tag:blogger.com,1999:blog-28086856.post7535316048644051463..comments2024-03-20T01:42:13.273+08:00Comments on Eight percent per annum: Value investing in Singapore stocks: Sky Habitat's Crash Landing - Part 4Jayhttp://www.blogger.com/profile/03292158817395898619noreply@blogger.comBlogger11125tag:blogger.com,1999:blog-28086856.post-61089647051641212002013-06-11T23:00:18.458+08:002013-06-11T23:00:18.458+08:00Hi Jay Chan,
Certainly we should own the roof ove...Hi Jay Chan,<br /><br />Certainly we should own the roof over our head if we can. Having our own home provides the security and stability to raise our own family. In fact, every male Singaporean who has sacrificed for NS should own a HDB to make his sacrifice worthwhile. Buying a HDB is almost a sure-win.<br /><br />I agree that when property is bought cheap, it can grow wealth faster than stocks because of the leverage. Besides, leverage with property is safer than with other kinds of asset classes because interest rates as well as the risk of margin call are much lower.hyomhttps://www.blogger.com/profile/00175340583474513718noreply@blogger.comtag:blogger.com,1999:blog-28086856.post-69381044713725877852013-06-11T00:37:03.382+08:002013-06-11T00:37:03.382+08:00Hi hyom^2
Thanks for your inspiring comment.
I t...Hi hyom^2<br /><br />Thanks for your inspiring comment.<br /><br />I think anyone should at least own one property - the one that we live in. That way we are at least neutral and not short the property market.<br /><br />Property as with all investment makes sense when the valuation is right. ie when it is cheap. As I have described in my posts, Singapore property is way over the top now, and is hence very risky.<br /><br />I think your points on property being big ticket, illiquld, leveraged are all valid. They magnify the wrong decision badly - ie when bought at a high price, the fall will be twice as hard.<br /><br />But when bought at a cheap, property can also help you grow your wealth fast. In the end, it boils down adhering to a strong value philosophy and understand valuation well.<br /><br />Buy when things are cheap!Jayhttps://www.blogger.com/profile/03292158817395898619noreply@blogger.comtag:blogger.com,1999:blog-28086856.post-65857546702343773452013-06-08T16:41:20.809+08:002013-06-08T16:41:20.809+08:00Hi Jay Chan,
I just stumbled onto your blog today...Hi Jay Chan,<br /><br />I just stumbled onto your blog today and read through all 4 parts of your analysis on Singapore's property market. It was easy to make the decision to add you to my blog-list because your blog is one in which readers will find worthwhile to read.<br /><br />Like you, I too veer towards stocks rather than property. But unlike you, I do not have the keen insights you have on property. <br /><br />I avoided property mainly because it is hard to manage risk with property investments compared to stocks. A middle-class Singaporean like me can at most purchase 1 more investment property. No diversification. On top of that, the purchase has to be made with leverage. In addition, property is illiquid in nature. With a portfolio that is super-concentrated (only 1), highly leveraged (at least 4 to 1) and illiquid, how to manage risk? How to avoid financial disaster when things go wrong? Yet so many middle-class Singaporeans have done just that. Although the value of a property does not fall to zero like some stocks, the property market poses huge systemic risks when it crashes because it is perceived by many Singaporeans to be low-risk, hard-to-lose bets. <br /><br />My steadfast refusal in shunning property has led some acquaintance to brand me as a loser who will never get rich. Nevertheless, I would rather miss the opportunity to get rich than to take the risk of becoming poor. <br /><br />Do you face similar situations among your peers? Are they also mostly in favor of property?hyomhttps://www.blogger.com/profile/00175340583474513718noreply@blogger.comtag:blogger.com,1999:blog-28086856.post-76009214502482646332013-05-16T19:25:20.498+08:002013-05-16T19:25:20.498+08:00GDP per capita is not even close to national avera...GDP per capita is not even close to national average disposal income per person. Think about it, so many people live in HDB where total household incomes cannot exceed 10k per mth when they first bought their flats from the govt. We know salaries have seen stagnant to little growth due to massive influx of cheap FTs..even if we assume all households make 10k, average salary person is 5k or 60k per year. Take away taxes etc, we are left with closer to 50k.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-28086856.post-50630771137866018022013-03-19T17:28:02.130+08:002013-03-19T17:28:02.130+08:00Hi , nice write up but I think you are missing the...Hi , nice write up but I think you are missing the Killer Punch ! when it comes to looking at Singapore property and that is how fast buildings age !