Up Up and Away!

Last Sunday while collecting mail at my tenanted apartment, I figured since it was lunch time I might as well make my way to the Lavender food court for a change since my favorite Killiney kopitiam opposite my apartment is no longer in business. There, I ordered duck rice, and noticed the (famous) wanton mee store has nobody in the queue. I thought it was not open yet. Then at 12:03pm, a queue started to form and in 5 minutes it has grown from 5 people to like 15-20 people.

Locals will know this is typical of Singapore and Singaporeans. I have ever even been in a queue and someone join it behind me asking me what I'm queueing for after others have joined in behind him. And therefore the perfect display of 'herd mentality' which stems from the Singaporean essential attribute of 'kiasu' (afraid to lose out).

Look at the recent launches since Alexis / Caspian, and you will notice almost every project SOLD OUT in days if not hours. Optima even had queues form before the showflat is officially open. Can you imagine this madness - in a recession? Or are we already so sure prices are only going to go up with the impending completion of IR. Soon, 600psf in Bedok new launches will be a thing of the past - if not already - when Optima in Tanah Merah has seen prices of 900psf-1000psf. AMK had launched at 1200psf. Balestier is being launched for 1400psf as we speak. Soon, nothing will be below 1000psf.

Sure, one can say, the mata (policemen) also had to start wearing pants instead of shorts as Singapore progresses through the decades, so why not property prices? I'm just wondering whether this pace is too fast. Anyway, I'm not fast to complain, considering this market upswing helped me to 'get rid' of my odd shaped apartment at a very decent price - enough to buy 2 new better and regular-shaped ones.

Heck, for every willing buyer, there is a willing seller. Same goes for wanton mee even if the price is $5 - when everyone seems to be just queueing (or killing) for it.

Fish Maw Masquerade

My newly discovered haunt lies somewhere along Changi Rd, in an inconspicuous noodle house whose original owner still waits and serves customers after more than 30 years in the business. I personally have always liked fish maw - the springy texture and raw fishy taste is just irresistable. Be it expensive restaurants or road side stalls, none of those I've ever tasted matched neither the quality nor the quantity of the Fish Maw soup based noodles served by this noodle house. I've seen much better presentation and color of this dish in the past, but the true value and wonderful aroma of this Changi Rd shop chef's creation is truly bar none.

Since I'm on the topic of presentation and value, it occurred to me that shopping for a house for the main purpose of investment is not that much different.

There is this ultra modern and super luxuriously finished smallish (sub 500sf) apartment right smack in District 09, just 2 mins stroll to Somerset MRT, going for 2000psf. That is a cool $1 million. However, realistically, it can only be leased out for about $2500 max.

Then there's this shabby looking walkup apartment over 30 years of age, no where really near any MRT station, along a busy main road in East Coast, all 1200 square feet of it in original condition asking only $500K or 416psf. Surprisingly (or not), it is fetching the same amount of rental - $2500. How so? Well, it's got 5 bedrooms and each has been leased to individuals for $500 each.

There you have it. At half the price, you get the exact same rental revenue. Not only that, you mitigate your risk (lessen by 5 times) as your lease income is spread across 5 parties vs just 1. Imagine if your ultra-lux condo tenant bails out all of a sudden - you'd be left with $0 rental income until you find a replacement tenant, whereas it is quite unlikely all 5 tenants in your shabby walkup bail out at the same time.

You may say the capital gain is higher for ultra-lux Orchard apartments. Yes, for sure, but don't forget the possibility of your 30-year-old walkup being purchased en bloc. That is substantial capital gain opportunity for you.

So as they say, same for people, don't judge a dish by its mere presentation - the same goes for investment properties.

One 'So-So Char Kuay Teow' Leads to a 'Lor Mee Discovery'

Just the other day, I was queueing up for the famous Char Kuay Teow stall (I shall not say which) at Old Airport Road hawker centre. Based on what I heard so far, almost everyone sang praises. So I decided to pay the stall a visit. There were tons of (used) plates at the front of the stall. Interestingly, the stall opposite also had a similar kind of presentation. Anyway, the standard Char Kuay Teow I ordered was so so, nothing to shout about, nothing to complain about either. 

Unfulfilled, I pranced over to the other side of the hawker centre. There I sighted a long queue - a Singaporean kinda 'quality seal'. It was Lor Mee. And so I took my chances and queued like any other deserving Singaporean would. Sure enough, when it was my turn, I finally realised what the Q was about. One of the best Lor Mee's ever...

Of course, that is not the story. Yet the lesson learnt was representative of how the market is today. Not the wet market. The property market.

Recent news about some 'ideal' property management company (you would know who if you're in the business) partitioning en-bloced condo units up resulting in no access to washing or garbage disposal facilities led to the authorities turning up the heat on checks. Some other "park complex" - a long standing iconic building in Singapore history - has also been earmarked as abuse potential. In fact, abuse has already been occuring for a long time with the influx of foreign labour in recent years - particularly the Chinese. Apartment units were partitioned and then rented out, often on short term leases too. This brought the legislation to the light - that private apartment units are not to be leased on daily, weekly or month-to-month basis. The minimum lease according to IRAS is one year. (Obviously, if short term lease was allowed, they would directly compete with the hotel industry - like one 'Soho'-style condo in one of the culturally rich areas in Singapore.) In  fact, there is even a new term coined - Condotel. Actually, if you have been to Europe, the concept of Condotel, Apartotel or even Boatel is not new. I am sure you have heard of B&B (bed and breakfast) too. 

Anyway, so thus luck knocks on my leisure boat house - now the expat who either has been priced out of the market or cannot commit to stay longer than a month or two has an option. And a pretty cool option at that.

So what does this teach us? People may say "one good thing leads to another". I say, one bad thing may open up the opportunity for a good one.

PSF and Prata

PSF is like Roti Prata.

If you think a bigger prata is always a better investment, think again.

At first, you may think a bigger house is going to have a higher PSF.

But, on the contrary, due to simple economies of scale, a 3 BEDROOM apartment in the same project, on the same level, is in fact going to be at a LOWER PSF than a 1 BEDROOM.

Let's just say you bought a XL prata at 3 bucks. 

You could have bought 2 L prata at 1.50 each. And that, would possibly feed two.

So if you have money to buy a 3 BEDROOM, why not spend the same amount on TWO 1 BEDROOM's.

For one, you can fetch a higher rental yield on them vs a single 3-bedder. (Note: Privacy has its privileges and thus, you can monetize that off two separate tenants)

In the same vein, if you were to resell those two L prata, you could have earned a neat 1.00 each if you sell them for 2.50 each. Imagine if you were to sell the XL prata at 5 bucks? Would that be easier?

Not to mention keeping to the ethos 'not keeping your eggs in one basket', if you buy TWO 1-bedders in separate development projects. If one of the project's developer goes bust, or workers' quarters start sprouting around it and undermine its value, you still have the other to milk to its full worth.

In the prata case, if you had bought two L prata and taken a bite of one of them, establishing that it is not fresh - or worse, saw (half) a flattened cockroach - at least you could return this and even if not, you might be luckier on the other piece. Imagine if this happened with the XL prata?