Would I buy the CityLife EC?

EC's are the rage of the year and especially the bigger units penthouses which I find a big value for money. You can never find sizes of penthouses in private condo going for that type of pricing. We've heard the tired old argument ECs are not Private Condos. Well, a recent report states the price differential between a resale ECs and a private condo is very minimal. This is what matters, we sell in a bull market.

The most anticipated launch next month will be the CityLife EC. The CityLife plot next to Tampines Trilliant EC was acquired by SingXpress on early May 2012 for $233mil. This works out to about $373 psf ppr. Add in the marketing and construction costs, you might be looking at a similar breakeven price of $600psf per unit in the new development (quite similar to Trilliant's breakeven psf). Add in the developer's profit margin, you might have new units selling for $700 - 800psf.

Can you see why EC penthouses are a steal (always the first to be fully sold out) with their asking prices of $550-600psf (the developer's  breakeven psf pricing). I've explained why you need to pay for the roof in the Tampines Trilliant article and that's why the psf is as such. So , do not worry too much about buyer's unwillingness to buy a penthouse. They are the prized assets of any condos and people will usually be willing to pay a little more for the space especially those who like condo facillities but yearn for "landed spaces" in the sky.

When I looked at CityLife, I found the much hoo-haa 4300sqft penthouses not really a value buy as it has simply too much roof space to be acceptable for me. However, the 2300-3300ish-sqft 5bedrooms (not sure whether it is a penthouse but it is type G4-Gx) are EXCELLENT! To me the layout is very much like a landed in the sky. It is a SINGLE LEVEL OF AWESOME GOODNESS (not a duplex). If you can get those facing the park or unblocked, i'm sure you will sell much easier and faster and more expensive than the inner facing ones.

For selling, the prices that exceeds $2mil will have a harder time selling. Can you imagine a 4300sqft penthouse bought for $2.4mil and trying to sell for $2.8-3mil? Most singaporeans would go for a landed at this kind of pricing. As you might have read, after the CMs, a lot of units that are moving are those <$1.5mil. So, be careful of buying something that is out of the norm too much ($1.6-1.8mil is still alright I feel). Your buyer base will shrink dramatically especially since you can only sell to foreigners after year 10 and locals from year 5 onwards. Local buyers have a choice between your unit and a landed.

The layout is very suitable for multi-generation living with the parents taking one ensuite, the couple taking one ensuite and leaving 3 more rooms for children and study. The living and dining room is situated at a corner with a big roof terrace surrounding the two frontages. You can imagine the wholesome goodness of the roof terrace if you can spend some money to do up the landscaping. It will be something similar to this... a landed in the sky. Just imagine it wraps two corners. Oh.. ignore the phone number, it is not mine.

Just imaging replacing the swimming pool(Citylife is just PES) with landscaping as below. And I can imagine my kids and family enjoying the outdoor space right in the comfort of our home.

It will be shiok! If this came online in February 2012, I would definitely have bought this as I much prefer this to the current Trilliant Penthouses layout. Again, if you are doubtful of your purchase, just look at the condos/ECs around Tampines and Bedok Reservoir. Then see how it stacked up against an EC with 3 shopping malls and 2 MRT lines straight to town. Of course, the arrival of QBAY next year by FEO, Sekisui House and Frasers near Temasek Poly will bring some excitement. They bought the piece of land at $417psf ppr and expected selling price should be around $900-$1000psf guesstimate.

HDB , HUDC and DBSS

80% of people are living in public housing and government have to upkeep the housing using taxpayer's money.

Slowly but surely, I think govt will start reducing the percentage of public housing to catered only to those in the need (ie, lower-middle income and below).

This will free up more capital for other expenditures.

That's why i think the DBSS will become like HUDC as the next step. Govt. wants to relinquish their role in using taxpayers money to maintance housing developments. So DBSS might have the option to be privatised and ebloc. 

