Goldmine in "Ponggol"

Have you ever driven into the deep north of Punggol Road? If you have, you might have noticed two left turns into landed housing estates known as Ponggol Seventeenth Ave and Ponggol Twenty-fourth Ave. Curiously, "Ponggol" is spelt differently from "Punggol" for these two streets, possibly a hint at the 'ulu-ness' of the estates.

Well, all that will change with the new Land Use Plan, which proposes an extensively developed Punggol North, complete with its own MRT station.


Notice the two landed housing estates nestled within the new Northshore District and Punggol Point District.

The new development proposals for Punggol presents an excellent investment opportunity for those who are looking in the medium to long term. Data from URA shows that the latest land sale in Ponggol Twenty-fourth Ave took place in April last year, with a 9,104 sqft plot being sold at $665 psf. Granted, prices in the 2 estates have already adjusted upwards slightly due to the introduction of new strata bungalow developments such as The Ambience. But compare this $665 psf price tag with the nearby Seletar Hills (D28) average of $1,425 psf (in Jan 2013, URA), it is clear that the huge upside for the landed houses at Punggol is almost guaranteed.

There are extremely few transactions for these landed houses at Punggol though, with only 8 recorded since Feb 2011. It could be due to be low number of units there in the first place, or it could be that the owners are already the investors waiting to cash out in the medium term, having invested with the prior knowledge of the impending development of Punggol. Going forward, the estates will gain popularity, but the high quantum due to the large land plots will continue to be a barrier for many. Further, the Master Plan 2008 zoned the estates as 'bungalows' which disallows investors to subdivide the large land plots into multiple smaller terrace houses to maximise profits.

Today these residents can be said to be living in the middle of a forest. In 2030, their properties will be dwarfed by high-rise surrounding them. We would have lost another tranquil haven, just like the Seletar black & white bungalow estate we lost in the name of development of Seletar Aerospace Park. For homestayers, they might be sitting on a goldmine, but they might not be happier with their new bustling "Punggol Downtown" life.

Master Plan 2013?

With the release of the Population White Paper and the Land Use Plan, the next publication to follow should be the Master Plan 2013.

Master Plans are published every 5 years and the last one published by the URA was the Master Plan 2008.

It is no doubt that the Master Plan 2013 will incorporate the Land Use Plan, which was widely seen by most as the long overdue Concept Plan 2011.

2013 looks set to be a bumper year for urban-planning enthusiasts. Hopefully the Master Plan 2013 gets released sooner rather than later.

Of population and populating

I have not blogged for more than 2 years now. On the property front, the past 2 years have seen non-stop increases in the price indexes offered by both URA and the NUS Dept of Real Estate. Generally, prices across all housing segments, public, condominiums and landed, have all continued on their upward trend since the trough in early 2009. As suspected, the price increases for the OCR (outside central region) increased at a faster pace as compared to the CCR (core central region). Volume has also kept up - although developers selling more than 2,000 units in a month is no longer big news. 2012 was also a record-breaking year in terms of number of units sold. All these data have been largely expected and unsurprising.

But things have been getting interesting on the population front. In 2009 and a population of 4.8 million, I had blogged about overcrowding in some places in Singapore. It was generally the consensus of the government then to target a population growth to 6 million, and I was beginning to see the merit of Japan's tight immigration policy. And then in early 2010, when our population stood at 4.99 million, the government expressed views that saw a population of 5-5.5 million as optimal. I was worried about the direction of the market then, especially with the impending oversupply of private units in 2012 and beyond. In retrospect, my fears were thoroughly unfounded.

Today, our population stands at 5.4 million. The fears of oversupply in 2012 and 2013 were unfounded, although I believe rental yields, especially in the CCR, will dip or slow down slightly alongside a slowing expat population. 

The Population White Paper has forecasted a 6 million-strong population by the end of this decade, and 6.9 million by 2030. This is the first time that the government has explicitly forecast a population alongside a detailed report on the proposed increase in infrastructure. I shall leave the headline population numbers to politics. But theoretically, these figures mean that all the flats, public or private, being churned out en masse in the next 5 years by the MND can and will be taken up. Do we think this is sustainable? In an era where people are already complaining about high home prices, the lack of an oversupply scenario simply means prices are not allowed to drop based on market forces. Are we still waiting for that dip that analysts have been (wrongly) predicting for so long? Perhaps the wait just got longer with this new White Paper.