<br /><br />Basically we are living in a jungle that we have cleared, but the jungle is trying to take the land back again, buildings age fast here and coupled with poor construction depreciation is a killer. <br /><br />Assuming the market stays flat , over 10 years a new building will become an old builkding and the price will drop and rents fall assuming there is no change in the price of a brand new property. <br /><br />Consider the following 3 properties all within 100 meters of each other and all considered very nice luxury stylish desirable properties when brand new <br /><br />aspen heights top 2000 , price now 1450 psf rent 3.75 psf<br />The imperial top 2006 , price now 1850 psf rent 5.5 psf<br />Belle vue top 2011 price now 2,300 psf rent 6 psf<br /><br />So over 10 years a building in river valley area will probably drop by 40% from new with nothing else happing <br /><br />Now the 2% rental yield looks even worse given price dropping 4% a year <br /><br />even monaco would be better , dry climate and well built property that even 100 years old trades at the same price as new means your 1% is ahead of the true singapore yeild<br /><br />And also remember that with the rent dropping as the building ages if prices dont change your yiled on purchase price will soon drop to 1% anyway .... catsickspamhttps://www.blogger.com/profile/00051854392598020543noreply@blogger.comtag:blogger.com,1999:blog-28086856.post-54554095616126579132013-03-18T15:39:18.206+08:002013-03-18T15:39:18.206+08:00U forgot the L word. Leverage.U forgot the L word. Leverage.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-28086856.post-91519313046985604672013-02-21T17:58:58.612+08:002013-02-21T17:58:58.612+08:00Latest update: Sky Habitat is just 29% sold of 509...Latest update: Sky Habitat is just 29% sold of 509 units as of end-Jan 2013.<br /><br />Data from:<br />http://sbr.com.sg/commercial-property/news/capitalands-dleedon-mega-project-presales-surged-five-foldZYhttps://www.blogger.com/profile/06344748581494848257noreply@blogger.comtag:blogger.com,1999:blog-28086856.post-34932135219730734042013-02-18T20:13:19.021+08:002013-02-18T20:13:19.021+08:00Hi Unknown,
You are correct in a sense that dispo...Hi Unknown,<br /><br />You are correct in a sense that disposable income should be the one that we use. But as mentioned, other no.s are hard to come by, hence the easiest no. is GDP per capita. The following is from the OECD website. <br /><br />-------<br /><br />Both measures (refer to GDP per capita and disposal income) are compiled according to the definitions of the 1993 System of National Accounts. There are, however, practical difficulties in the measurement of the additional income components, such as remittances, that make up the difference between GDP and dispo-sable income (including adjusted). It is for that reason that GDP per capita is the most widely used indicator of income or welfare, even though it is theoretically inferior, in that context, to measures of disposable income.<br /><br />--------<br /><br />On whether yield can go to 1% or not, again you are also correct, it is not a theoretical impossibility. I hold the view that while it IS possible, it is also unlikely because of the social and political consequences. And if it does happen, ie I am wrong. That as I mentioned, it will be a very sad day for Singapore as all our kids will never own their homes (they would need disposal income of SGD 320,000 at least) and we will also undoubtedly become minority in our own countries, as only the rich foreigners are buying up Singapore.<br /><br />I truly hope we never get to Monaco's 1% yield. Really.<br /><br />Cheers<br />8%Jayhttps://www.blogger.com/profile/03292158817395898619noreply@blogger.comtag:blogger.com,1999:blog-28086856.post-1848740440570958032013-02-18T11:58:01.962+08:002013-02-18T11:58:01.962+08:00didn't realize that GDP per capita = average w...didn't realize that GDP per capita = average worker's pay...<br /><br />on the other hand, there is nothing to stop 4% become 1%, they are relative figures w/ bank interest rate.Brucehttps://www.blogger.com/profile/13254585464682836163noreply@blogger.comtag:blogger.com,1999:blog-28086856.post-26109675623405781992013-02-17T01:33:26.459+08:002013-02-17T01:33:26.459+08:00Hi Ziyang, thanks for the compliment and for shari...Hi Ziyang, thanks for the compliment and for sharing the URL! Do drop by more often and help share this blog with your friends!Jayhttps://www.blogger.com/profile/03292158817395898619noreply@blogger.comtag:blogger.com,1999:blog-28086856.post-59806138745608256352013-02-14T10:40:52.999+08:002013-02-14T10:40:52.999+08:00Thanks for the excellent article. It is not easy t...Thanks for the excellent article. It is not easy to have a cool mind when the property market are red hot.<br /><br />Recently there is another article from economist mentioned that Singapore property is 50% overvalued.<br /><br />Below is the URL for your reference:<br />http://www.economist.com/news/finance-and-economics/21569396-our-latest-round-up-shows-many-housing-markets-are-still-dumps-homeZYhttps://www.blogger.com/profile/06344748581494848257noreply@blogger.com