Then the next step will be the HDB flats. The current way they are recycling capital is thru SERS of Prime HDB location. They sell the SERS land to developers and relocate the SERs owners to more ulu or cost-effective location. You can see 12 storeys of avg 1000sqft can become 25-35 storeys of avg size 800sqft. around 3 or 4 old development land size to exchange for 1 plot of new development land size. Those old flat in ulu location .. most govt have no choice but to do selective upgrading to keep them up till a date when they can ebloc them cost-effectively. And the way to do it now is .. you can see.. They are introducing 60yrs LH. So next time.. your 40yr old HDB .they will SERS and move you to a new 60yr LH.

So, in a way, if you are holding a 99LH condo, it is still safe. We are obviously going towards HK model. But 999/FH are obviously the GOLD Mine.

Housing oversupply but sentiments overrides everything..

Quote:

Originally Posted by XXXX Taking 1million divided by 4 per family. Housing required is 250K from 2006 onwards. From 2006 to 2011, a total of 34K of private residential was added. So where do this so called 216K families are living in? IF you look from 2006 to now, rental has jumped like crazy !!!!

You need to figure out how many are white collar, blue collar, construction related.

Souce :- http://www.mom.gov.sg/statistics-pub...ceNumbers.aspx

Pass Type As at Dec 2011
Employment Pass (EP) 176,000
S Pass 113,000
Work Permit (Total) 908,000
- Work Permit (Foreign Domestic Worker) 206,000
- Work Permit (Construction) 264,000

Total Foreign Workforce Around 1.19 million

So, let's work on these figures.
So, Work Permit holders account for almost 76% of the 1.2mil foreign workforce. These people do not need homes as they are housed within dormitories or employers' residence.

So we are left with the S-Pass (usually the service industry and lower wage office workers) and the EPs(the higher wages office workers).

The S-Pass holders usually congregates with each other(most without bringing family over) with min. of 4 pax per unit (but it is 8pax usually for those waitresses and cooks and drivers etc). So, let's divide, 113k S-pass with 4 pax which will give you the max units needed to house them of 113/4 = 28k units.

The EP holders will have some families and some singles, so let's assumed half of them are families and half are singles, so the amount of units needed to be 176k/2 = 88k units.

Adding all up, you need a supply of around 28k + 88k = 116k units.

Do not, this is the demand needed. Not the SUPPLY created during the boom years like you mentioned.

So now matching supply with demand.. we should use the SUPPLY of ALL outstanding units in singapore up for rental (HDB + condos, we'l ignore landed).

Again, googling for some info , turns up .. http://www.ura.gov.sg/pr/graphics/2012/pr12-44e1.pdf

Condos completed units
- available 270.9k
- occupied 254.7k
- vacant 16.1k
- Vacancy rate 6%

Condos supply pipeline
- under construction 49.5k
- planned (ignored this since planned can be deferred but under construtions mean supply will be created definitely).

This is only the condos hor.. i haven't counted the hdbs.

Assumed, one third of condos(33.33%) are rented out while the rest are actually owner-occupied. So there is an availability for rental of 270.9k/3 = 90.3k units available for rent.

Ok, let's assumed only EP holders rent private.. you will see from te previous research, we need 88K units. Now, we have 90.3k units COMPLETED(not counting the under construction ones), so the demand and supply is matched. Surprising... if you look at 88k/90.3k = 97.5% of all rental units available.

The Vacancy rate was indicated as 6%. So, I can only assumed I might have over-estimated the demand while the real figure(the vacancy rate) reflects an oversupply of 6%.

Now, the S-Pass holders.. I am lazy to do research laready... so i just hantam.. 80% of households are living in HDB.. we know roughly it's 5% landed, 15% condos, 80% public..

So, there's 1.44mil HDB available. But let's be conservative and take the 2010 numbers from Mah Bow Tan .
http://www.mnd.gov.sg/reflections_housing/article2.htm
It is 800k HDB households.

So S-pass needs 28k HDB units.. so it's 28/800 = 3.5%. 
Only 3.5% of HDB households need to rent out their flat to meet the demand.


Ok.. so now... I am wondering.. do you thiink there is really an under-supply of housing if govt restricts the no. of EP and WP and SP into singapore for the next few years.. (if they do).