#19: The Cheat Sheet For Property Decisions! | NOTG S2 E19

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(Melvin’s manual sound effect)

2[Melvin Lim]
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– Episode number 19.

3[Melvin Lim]
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Is it 19 or 18?

4[Melvin Lim]
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Alright.

5[Melvin Lim]
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Welcome back to Episode 19

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of our Nuggets On The Go.

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Very happy to have you guys back with us

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and happy 2022 by the way.

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We’re right now in I think the month of February,

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by the time this is being aired.

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And we’re going talk about MOAT Analysis even further.

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So our previous episode,

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we talked about one of the key parameters

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and key inherent factors in our PLB MOAT Analysis.

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Whenever we analyse what condominium projects

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or what kind of apartment projects to enter into,

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when we’re helping our clients

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to decipher through all the many different types of projects

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in Singapore.

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When we talk about real estate,

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there are also three very important things to understand

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which stage you are in right now.

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So before I dive further into point number two,

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let’s talk about these three points.

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So your three points will be

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understanding why do you want to invest in real estate?

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So we always have this triangle

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to illustrate our thought process.

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So what is this triangle?

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So basically when you look at this triangle

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it’s to understand which stage are you at.

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So this is what we call our PLB core model.

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Understanding why do you want invest in real estate

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is an extremely (important) part of your investment journey

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especially when you are heading out

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to invest in your first property in Singapore,

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or you’re planning to either exit from your current property

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or diversifying your portfolio

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or multiplying your portfolio investments.

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And understanding why will strengthen your belief

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as well as helping you to articulate in your mind

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on what are the core fundamental reasons

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on why real estate is a good investment

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for your own portfolio’s sake.

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So we explored in one of the previous episodes,

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that episode is talking about real estate inflation

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generally in Singapore,

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and whether does it apply to Singapore real estate.

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And in that episode at the beginning part,

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we talked about the eight inherent factors

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of real estate as a form of asset class.

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And why are these inherent characteristics of real estate

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a very unique form of characteristics

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right here in Singapore,

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and of course globally as well.

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So this triangle basically is a very important framework

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that we use in PLB to understand,

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why do we want to invest in real estate?

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When should we enter the market?

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Should we time the market?

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Should we not time the market?

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And what kind of properties to select?

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And that’s where our MOAT Analysis comes in.

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Of course, there’s one more core factor

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is that from number one going to number two

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and number three, the fourth one is about

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how do we plan our portfolio strategy?

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How do we plan our structure

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in terms of investing in real estate?

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And before we dive into the how,

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let’s talk about the why first,

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coming back to today’s episode.

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So last week we talked about

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one of the core fundamental reasons,

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and that’s MOAT Analysis point number one,

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is to know that in Singapore,

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the way that our valuation system works,

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it works a little bit differently

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because our valuation system for condominiums

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and apartments, when it comes to projects

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and when it comes to year-on-year appreciation.

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And that usually happens when you want to sell a property

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and when you want to buy a property,

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you’ll call your banker,

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you’ll ask for the desktop bank valuation,

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and either you get a shock of your life

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or you feel very happy,

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or either you get a shock of your life,

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if your valuation did not appreciate

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over the past five or eight years

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or the valuation depreciates,

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or you get very happy

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to hear that your valuation suddenly doubled

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or maybe increased by about 40% or 50%

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over the past few years.

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So MOAT Analysis number one, in our previous episode,

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if you have not watched it, you can head back to watch it,

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when we talked about the fact

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that our valuation is vastly and deeply affected

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by the amount of volume of transactions

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that happens in the project

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and thus the density of the project

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is of one very important characteristics and factors.

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And the profile of the current owners

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that are living in the project

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is also another very important factor.

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Which then brings us to one very important point as well.

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Let me show you this project right here.

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So just imagine if you own this project.

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This project has been,

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it’s a 99-year development, currently is about 18 years old

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and the graph looks like this.

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So ever since the launch date in 2004

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towards its TOP in 2007, it has been increasing.

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Even in the year 2022,

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even though right now it’s about 18 years old,

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99-year leasehold.

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It’s still appreciating very gradually year-on-year,

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having a very nice momentum in terms of appreciation.

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Of course, for the first-time owners that would be fantastic

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because they’re sitting on a capital gain

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of close to maybe about 100% capital gain,

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already.

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A lot of them bought at $500 PSF or $600 PSF.

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–

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By the time it TOP-ed, it appreciated

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to about $700-odd PSF.

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Of course, those were the heydays,

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you cannot go back to that kind of PSF anymore

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because HDB apartments is already surpassing this PSF level.

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And right now it’s about $1,300 PSF, $1,400 PSF

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averagely.

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Will this project continue to appreciate?

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That’s the key question you wanna understand.

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I mean, it has been going up in this direction,

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so will it continue to go up in this direction?

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When we look at this other project,

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this is a freehold development,

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it’s in a prime area in District 9.

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That project that I just showed you with the uptrend graph

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that’s in District 19.

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All right?

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And that project has maybe about 600+ units.

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And then this project has less than 100 units.

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But of course, I’m not talking about

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big projects and small projects right now,

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we’re referring to the trend graph.

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2007*, they launched.

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Look at the graph.

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It’s a downward trend for the past 14 years.

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So the trend is like this, it’s going down.

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Will this project be able to turn around

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or will it continue to go down

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or will it go down and stay stagnant?

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What do you think?

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This is a question that we need to answer.

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We need to be able to decipher.

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We need to understand why has this happened?

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What is happening to these two projects?

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Why is it that one is going up since its launch day in 2004,

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2007, defying the odds of Lehman Brothers,

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defying the odds of ABSD in 2013, TDSR in 2013,

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continue to go upwards until today.

