Assessing Property Potential Upside and Risks

In one of the previous post, we have talked about the reverse mortgage.  Let us talk more about assessing the potential upside and the risk associated when it comes to investing in property. We will also recommend a good property investment opportunity for our reader – Hundred Palms Residences at Yio Chu Kang Road.

Assessing Potential Upside and Risks

From historical data, we know that the value of properties in Singapore has multiplied many times over. 30 years ago, the value of a small private apartment in Singapore was around $50,000. Today, the value of a small private apartment in Singapore is at least $500,000 on average. Due to the scarcity of land in Singapore, as well as her growing population and attractiveness to foreigners as a place in which to live and work, we can say that the value of properties in Singapore will continue to rise.

Based on these observable trends, it is safe to say that properties in Singapore generally offer good long-term potential upside. But the meaning of “potential upside” as applied to buying specific properties is not the same.

When you want to buy, you want properties that you have assessed to have high potential upside. When I use the term, “potential – upside” within the context of a particular property, I am referring to the potential returns from the property that I can measure at this point in time. It is very time-and-property specific. Note that I used the word “measure” and not “see”. It is not just an observation. I do calculations in order to measure the potential upside of a property.

Another point I want to highlight is that I am not measuring the “future” potential upside when I assess the potential property. I am measuring the current potential upside of the property.

Many people misunderstand potential upside as future potential. This is a common mistake – they are lured based on the idea that the potential upside will come true in the future. The future is something nobody knows for sure.

“Timing” is not a good enough reason to buy. Value is. Even if there are new launches and the price seems low, or you happen to have spare cash, a property is still not a good buy if the potential upside is not clear to you.

I also measure “potential upside” in a very specific manner before I make the decision to buy a property, I must be able to determine the potential upside of the property based on prices under current market conditions. For example, current transacted prices of similar types of properties within the same area.

Rental yield assessments should also be based on current market rates and not future market rates. Getting a sense of what the rental yield is likely to be, is not difficult. One simple way you can check on rental yields is to scan through the property classifieds on websites or in newspapers to see what similar properties (or the same property) are asking for in terms of rent.

Measuring Potential Upside

For the purposes of assessing potential upsides, my team and I have created a customised software programme that allows us to among many other things, compare current transacted prices within a given project or across different projects within a specific area.

This invaluable tool is used all the time to make sound assessments of potential upside for our clients. Here is a sampling of what the software can do:

Example: The Sail

The sail is a private residential property project launched in 2009. The following chart shows the transacted prices of units within The Sail from March 2009 to June 2011. In that period, a total of 18 transactions were recorded. The average psf transacted price was $2,670. When it was first launched, the transacted price was less than $2,000 psf. The highest transacted price in that project was $3,000 for a unit on the 25th level. For comparison, a unit on the 21st level sold for $2,620.

Expressway of Singapore

Express in numeric values, we can say that the potential upside for buying the unit on the 21st level is good as there is a difference of —$380 psf ($3,000-$2,620) between the buying price and the highest transacted price. Based on transacted prices, we can tell that the price can go at —$3,000 psf when we choose to sell it. When we buy, we buy with the aim to sell, as that is when we can take profit. We will further discuss the different ways of comparing potential upside using different price factors in a future post.

Hundred Palms Residences

Below is a quick glance for the project information for Hundred Palms Residences.

Project Name: Hundred Palms Residences
Developer: Hoi Hup Realty
Tenure: Leasehold 99 years w.e.f. 29 Feb 2016
Address: Yio Chu Kang Road, Singapore
District 19
Units Mix: 3 Bedroom, 4 Bedroom, 5 Bedroom
Total Units: 531  Exclusive Units
No. of Blocks/Levels:  9 Blocks, 15 Storey
Car Park Lots: TBA (1 Basement Carepark)
Expected TOP Date: 28 February 2020 (Launching Q3, 2017)
Site Area: 18,422.9 sqm
Architect: Consortium 168 Architects (C168)

The new Hundred Palms Residences EC land parcel attracted 10 hopeful bids with Hoi Hup Realty emerging winner with a top bid of $183.8 million. The land cost translates to a land cost per square foot per plot ratio(psf ppr) at $331.02 and an estimated Hundred Palms Residences EC price to be in the range of $750 psf to $800psf.

