Ask any seasoned property investor and he will tell you the same thing. All else being equal, you should always buy the property with the better location. Now the term “all else being equal” is something which will almost never happen. Chances are that location is not the only differentiating factor when comparing two distinct properties. However, the mantra that looking at location as a primary factor while making a property investment decision should not deviate. In good times developers bid for land at astronomical prices which then results in them pricing the property which they are to develop at an exorbitantly high price. Flashback to Sky Habitat. A 99-year leasehold development which is located in the heart of Bishan. It was launched at around SGD$1700 per square foot. The sale price was inclusive of balcony space which then actually eats into the actual livable area of the property. As of today, there are 182 units sold at a median price of SGD$1,530 per square foot. If we take this median price and multiply it to a 3 bedder in the development with a size of 1216 square feet, we will get a purchase price of about SGD$1.86 million dollars. In contrast, if we were to take a look at the transacted prices in the prime district of Singapore, district 9, we can find that a freehold, 1227 square foot unit at Wilkie 87 was sold at SGD$1.27 million in September of 2013. In contrast Sky Habitat was launched in April of 2013. So why take the gamble on a unit like Sky Habitat when freehold units are available in district 9? The developer’s advertisement is usually extremely impressive. In a booming market it is easy to get lost in pressure selling and think that the $1.8 million property I purchase today will definitely rise in value tomorrow. On top of that buyers tend to give the reasoning that the property is “for our own stay” and thus validate the expensive purchase. I liken this to the fact that we wait for sushi to go on sale at 9pm at most major super markets or we time our purchases to coincide with a major sale so that we get the items that we are going to use at a cheaper price. I usually tell my clients, if you are willing to save a few dollars on sushi or clothes by waiting for it to be on sale, then why not do the same for your property purchase?
In today’s depressed market I see better decision making when it comes to buying a property. In a bad property market it is easier for buyers to make better decisions as they have the luxury of time as they have the upper hand.
Whatever it is, to me, 182 purchasers made the absolute wrong decision with Sky Habitat.