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And why is it that this project launched in 2007,

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Lehman Brothers, continue to go down,

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2013, continue to go down,

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2018, continue to go down until today

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it is much lower than where it used to be.

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So it launched at $3,000+ PSF.

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Now it’s about $2,000 PSF dropped by $1,000 PSF.

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Why did this happen?

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And that is a very real question,

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because we need to understand

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it’s not about whether does new launch

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or resale see appreciation.

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So when people tell you

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that when you buy a new launch,

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you confirm you’ll see appreciation.

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That’s not true.

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You and I know that

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because there are a lot of new launches

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that don’t see appreciation.

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There are also a lot of new launches

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that see a lot of appreciation.

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There are also resale properties

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that the moment you enter for the next five to 10 years,

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you don’t see appreciation.

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There are also resale properties,

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that the moment you enter in three, five years’ time,

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you see a lot of movement and appreciation.

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So why is that so?

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Now, there are so many different factors,

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but one key important factor

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was touched on in the previous episode.

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Just a quick recap

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with these two new graphs right now in Episode 19.

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The psychology of the price graph going up and down

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has something also to do with the profile

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and the margin that the current owners are sitting on.

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Let me give you an illustration.

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For example, you bought cryptocurrency,

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maybe just six months ago.

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You happened to maybe purchase Bitcoin

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while it was like $62K.

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Today at the point of filming,

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right now Bitcoin is at $38K.

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We’re talking about USD.

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And if you happen to be the person

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that entered at $62K, now it’s $38K,

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will you sell your Bitcoin?

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If you have no need for your investment fund,

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that is parked in Bitcoin

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as a form of mid- to long-term strategy,

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there’s no need for you to sell your Bitcoin

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because the moment you sell,

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you’ll realise an immediate loss.

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There’ll be an immediate red colour mark,

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on your balance sheet.

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What will you do as a mindset of an investor?

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Maybe you would think that,”Hey, you know, it’s okay.

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That’s my investment fund,

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it’s an additional fund that I set aside

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it is not for my daily need.

224[Melvin Lim]
00:08:07,720 –> 00:08:09,840
I’ve set aside that diversification

225[Melvin Lim]
00:08:09,840 –> 00:08:11,040
to go into Bitcoin as a form of investment.

226[Melvin Lim]
00:08:11,040 –> 00:08:14,680
I want to hold it for at least three, five, eight years time.

227[Melvin Lim]
00:08:14,680 –> 00:08:16,120
I have no need to sell right now.”

228[Melvin Lim]
00:08:16,120 –> 00:08:17,320
And maybe you tell yourself,

229[Melvin Lim]
00:08:17,320 –> 00:08:19,160
I will hold it minimum three years.

230[Melvin Lim]
00:08:19,160 –> 00:08:21,000
Why is it that I use this illustration of three years?

231[Melvin Lim]
00:08:21,000 –> 00:08:23,240
It’s because when we come back to real estate,

232[Melvin Lim]
00:08:23,240 –> 00:08:24,080
residential real estate,

233[Melvin Lim]
00:08:24,080 –> 00:08:25,760
the moment you buy anything,

234[Melvin Lim]
00:08:25,760 –> 00:08:27,320
there’s a blackout period of three years.

235[Melvin Lim]
00:08:27,320 –> 00:08:29,240
For three years, you will not sell

236[Melvin Lim]
00:08:29,240 –> 00:08:30,680
because if you sell within three years,

237[Melvin Lim]
00:08:30,680 –> 00:08:34,160
you will be hit by the Seller’s Stamp Duty of 12%, 8% and 4%.

238[Melvin Lim]
00:08:34,160 –> 00:08:35,760
So everybody enters with the mindset

239[Melvin Lim]
00:08:35,760 –> 00:08:37,800
to hold it for at least three years.

240[Melvin Lim]
00:08:37,800 –> 00:08:40,760
So we don’t have to pay unnecessary Seller’s Stamp Duty.

241[Melvin Lim]
00:08:40,760 –> 00:08:41,760
So you’ll buy it.

242[Melvin Lim]
00:08:41,760 –> 00:08:42,600
You’ll sleep on it.

243[Melvin Lim]
00:08:42,600 –> 00:08:43,760
You will use the property.

244[Melvin Lim]
00:08:43,760 –> 00:08:44,600
You’ll rent it out.

245[Melvin Lim]
00:08:44,600 –> 00:08:45,480
You will live in it.

246[Melvin Lim]
00:08:45,480 –> 00:08:47,360
You will not sell it within three years.

247[Melvin Lim]
00:08:47,360 –> 00:08:49,640
So that’s your own personal blackout period.

248[Melvin Lim]
00:08:49,640 –> 00:08:53,520
Similarly, if you enter Bitcoin $62K, now it’s $38K,

249[Melvin Lim]
00:08:53,520 –> 00:08:55,200
your mindset is that I will not sell.

250[Melvin Lim]
00:08:55,200 –> 00:08:56,040
I will hold it.

251[Melvin Lim]
00:08:56,040 –> 00:08:57,000
I will wait for it to recover.

252[Melvin Lim]
00:08:57,000 –> 00:09:00,720
However, if you belong to the other category of investors.

253[Melvin Lim]
00:09:00,720 –> 00:09:04,400
For example, you bought Bitcoin at $24K,

254[Melvin Lim]
00:09:04,400 –> 00:09:06,840
right now it is $38K.

255[Melvin Lim]
00:09:06,840 –> 00:09:10,080
You might be thinking that, “Hey, I’ve seen a gain of $14K.