Hundred Palms Residences Project Information

A new site on the Yio Chu Kang Road (YCK) / Hougang has managed to attract significant interest from various developers. It has managed to receive ten bids by the close of the tender on the 18th of February, 2016. This site is intended to be developed into an executive condo property. The winning bid is worth S$183.8 million and it was placed by Hoi Hup Realty.
Yio Chu Kang Road

According to the director of the property development company, the breakeven cost will be just above S$700 psf. Therefore, it is likely that the sale price being the target will be S$800 psf approximately. Of course, the actual pricing will be dependent on the market conditions at the time of the sale. The company expects to launch the project in 2017.

Why Buy Hundred Palms Residences EC?

  1. Hoi Hup Realty is a popular developer behind this project
  2. More than 500 units to choose from starting with 2 bedrooms to cater to different needs.
  3. Easy connectivity to multiple expressways including Central Expressway (CTE)
  4. Close proximity to prestigious school
  5. Attractive pricing from just $700K
  6. Magnificent interior designs and modern layouts
  7. District 19 and close proximity to Kovan Town Centre & Kovan MRT

Hougang (Yio Chu Kang) Master Plan

Yio Chu Kang Road EC site area is around 198,529 square feet. Thanks to a plot ratio of 2.8, a gross floor area of 555,246 square feet will be the maximum allowed on the site. Around 520 units should be available to the residents.

When the site was launched for sale in 2015, experts had predicted that the winning bid will be in the range of S$260 to S$340 per square foot per plot ratio. They also believed that the site would attract somewhere from 5 to 14 bids in total.

The bids for this EC site illustrate the interest in this sector by the property developers. This is despite the fact that there are still a large number of EC units that have remained unsold. Moreover, there are additional EC units that are currently being developed and yet to be launched.

Experts noted that the interest in this site is specific to its location. As such, it should not be taken as an indicator of the wider market conditions. The competition seems to have been intensified due to the ease with which residents will be able to access the development. Moreover, various facilities and amenities are within easy reach. The site should be particularly of interest to parents thanks to the convenient location of reputed schools in the vicinity.

Another reason for the increased interest is that the site is located in an area surrounded by HDB estates. As a result, the developer will get access to a ready catchment pool to get residents from.

Assessing Risk for property

In addition to the potential upside for a property, I also assess the risks associated with it. Risks can be measured in terms of comparing rental income with other properties within the same location, or with other units within the same development. Risk can also be measured by comparing capital gains based on other units within the same development.

For instance, going back to The Sail’s example, we can see that the current transacted prices exceed that of the current asking prices in the same development. This means that risk of buying this property is lower, as I can sell the property at a lower price than the current transacted prices and still take a profit at this point in time.

Actual Site Hundred Palms Residences

TIP! When assessing whether to buy or sell a property, ask to see the current or latest transacted prices of similar properties within the same development, or within walking distance from the property.

At the same time, check whether units with the highest transacted prices have the same features (e.g. same facing, level). Potential upside and risks are two concepts that form the basis of research and analysis in a systematic approach. It helps me make decisions on whether to buy or sell.


When we think about expanding our business,  higher studies of our children, for medical treatments and any other unexpected expenses we need a large amount of money. It is not easy to arrange such a big amount of money  in a very short time. Property acts as a backup for us. We should always buy property with good appreciation value, like The Visionaire EC.

Have a look at the visionaire ec project details to see why it is a worthy investment.

Money problem can be easily solved by taking a loan against our property. Loan is given as a certain percentage of the market value of the property . Loan against property is a secured loan where the borrower gives the authority to use his property as security. Loan against property is different from the personal loan. Loan eligibility depends on the value of property. It is a secured loan and rate of interest is lower. It is the best way to raise the money. Any individual who is an employee or self employed,  or engaged in agricultural activities are eligible  to get loan over their property.

