With all the buzz about property measures these days, where does that leave us in terms of property investment? Auntie Scroogey shall partly answer that question by telling you a tale (it’s a true story by the way) about 2 properties.
I’m sure you must have heard before, from older folks or otherwise, that when it comes to buying property, it’s all about location, location, location. Indeed, at any given point in time in the property cycle, the single largest determinant of property price is its location.
In the 1970s, there were 2 brothers who each bought a property. The older brother bought one in Nassim area, while the younger brother bought one in District 15 East Coast area. Both have roughly about same size living area, both are freehold properties, both were brand new properties at that time and both were bought at around $100,000 (which was rather substantial back then). Fast forward it to 4th quarter in 2010, the Nassim piece is worth circa $6-7 million while the East Coast property is valued at $2.5 million.
Why the drastic difference? That’s because the Nassim area is closer to town (almost in town itself). In land scarce Singapore, a good, strategic spot is almost as valuable as striking gold. In addition, the area has grown much in importance as the country progresses.
In case you’re thinking that the nearer to town it is, the higher the property price, well…… think again. A quick check with records of resale HDB transactions indicate that in 4Q2010, a 3-room HDB flat in Jalan Besar / Veerasamy Road (about 10 mins walk to Bugis MRT) transacts for low $4xx psf while over at Holland Close/Drive, the same size unit transacts at least $5xx psf during the same period, with the higher floors registering $6xx psf. Both HDB units have 2 bedrooms and 2 bathrooms.
What accounts for the difference in this case is the appeal of the location. No doubt the former is located closer to town area, it is the latter’s proximity to the upmarket, exclusive Holland estate that allows it to command a higher premium.
So if you were to invest in a property, which area would you choose considering capital gains potential, rental yield and your budget?