256[Melvin Lim]
00:09:10,080 –> 00:09:11,400
If I want to sell

257[Melvin Lim]
00:09:11,400 –> 00:09:13,320
because I’ve identified a better investment,

258[Melvin Lim]
00:09:13,320 –> 00:09:15,880
okay, I think I will sell, because I’m sitting on green.

259[Melvin Lim]
00:09:15,880 –> 00:09:18,560
I’m making a profit, I’m making a paper gain.

260[Melvin Lim]
00:09:18,560 –> 00:09:20,280
And the moment I sell, I’ll realise the gain.

261[Melvin Lim]
00:09:20,280 –> 00:09:22,280
I can then use my profit plus my original capital.

262[Melvin Lim]
00:09:22,280 –> 00:09:24,120
I can invest in another asset

263[Melvin Lim]
00:09:24,120 –> 00:09:27,000
that I think has a higher or faster growth potential.”

264[Melvin Lim]
00:09:27,000 –> 00:09:28,440
So your mindset is very different

265[Melvin Lim]
00:09:28,440 –> 00:09:30,680
when you’re sitting on paper loss

266[Melvin Lim]
00:09:30,680 –> 00:09:32,560
and if you’re sitting on paper gain.

267[Melvin Lim]
00:09:32,560 –> 00:09:35,760
The same ideology happens when it comes to real estate.

268[Melvin Lim]
00:09:35,760 –> 00:09:38,440
And I’m not saying that it happens for everybody,

269[Melvin Lim]
00:09:38,440 –> 00:09:40,160
but I say generally speaking,

270[Melvin Lim]
00:09:40,160 –> 00:09:41,840
it happens for existing owners.

271[Melvin Lim]
00:09:41,840 –> 00:09:42,680
So for example,

272[Melvin Lim]
00:09:42,680 –> 00:09:44,280
if you belong to the first group

273[Melvin Lim]
00:09:44,280 –> 00:09:46,520
that I showed you the graph of an uptrend

274[Melvin Lim]
00:09:46,520 –> 00:09:48,080
for the past 18 years,

275[Melvin Lim]
00:09:48,080 –> 00:09:50,520
if you happen to be the first, second or third owner

276[Melvin Lim]
00:09:50,520 –> 00:09:51,440
that entered progressively,

277[Melvin Lim]
00:09:51,440 –> 00:09:52,640
you are sitting on a gain.

278[Melvin Lim]
00:09:52,640 –> 00:09:54,360
There’s no need for you to sell

279[Melvin Lim]
00:09:54,360 –> 00:09:55,720
if you have not seen anything

280[Melvin Lim]
00:09:55,720 –> 00:09:57,360
that is better than the current property,

281[Melvin Lim]
00:09:57,360 –> 00:09:58,600
or maybe you’re so comfortable here

282[Melvin Lim]
00:09:58,600 –> 00:09:59,920
that you’re just thinking that,

283[Melvin Lim]
00:09:59,920 –> 00:10:01,800
you know, I’m sitting on a paper gain, if I want to sell,

284[Melvin Lim]
00:10:01,800 –> 00:10:03,320
okay, I want to sell at the current price,

285[Melvin Lim]
00:10:03,320 –> 00:10:04,680
or I want to sell higher

286[Melvin Lim]
00:10:04,680 –> 00:10:06,720
than what my neighbour just exited at last month.

287[Melvin Lim]
00:10:06,720 –> 00:10:08,760
It would then become a psychology that you have

288[Melvin Lim]
00:10:08,760 –> 00:10:10,080
that you’re not urgent to sell

289[Melvin Lim]
00:10:10,080 –> 00:10:11,280
because you’re already sitting on paper gain.

290[Melvin Lim]
00:10:11,280 –> 00:10:12,600
And if you wanna sell,

291[Melvin Lim]
00:10:12,600 –> 00:10:14,680
you wanna sell at a slightly higher price

292[Melvin Lim]
00:10:14,680 –> 00:10:16,640
than your neighbours have exited at

293[Melvin Lim]
00:10:16,640 –> 00:10:18,080
maybe three or six months ago.

294[Melvin Lim]
00:10:18,080 –> 00:10:19,360
So that is your psychology.

295[Melvin Lim]
00:10:19,360 –> 00:10:21,400
If you’re sitting on a paper loss,

296[Melvin Lim]
00:10:21,400 –> 00:10:24,200
you will only sell when you really need to sell.

297[Melvin Lim]
00:10:24,200 –> 00:10:25,840
That means you really need the money.

298[Melvin Lim]
00:10:25,840 –> 00:10:28,120
You will only sell if you are really at a stage

299[Melvin Lim]
00:10:28,120 –> 00:10:29,600
that you feel that there’s no chance

300[Melvin Lim]
00:10:29,600 –> 00:10:31,000
that your project can recover

301[Melvin Lim]
00:10:31,000 –> 00:10:32,520
because the valuation is damaged

302[Melvin Lim]
00:10:32,520 –> 00:10:33,920
through the past 10 years

303[Melvin Lim]
00:10:33,920 –> 00:10:37,400
of a declining transaction PSF level

304[Melvin Lim]
00:10:37,400 –> 00:10:38,240
that has brought down the PSF.

305[Melvin Lim]
00:10:38,240 –> 00:10:40,120
And if you noticed the graph,

306[Melvin Lim]
00:10:40,120 –> 00:10:42,680
the amount of transactions usually in a downward trend

307[Melvin Lim]
00:10:42,680 –> 00:10:43,520
is very little.

308[Melvin Lim]
00:10:43,520 –> 00:10:44,360
Why?

