SG Government Finally Revised Executive Condo Purchase Rules- Just Do Away with EC Scheme.

 

I read in absolute amazement at the devastating new property measures released by the Singapore Government with regard to changes in conditions for buying an Executive Condo (“EC”) in Singapore. These changes will apply to government land sales from May 8, 2026 which means that it will occur somewhere in late 2027 or early 2028 given the requirement for developers to only be able sell EC 15 months after successful land bid. Many private developers and 2nd time HDB upgraders are probably cursing and swearing at the upcoming changes. 

1. Latest Changes Summarised

So for couple who decided to apply for EC and getting married soon at age 28, waiting for TOP takes around 2 years while the new Minimum Occupation Period (“MOP”) thereafter is 10 years will mean a long waiting time to flip EC of 12 years, that is age 40 already. This will definitely address the current unhealthy trend of Singaporean couples using this as a mean to get rich via property flipping. 

The increased allocation from 70% to 90% reservation for 1st time buyer will also reduce the get rich 2nd time lottery for HDB upgraders who already benefitted from the Singapore get rich via HDB lottery system in the 1st round and now asking for 2nd bite of the cherry. Additionally, this will ensure more 1st time buyers benefit from owning their first property.

2. My Personal Take- Good Measures To Control Unsustainable Rise in EC Prices

Overall, I think this is good as developers will now be very worried about selling off all units in time lest they get into trouble with the 5 years sales penalty if they are still unable to market the units off. Developers will thus be more prudent in their EC bid.

3. EC Scheme Should be Removed.

Don’t flame me but I am not exactly a fan of the current EC scheme. Our HDB government agency has lost track of its original purpose post independence to help all Singaporeans own affordable housing for a roof over their heads. Building EC takes away precious land now used to build tennis court, swimming pool & landscaping which could be used to build an extra stack of BTO. Why should all tax payers be paying for folks who want to live in luxury property at the expense of the lower income group who are more in need of subsidies?

Hence, there should just be (i) BTO and (ii) private property class in Singapore. HDB housing is for Singaporeans to live in and not for flipping upon MOP. Those who wants to speculate or invest can just go directly to the private property market. 

Parting Thoughts

Personally, I think that these new measures are long overdue and bring EC in line with the BTO Plus and Prime area programmes of 10 years MOP. For too long, many Singaporeans have been treating an EC as a mean to get free government handout in the form of subsided land rates and special CPF grant of up to S$30K. Overall, many EC flippers simply just sell away after the previous 5 years MOP rule and walk away with half a million dollars of profit or even more to upgrade to private condo or to buy a landed home without any effort. A home is primarily for living in and not for speculation. I hope that this measure will also help moderate EC prices to benefit future generation and also spur more people to be more entrepreneurial by starting their own businesses to boost the economy instead of just lying flat and waiting for money to drop down via flipping of their EC for sure-win lottery gains. 

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 mislead 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 la

Crazy Singapore Property Price- Price Collapse Will Lead to Bursting of People's Dream.

When one sees Woodlands Condo, Norwood Grand, lauching at close to S$2,000psf and still gets snapped up like hotcakes, this signal something very wrong with the property market. Emerald of Katong launched at S$2,621 psf average also gets snapped up by 99% within a single weekend signalling a red hot property market. Once the bubble bursts, many folks will be saddled with over S$1.5Mil+ of mortagages. I still believe market goes up and down in cycles.....it cannot shoot up perpertually. Look at what is happening to Hong Kong property market right now. 

Be cautious when many people are bullish. Buy only if one has sufficent cash buffers. Don't end up being a slave to the banks.

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 free-hold 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 one for you.

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 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 of 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.