Loan can be availed against any residential or commercial property. It may help to get immediate finance to meet a variety of our needs. Funds can be generate by unlocking the property value and easily satisfy urgent needs or emergency expenses. There are convenient repayment options and repayment tenure may vary from 5 to 15 years. Loan against property is the best option to get large funds in short time. Loan against property is more handy because the processing is much faster than any other sources of getting loan. There will be increment of loan amount if the value of property increases at the period of time.

Lenders are more interested as it is secured loan or if borrower will fail to pay the loan amount lender can take over the mortgaged property. Loan is only eligible to the freehold and self-owned properties. At the time of taking loan, some important points should be kept in mind. The entire transactions should be done properly or with great care. While taking loan against property each and every step should be taken carefully and entire repayment process should be done properly. Any mistake may cause problem  for an individual. Although there are some difficulties but if we have any freehold property it is the best option to get an attractive deal and good loan opportunity. Loan amount may be used for professional as well as for our personal work too.

Understanding What A Mortgage Is

From the previous article, you have understood what a reverse mortgage is. Now, let’s go deeper into understanding what mortgage is, and some of the important things you have to know about mortgage.

Let’s kick off this with a video about mortgage.

mortgageMortgage: A financially legal and binding procedure to facilitate the transactional flow of money between two parties, referred to by the term lender and borrower, in exchange of any immovable/movable entity with a physical significance under the given laws and conditions.

The borrower gets money in exchange of the entity being under the ownership of lender for a mutually agreed stipulated time. The lender has the rights and necessary privilege to claim on borrower’s property in case if the later faults on the line of repayment or does not respect the terms and conditions of the agreement previously agreed upon.

Technical Terms

There are few technical terms associated with mortgage:
Loan Amount
Loan amount is the money which borrower takes from the lender in order to pay for the property given under the care of lender.


This is an option with the borrower which he can exercise to fast re-pay his pending loan in order to secure his property.

Principal Amount

The total amount loaned by the borrower from the lender.

Interest Amount

This is the amount which is paid as interest on the principal amount by the borrower to the lender over the specified period.

Typically, mortgage is of two:

Fixed Rate
Under this category, there is a mutual agreement between borrower and lender whereby the fixed time period is decided upon and fixed repayment amount on regular interval, usually a monthly phase out activity, to repay the complete amount.

Floating Rate
Under this category, there is no fixed amount being paid over the mutually decided period, which usually ranges from 5 to 30 years entirely dependent on the loan amount. The rate is calculated based on the market fluctuations and economic scenarios.

This is a very crucial phase in everybody’s life when it comes to applying for loan to secure your dream home. Usually, we all opt for reputed banks, if possible government undertaking, to make sure that they are no risks involved and preferably lower interest rate involved. It is very imperative for us to do proper analysis before we opt for the property and then for the bank of our choice.

1. Note down your financial liabilities & daily expenses
a. Once you have made up your mind to go for your dream home, make note of all your financial responsibilities in terms of any existing investment and total amount.
b. Now, monitor for close to 2 to 3 months to see how much you spend on your household activities. The sum of a & b will give you clear perspective about how much bandwidth you have in terms of opting for the loan amount.

2. Analyze your future projection in terms of earnings
a. Based on your current total household income, make a calculation about the future
earnings for next 10-15 years and see how much you could probably save.
b. Keep aside a portion of amount for any eventuality from the projected amount.

3. Tax exemption
a. Considering the existing investments that you have around for the sake of tax saving, calculate the expected principal and interest rates. Once you have followed the above three steps, you will have the clarity around your financial strength to decide about the price range for the house. These steps will also give you clear perspective about how you can save your tax by stop investing in other financial instruments that you had in past.

Love this article? We will be sharing more about mortgages, real estate, and anything that can make you financially wiser with property!