309[Melvin Lim]
00:10:44,360 –> 00:10:46,400
Because a lot of owners are demotivated to sell.

310[Melvin Lim]
00:10:46,400 –> 00:10:48,720
The moment they sell, they’ll realise their net loss

311[Melvin Lim]
00:10:48,720 –> 00:10:50,640
and thus they hold onto their property

312[Melvin Lim]
00:10:50,640 –> 00:10:53,560
for longer period of time to wait for recovery.

313[Melvin Lim]
00:10:53,560 –> 00:10:55,840
But sometimes at a certain point in time,

314[Melvin Lim]
00:10:55,840 –> 00:10:59,320
certain owners will think that I don’t wanna wait anymore.

315[Melvin Lim]
00:10:59,320 –> 00:11:01,520
I’ve seen this other property that my family love,

316[Melvin Lim]
00:11:01,520 –> 00:11:02,360
it’s a bigger one.

317[Melvin Lim]
00:11:02,360 –> 00:11:03,800
I can afford that.

318[Melvin Lim]
00:11:03,800 –> 00:11:05,400
I think I’ll just cut my paper loss,

319[Melvin Lim]
00:11:05,400 –> 00:11:08,160
I’ll just exit at whatever bank valuation it’s at right now,

320[Melvin Lim]
00:11:08,160 –> 00:11:10,000
even though I lost $500 PSF.

321[Melvin Lim]
00:11:10,000 –> 00:11:12,400
I’ll just cut my loss, move on to my new place,

322[Melvin Lim]
00:11:12,400 –> 00:11:15,560
or maybe they could be foreign investors or foreign buyers

323[Melvin Lim]
00:11:15,560 –> 00:11:18,480
that is in a very different position if you’re a Singaporean

324[Melvin Lim]
00:11:18,480 –> 00:11:20,720
because foreign investors think differently.

325[Melvin Lim]
00:11:20,720 –> 00:11:22,280
Why is it that they think differently?

326[Melvin Lim]
00:11:22,280 –> 00:11:24,240
Not only do they think differently,

327[Melvin Lim]
00:11:24,240 –> 00:11:26,560
they have something that works very separately

328[Melvin Lim]
00:11:26,560 –> 00:11:28,040
from Singaporean investors.

329[Melvin Lim]
00:11:28,040 –> 00:11:30,960
Foreign investors, if they come from their native country,

330[Melvin Lim]
00:11:30,960 –> 00:11:34,640
whose currency is performing weaker than Singapore currency

331[Melvin Lim]
00:11:34,640 –> 00:11:35,840
on a year-to-year basis,

332[Melvin Lim]
00:11:35,840 –> 00:11:38,880
even though if they were to sell at a net loss,

333[Melvin Lim]
00:11:38,880 –> 00:11:41,160
when they translate back Singapore’s currency,

334[Melvin Lim]
00:11:41,160 –> 00:11:43,120
what they get back from the net loss property,

335[Melvin Lim]
00:11:43,120 –> 00:11:44,920
back into their native currency,

336[Melvin Lim]
00:11:44,920 –> 00:11:46,960
they might still see a gain.

337[Melvin Lim]
00:11:46,960 –> 00:11:48,440
Which is why you see certain articles

338[Melvin Lim]
00:11:48,440 –> 00:11:50,880
about some foreign investors in the past few years

339[Melvin Lim]
00:11:50,880 –> 00:11:52,480
who sold their property at a loss

340[Melvin Lim]
00:11:52,480 –> 00:11:54,720
but when they translate back to their native currency,

341[Melvin Lim]
00:11:54,720 –> 00:11:56,040
they still see a gain,

342[Melvin Lim]
00:11:56,040 –> 00:11:59,040
because our Singapore currency has appreciated so much

343[Melvin Lim]
00:11:59,040 –> 00:12:01,160
against their original country’s currency

344[Melvin Lim]
00:12:01,160 –> 00:12:03,880
by so much over the past five to 10 years.

345[Melvin Lim]
00:12:03,880 –> 00:12:06,360
So that is something that’s working for foreign investors

346[Melvin Lim]
00:12:06,360 –> 00:12:08,680
that is of course an additional benefit

347[Melvin Lim]
00:12:08,680 –> 00:12:10,400
and that is also an additional reason

348[Melvin Lim]
00:12:10,400 –> 00:12:12,920
why foreign buyers love to purchase Singapore property

349[Melvin Lim]
00:12:12,920 –> 00:12:14,680
because not just you’re buying a property

350[Melvin Lim]
00:12:14,680 –> 00:12:15,880
on land-scarce Singapore,

351[Melvin Lim]
00:12:15,880 –> 00:12:18,240
you’re buying a property in a base currency

352[Melvin Lim]
00:12:18,240 –> 00:12:21,200
that’s appreciating against their native currency.

353[Melvin Lim]
00:12:21,200 –> 00:12:23,320
So coming back to these two graphs,

354[Melvin Lim]
00:12:23,320 –> 00:12:25,400
these characteristics that we’re talking about

355[Melvin Lim]
00:12:25,400 –> 00:12:27,400
is that if the original profile

356[Melvin Lim]
00:12:27,400 –> 00:12:29,880
of the current owners that are holding onto the property

357[Melvin Lim]
00:12:29,880 –> 00:12:32,160
is not sitting on a paper gain,

358[Melvin Lim]
00:12:32,160 –> 00:12:34,200
most of the time they’re demotivated to sell

359[Melvin Lim]
00:12:34,200 –> 00:12:36,640
which then translates into lower level of transactions.

