have the bigger jumps as compared to their neighbours.

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We understand that by just counting on statistics alone is not practical. We need a property that has volume. No point buying a project that may statistically has a high capital gain but only 1 transaction every 2 or 3 years. There is just not enough liquidity!

Let us now tear into the data and try to find out of the top 5 listed which is a more logical choice.

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As mentioned earlier, based on a single statistic alone is not good enough to find the better performer. We can see that UE Square has the best performance in terms of sales and rental transaction volume. Second in place, will be LEONIE GARDENS.

From the table TOWNHOUSE APARTMENTS only had 36 sale transactions in the last 10 years or 3.6 units transacted per year even though it has the highest capital gains.

UE SQUARE has 186 sale transactions or 18.6 units per year which is considered relatively liquidity. LEONIE GARDENS comes in second with 128 sale transactions or 12.8 units per year. It will be easy to move units in these 2 projects even though the statistical capital gain is not the highest.

Both UE SQUARE AND LEONIE GARDENS have very good healthy rental activities so getting a tenant will not be a challenge.

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top5-pricemovementTable 3: Price movements of the top 5 developments over 10 years.

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In conclusion, our little test does show that property prices does move up over time. As an investment it does hedge against inflation. However, property cannot be used as a short-term investment as it is not as liquid as compared to other investment tools.

We would like to do more tests on other segments of the property market to see what kind of results does it yield. If you have any good ideas or suggestion on which kind of property or tests you are interested to know, please feel free to write to me at contactme@justinkongyt.com.

If you want to find out how your portfolio of properties doing? Feel free to contact us, we can do a ‘REAL-TIME’ Property Analysis to see how your property investments are doing.

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