Nevertheless, the construction and real estate sector will see much activity in the medium term, much to the delight of industry players.

Bulls and bears

Bulls and bears.

Once again, we are back to this debate of whether the uptrend in the property market will continue.

Let's take a look at a traditional barometer of predicting market directions on this chart here.

Since 1999 (and perhaps even long before), the STI has always led the way in market exuberances or depressions. The PPI, on the other hand, will follow closely behind, mimicking the rises and falls of the STI, although with a substantial and consistent time lag of approximately 6 months.

Then a change occurred. The trends seemed to have reversed.

In present times, the STI has been rather stagnant since 2009Q3 at the 2475 – 2970 level, while the PPI seemed to have rebounded prematurely and continued to rise way ahead even though the STI has stopped rising.

Now, the PPI is almost back at 2007 levels (or already exceeded as some people believe), where the STI was sustained at high levels of 3465 – 3960 for a whole quarter.

Is there something we are missing here?

Both indexes appear to have reached a certain resistance level. For the STI, it seems there is difficulty breaching the 3000 mark. While for the PPI, it seems price increases have slowed significantly, with foreseeable difficulty in sustaining a level above the 2007 peak if the recovery is generally slow and no especially good news expected.

I guess its too early now to make a justified assessment. Like I said, April will be an interesting month – lets see if the major infrastructure works like the CCL and MBS can and will make a difference.

$10 million in 6 years

Wonder why people spend tens of million buying GCBs? Don't ask me - I don't own any.

But these transactions' histories just make you wonder why didn't you take that small gamble back in 2004 (I am not even talking about long-drawn historical prices in the 70s or 80s). The best part is, everyone agrees incomes have not changed much in 6 years. Well, if they haven't changed much, most people who can afford 4 million now should be able to afford 4 million 6 years ago right? The only problem would be the 20% downpayment.

If only we had taken that gamble...

Trasaction 1:

SWETTENHAM RD
15,149SQFT FREEHOLD
FEB 2010 $17,000,000
$1,122PSF RESALE

History:

SWETTENHAM RD
15,149SQFT FREEHOLD
AUG 2004 $4,640,000
$306PSF U/C

Transaction 2:

BINJAI PARK
34,586SQFT FREEHOLD
JAN 2010 $28,000,000
$810PSF RESALE

History:

BINJAI PARK
34,586SQFT FREEHOLD
DEC 2003 $9,000,000
$260PSF U/C

Well... just imagine... 4 million Singapore dollars and you are a GCB owner, barely 6 years ago. And.. in the event that you are bored of it just after 6 years - just flip it for a mere (read: awesome) 10 million profit.

Yeah right... I guess I'll just go on with my daydreaming...

China and Singapore

The first thing I read as I opened my email, "The Chinese property market looks likely to weaken because the government has indicated it wants prices to fall." - from The Edge Midweek.

What? Does that spell trouble for our property market? Will prices in Hong Kong and Singapore follow suit, or rather, will our governments follow suit?

Quite on the contrary, to me. I have mentioned this point on the Skyscraper's forum before - we actually need to thank the Chinese government on imposing measures preventing bubbles for our increased demand back home.

Most of the Chinese investors who want a piece of the property pie will either invest in China itself, or cross the border over to Macau and Hong Kong. No wonder you see Hong Kong property market sky-rocketing even as Hong Kongers themselves are priced out.

And China is no short of millionaires. So what happens to the rest (or the rest of the money for that matter). They come to Singapore. Buying properties to hedge against the threat of inflation is a very common reason, and the Chinese know all too well about that. With global inflation looming due to the massive stimulus put into the market last year, China's own inflation figures might just be set to shoot off the charts should economic (runaway)growth be uncontrolled.

Not only that. Singapore's prime property indexes are still quite a distance below Hong Kong's and China's, which makes us more attractive as an investment option. But not everyone will flock here like a herd of geese immediately - we need a spark, a big bang to increase Singapore's visibility, to set things into motion.

And the answer to that? The two mega Integrated Resorts at Sentosa and Marina Bay. Now, do we have all the elements for a bull run yet?