360[Melvin Lim]
00:12:36,640 –> 00:12:38,120
But that also means that

361[Melvin Lim]
00:12:38,120 –> 00:12:40,440
the second effect will kick in easier,

362[Melvin Lim]
00:12:40,440 –> 00:12:41,840
which brings me back to this.

363[Melvin Lim]
00:12:41,840 –> 00:12:43,880
If the valuation of the project is damaged,

364[Melvin Lim]
00:12:43,880 –> 00:12:45,280
because there was a fire sale.

365[Melvin Lim]
00:12:45,280 –> 00:12:46,560
If some of the owners

366[Melvin Lim]
00:12:46,560 –> 00:12:49,520
who were already sitting on paper loss through the years,

367[Melvin Lim]
00:12:49,520 –> 00:12:51,400
they just want to maybe just exit

368[Melvin Lim]
00:12:51,400 –> 00:12:52,560
and switch to another property

369[Melvin Lim]
00:12:52,560 –> 00:12:54,920
that they think has a higher potential to appreciate

370[Melvin Lim]
00:12:54,920 –> 00:12:56,240
they are not going wait anymore.

371[Melvin Lim]
00:12:56,240 –> 00:12:58,480
The project will find it very hard to recover.

372[Melvin Lim]
00:12:58,480 –> 00:13:02,040
I believe that you will reach a saturation point

373[Melvin Lim]
00:13:02,040 –> 00:13:04,840
that it might stagnate, or it might recover

374[Melvin Lim]
00:13:04,840 –> 00:13:06,000
and that point will come

375[Melvin Lim]
00:13:06,000 –> 00:13:09,280
when all surrounding projects are so much more expensive

376[Melvin Lim]
00:13:09,280 –> 00:13:11,320
in terms of PSF compared to these projects.

377[Melvin Lim]
00:13:11,320 –> 00:13:13,920
But if the surrounding has not outperformed this project

378[Melvin Lim]
00:13:13,920 –> 00:13:14,960
by a huge disparity,

379[Melvin Lim]
00:13:14,960 –> 00:13:17,920
then it might continue to trend downwards a little bit more,

380[Melvin Lim]
00:13:17,920 –> 00:13:19,200
or it might just stay flat

381[Melvin Lim]
00:13:19,200 –> 00:13:20,800
before it really hits the recovery point.

382[Melvin Lim]
00:13:20,800 –> 00:13:23,240
But sometimes the recovery point may come after 10 years

383[Melvin Lim]
00:13:23,240 –> 00:13:24,080
or 15 years.

384[Melvin Lim]
00:13:24,080 –> 00:13:25,200
So it’s very hard to say

385[Melvin Lim]
00:13:25,200 –> 00:13:27,440
because for every project, it performs very differently.

386[Melvin Lim]
00:13:27,440 –> 00:13:29,560
So this is a little bit like on the contrary kind of thing,

387[Melvin Lim]
00:13:29,560 –> 00:13:31,320
because a lot of people think that, you know,

388[Melvin Lim]
00:13:31,320 –> 00:13:32,720
I need to buy properties

389[Melvin Lim]
00:13:32,720 –> 00:13:34,920
that has not seen that uprise, right?

390[Melvin Lim]
00:13:34,920 –> 00:13:36,800
But the contrary effect is that

391[Melvin Lim]
00:13:36,800 –> 00:13:40,120
this uptrend actually motivates the current owners

392[Melvin Lim]
00:13:40,120 –> 00:13:42,400
to price their property slightly higher

393[Melvin Lim]
00:13:42,400 –> 00:13:44,320
and challenge the next asking price

394[Melvin Lim]
00:13:44,320 –> 00:13:47,400
and when the asking price is being challenged successfully,

395[Melvin Lim]
00:13:47,400 –> 00:13:48,320
somebody transacted it,

396[Melvin Lim]
00:13:48,320 –> 00:13:51,080
then it will increase the entire valuation of the project

397[Melvin Lim]
00:13:51,080 –> 00:13:53,200
gradually and gradually upwards

398[Melvin Lim]
00:13:53,200 –> 00:13:54,920
and that’s how the uptrend curve happens.

399[Melvin Lim]
00:13:54,920 –> 00:13:57,480
And usually when uptrend curves happen,

400[Melvin Lim]
00:13:57,480 –> 00:13:59,560
the current owners are holding on strong,

401[Melvin Lim]
00:13:59,560 –> 00:14:01,720
they’re not letting go of their properties cheap,

402[Melvin Lim]
00:14:01,720 –> 00:14:03,560
then it brings up the entire project

403[Melvin Lim]
00:14:03,560 –> 00:14:06,240
gradually over the next five, 10, 15 years.

404[Melvin Lim]
00:14:06,240 –> 00:14:07,480
So usually that’s what happens,

405[Melvin Lim]
00:14:07,480 –> 00:14:08,840
but of course we’re not talking about other things

406[Melvin Lim]
00:14:08,840 –> 00:14:10,840
like Bala’s Curve and all this kind of stuff, right?

407[Melvin Lim]
00:14:10,840 –> 00:14:13,600
So this is really about the uptrend or the downtrend.

408[Melvin Lim]
00:14:13,600 –> 00:14:18,080
Now, coming back to our next point in the MOAT Analysis.

409[Melvin Lim]
00:14:18,080 –> 00:14:20,400
So as you all know, MOAT Analysis,

410[Melvin Lim]
00:14:20,400 –> 00:14:22,080
we have various different points.

411[Melvin Lim]
00:14:22,080 –> 00:14:25,680
We also have our MOAT Analysis on our PLB channel

412[Melvin Lim]
00:14:25,680 –> 00:14:28,120
just to show you a little bit of how it looks like.

413[Melvin Lim]
00:14:28,120 –> 00:14:31,080
So if you happen to meet any of our Listing Managers

414[Melvin Lim]
00:14:31,080 –> 00:14:32,960
and Listing Specialist Consultants,

415[Melvin Lim]
00:14:32,960 –> 00:14:34,360
or our Buyer Consultants,

416[Melvin Lim]
00:14:34,360 –> 00:14:36,920
what our guys can do is that we are all trained

417[Melvin Lim]
00:14:36,920 –> 00:14:40,280
in MOAT Analysis because this is our core fundamental tool

418[Melvin Lim]
00:14:40,280 –> 00:14:41,960
that we help our customers to identify

419[Melvin Lim]
00:14:41,960 –> 00:14:44,240
and sieve through all the projects

420[Melvin Lim]
00:14:44,240 –> 00:14:47,320
based on the districts and the estates that they love.

421[Melvin Lim]
00:14:47,320 –> 00:14:49,440
We sift through with our point system

422[Melvin Lim]
00:14:49,440 –> 00:14:50,560
to grade the projects.

423[Melvin Lim]
00:14:50,560 –> 00:14:53,640
The projects grading will change through time,

424[Melvin Lim]
00:14:53,640 –> 00:14:55,880
because sometimes there are new things that popped up.

425[Melvin Lim]
00:14:55,880 –> 00:14:57,960
There are new transactions that happen,

426[Melvin Lim]
00:14:57,960 –> 00:14:59,320
and this is a live update.

427[Melvin Lim]
00:14:59,320 –> 00:15:01,880
So basically this is our PLB condominium MOAT Analysis,

428[Melvin Lim]
00:15:01,880 –> 00:15:02,920
as you can see,

429[Melvin Lim]
00:15:02,920 –> 00:15:06,040
there are about five, six, seven, eight, nine,

430[Melvin Lim]
00:15:06,040 –> 00:15:07,160
10, 11 points.

431[Melvin Lim]
00:15:07,160 –> 00:15:10,480
Volume effect is the point number one that we just talked about.

432[Melvin Lim]
00:15:10,480 –> 00:15:11,840
There’s density effect as well,

433[Melvin Lim]
00:15:11,840 –> 00:15:13,920
developers’ experience

434[Melvin Lim]
00:15:13,920 –> 00:15:16,560
our district kinetic effect and things like that.

435[Melvin Lim]
00:15:16,560 –> 00:15:19,680
And of course, parents’ attraction factor is so important.

436[Melvin Lim]
00:15:19,680 –> 00:15:21,760
Why is parents’ attraction factor important?

437[Melvin Lim]
00:15:21,760 –> 00:15:23,920
It’s because parents’ attraction factor

438[Melvin Lim]
00:15:23,920 –> 00:15:27,040
basically affects the buyer audience.

439[Melvin Lim]
00:15:27,040 –> 00:15:29,840
So always remember when you want to invest in a property,

440[Melvin Lim]
00:15:29,840 –> 00:15:32,080
the most important thing is to try to visualise

441[Melvin Lim]
00:15:32,080 –> 00:15:34,640
in three or five years’ time or eight years’ time

442[Melvin Lim]
00:15:34,640 –> 00:15:35,560
when you want to exit.

443[Melvin Lim]
00:15:35,560 –> 00:15:38,080
How wide or how big is your buyer audience

444[Melvin Lim]
00:15:38,080 –> 00:15:38,920
that might like your property?

445[Melvin Lim]
00:15:38,920 –> 00:15:41,520
Because that’s one of the most important points.

446[Melvin Lim]
00:15:41,520 –> 00:15:43,560
And that can only be determined

447[Melvin Lim]
00:15:43,560 –> 00:15:46,760
through various scoring systems and various factors

448[Melvin Lim]
00:15:46,760 –> 00:15:49,760
that really adhere to the amount of audience

449[Melvin Lim]
00:15:49,760 –> 00:15:52,360
that might be present in three, five, eight years’ time.

450[Melvin Lim]
00:15:52,360 –> 00:15:55,040
That’s how we use MOAT Analysis to our client’s advantage.

451[Melvin Lim]
00:15:55,040 –> 00:15:57,280
And that’s how we select properties for them.

452[Melvin Lim]
00:15:57,280 –> 00:15:59,360
Most of the time, I always share with my customers

453[Melvin Lim]
00:15:59,360 –> 00:16:01,440
that if you’re hunting for your first property,

454[Melvin Lim]
00:16:01,440 –> 00:16:03,200
the most important thing is to note that

455[Melvin Lim]
00:16:03,200 –> 00:16:05,680
you need to balance out your family’s preference and needs

456[Melvin Lim]
00:16:05,680 –> 00:16:07,800
vis-a-vis having that investment engine

457[Melvin Lim]
00:16:07,800 –> 00:16:09,320
within that property.

458[Melvin Lim]
00:16:09,320 –> 00:16:10,720
So try to find a balance.

459[Melvin Lim]
00:16:10,720 –> 00:16:13,760
I will usually recommend having 50% coverage

460[Melvin Lim]
00:16:13,760 –> 00:16:15,200
in terms of family preferences.

461[Melvin Lim]
00:16:15,200 –> 00:16:16,640
That means, for example, if it’s for me,

462[Melvin Lim]
00:16:16,640 –> 00:16:17,920
what my kids would need.

463[Melvin Lim]
00:16:17,920 –> 00:16:19,200
In terms of the amount of bedrooms.

464[Melvin Lim]
00:16:19,200 –> 00:16:20,400
Do they need facilities?

465[Melvin Lim]
00:16:20,400 –> 00:16:22,160
Do they need a pool and things like that?

466[Melvin Lim]
00:16:22,160 –> 00:16:23,000
Do I need a gym?

467[Melvin Lim]
00:16:23,000 –> 00:16:24,200
Does my wife workout?

468[Melvin Lim]
00:16:24,200 –> 00:16:25,720
Do we prefer basement parking?

469[Melvin Lim]
00:16:25,720 –> 00:16:27,920
Do we prefer multi-storey parking?

470[Melvin Lim]
00:16:27,920 –> 00:16:28,760
And where?

471[Melvin Lim]
00:16:28,760 –> 00:16:30,560
How near do we want to live near the MRT?

472[Melvin Lim]
00:16:30,560 –> 00:16:32,000
Do we want the kids to be independent?

473[Melvin Lim]
00:16:32,000 –> 00:16:33,720
To be able to come back from school by themselves

474[Melvin Lim]
00:16:33,720 –> 00:16:34,560
and things like that.

475[Melvin Lim]
00:16:34,560 –> 00:16:35,400
And also things like,

476[Melvin Lim]
00:16:35,400 –> 00:16:36,680
do we want to live near a shopping mall?

477[Melvin Lim]
00:16:36,680 –> 00:16:38,360
Do we want to live near our parents?

478[Melvin Lim]
00:16:38,360 –> 00:16:39,920
Do we want to live near our siblings?

479[Melvin Lim]
00:16:39,920 –> 00:16:43,880
So trying to find that 50% factoring factors

480[Melvin Lim]
00:16:43,880 –> 00:16:45,800
to be for the needs of the family,

481[Melvin Lim]
00:16:45,800 –> 00:16:46,640
because always remember,

482[Melvin Lim]
00:16:46,640 –> 00:16:47,960
if your family is happy,

483[Melvin Lim]
00:16:47,960 –> 00:16:49,880
every day will be happy in your home

484[Melvin Lim]
00:16:49,880 –> 00:16:52,000
because your home is there to serve your family.

485[Melvin Lim]
00:16:52,000 –> 00:16:53,400
Don’t reverse it.

486[Melvin Lim]
00:16:53,400 –> 00:16:54,960
Don’t serve your property because…

487[Melvin Lim]
00:16:54,960 –> 00:16:56,600
Don’t be a slave to your property,

488[Melvin Lim]
00:16:56,600 –> 00:16:58,240
let your property serve your family.

489[Melvin Lim]
00:16:58,240 –> 00:17:00,560
Let it be a place to build good memories

490[Melvin Lim]
00:17:00,560 –> 00:17:02,480
with your family and kids through their growing up

491[Melvin Lim]
00:17:02,480 –> 00:17:03,320
and things like that.

492[Melvin Lim]
00:17:03,320 –> 00:17:05,680
And let your spouse be happy together with you as well.

493[Melvin Lim]
00:17:05,680 –> 00:17:10,320
The other 50% try as much you can to have inherent factors

494[Melvin Lim]
00:17:10,320 –> 00:17:13,600
from our MOAT Analysis is one range of factors.

495[Melvin Lim]
00:17:13,600 –> 00:17:15,440
If you have your own investment philosophy,

496[Melvin Lim]
00:17:15,440 –> 00:17:16,240
you can add those in as well.

497[Melvin Lim]
00:17:16,240 –> 00:17:17,680
The other 50%

498[Melvin Lim]
00:17:17,680 –> 00:17:20,960
try to have that investment inherent factors engine

499[Melvin Lim]
00:17:20,960 –> 00:17:22,960
within the selection criteria

500[Melvin Lim]
00:17:22,960 –> 00:17:25,680
so that you know that in five, eight, 10 years’ time,

501[Melvin Lim]
00:17:25,680 –> 00:17:28,040
when you want to exit, there’s a wide array of audience

502[Melvin Lim]
00:17:28,040 –> 00:17:29,440
that’s willing to buy your property.

503[Melvin Lim]
00:17:29,440 –> 00:17:30,320
There’s a chance,

504[Melvin Lim]
00:17:30,320 –> 00:17:32,560
a better chance to see upward appreciation

505[Melvin Lim]
00:17:32,560 –> 00:17:33,360
through the years.

506[Melvin Lim]
00:17:33,360 –> 00:17:35,840
So at least when you’re living there for the next 10 years,

507[Melvin Lim]
00:17:35,840 –> 00:17:37,840
your property is working for you

508[Melvin Lim]
00:17:37,840 –> 00:17:40,080
in terms of building up the capital appreciation

509[Melvin Lim]
00:17:40,080 –> 00:17:42,280
because sometimes it’s a little bit sad to know that,

510[Melvin Lim]
00:17:42,280 –> 00:17:43,960
you know, I bought my property in 2022,

511[Melvin Lim]
00:17:43,960 –> 00:17:46,120
2032 and I wanna move to a bigger property.

512[Melvin Lim]
00:17:46,120 –> 00:17:47,640
I bought this at $2 mil.

513[Melvin Lim]
00:17:47,640 –> 00:17:51,000
If 2032 it’s still $2 mil, I will be very sad

514[Melvin Lim]
00:17:51,000 –> 00:17:52,360
because I always share with my customer,

515[Melvin Lim]
00:17:52,360 –> 00:17:55,360
if your property do not appreciate the risk is very high.

516[Melvin Lim]
00:17:55,360 –> 00:17:58,280
You want to purchase a property with an upward momentum.

517[Melvin Lim]
00:17:58,280 –> 00:17:59,440
It can be gradual,

518[Melvin Lim]
00:17:59,440 –> 00:18:01,880
but at least it must be able to fight inflation

519[Melvin Lim]
00:18:01,880 –> 00:18:04,440
because inflation is 2.8% or 3%,

520[Melvin Lim]
00:18:04,440 –> 00:18:08,080
10 years time, it must appreciate by at least 30%,

521[Melvin Lim]
00:18:08,080 –> 00:18:09,240
because it must fight inflation.

522[Melvin Lim]
00:18:09,240 –> 00:18:11,880
If not, your dollar just keeps getting smaller and smaller.

523[Melvin Lim]
00:18:11,880 –> 00:18:14,360
The amount of principal that you pay down on your loan

524[Melvin Lim]
00:18:14,360 –> 00:18:15,840
just gets smaller and smaller.

525[Melvin Lim]
00:18:15,840 –> 00:18:17,400
Not only do you have to fight inflation,

526[Melvin Lim]
00:18:17,400 –> 00:18:19,440
you also have to pay back the bank’s interest,

527[Melvin Lim]
00:18:19,440 –> 00:18:21,400
1.3%, 1.5% or 2%.

528[Melvin Lim]
00:18:21,400 –> 00:18:23,080
So these are things that you need to factor in.

529[Melvin Lim]
00:18:23,080 –> 00:18:24,080
That’s why it’s important

530[Melvin Lim]
00:18:24,080 –> 00:18:26,800
to find a product that has a higher chance of appreciation.

531[Melvin Lim]
00:18:26,800 –> 00:18:28,200
Of course, nobody has a crystal ball,

532[Melvin Lim]
00:18:28,200 –> 00:18:29,960
but we believe that we have deciphered

533[Melvin Lim]
00:18:29,960 –> 00:18:31,960
a certain level of amount of code

534[Melvin Lim]
00:18:31,960 –> 00:18:34,560
to find out which projects has a higher propensity

535[Melvin Lim]
00:18:34,560 –> 00:18:36,600
to appreciate in future.

536[Melvin Lim]
00:18:36,600 –> 00:18:38,480
So point number two that we just shared with you

537[Melvin Lim]
00:18:38,480 –> 00:18:40,280
regarding our MOAT Analysis was to identify

538[Melvin Lim]
00:18:40,280 –> 00:18:43,080
whether the project that you are intending to go in,

539[Melvin Lim]
00:18:43,080 –> 00:18:44,840
whether does it have an upward trend

540[Melvin Lim]
00:18:44,840 –> 00:18:46,520
or does it have a downward trend

541[Melvin Lim]
00:18:46,520 –> 00:18:48,240
or does it have a stagnant trend

542[Melvin Lim]
00:18:48,240 –> 00:18:50,640
and try to decipher what it has went through

543[Melvin Lim]
00:18:50,640 –> 00:18:52,520
throughout the past five, 10 or 15 years.

544[Melvin Lim]
00:18:52,520 –> 00:18:55,000
Because if you follow us closely on our series,

545[Melvin Lim]
00:18:55,000 –> 00:18:57,840
there were a few key moments that happened.

546[Melvin Lim]
00:18:57,840 –> 00:19:00,600
Number one was during the 2013 TDSR period.

547[Melvin Lim]
00:19:00,600 –> 00:19:02,840
That was actually one of the most decisive factors

548[Melvin Lim]
00:19:02,840 –> 00:19:05,080
that affected a lot of PSF

549[Melvin Lim]
00:19:05,080 –> 00:19:07,400
plus quantum play effect that came in.

550[Melvin Lim]
00:19:07,400 –> 00:19:08,240
We also talked about that

551[Melvin Lim]
00:19:08,240 –> 00:19:10,120
in our previous two to three episodes as well.

552[Melvin Lim]
00:19:10,120 –> 00:19:10,960
You can catch that.

553[Melvin Lim]
00:19:10,960 –> 00:19:12,360
And coming back to another point

554[Melvin Lim]
00:19:12,360 –> 00:19:13,440
that we wanna share with you

555[Melvin Lim]
00:19:13,440 –> 00:19:15,320
other than the upward or downward trend

556[Melvin Lim]
00:19:15,320 –> 00:19:18,000
is to note that Singapore is vastly different.

557[Melvin Lim]
00:19:18,000 –> 00:19:20,480
So sometimes we might be a little bit fearful

558[Melvin Lim]
00:19:20,480 –> 00:19:22,720
to enter into the private property market,

559[Melvin Lim]
00:19:22,720 –> 00:19:24,440
because we were thinking about,

560[Melvin Lim]
00:19:24,440 –> 00:19:26,240
you know, what if the property market crash,

561[Melvin Lim]
00:19:26,240 –> 00:19:27,920
you know, like in 16 December,

562[Melvin Lim]
00:19:27,920 –> 00:19:29,440
there was another round of cooling measures,

563[Melvin Lim]
00:19:29,440 –> 00:19:30,720
now ABSD has increased

564[Melvin Lim]
00:19:30,720 –> 00:19:33,160
and then, you know, foreigners might not come in

565[Melvin Lim]
00:19:33,160 –> 00:19:34,680
to buy residential properties anymore

566[Melvin Lim]
00:19:34,680 –> 00:19:35,520
because now it’s at 30%,

567[Melvin Lim]
00:19:35,520 –> 00:19:38,680
ABSD just increased by 10% overnight,

568[Melvin Lim]
00:19:38,680 –> 00:19:40,200
TDSR dropped to 55%.

569[Melvin Lim]
00:19:40,200 –> 00:19:42,720
However, it will be beneficial

570[Melvin Lim]
00:19:42,720 –> 00:19:44,920
to understand how Singapore real estate works.

571[Melvin Lim]
00:19:44,920 –> 00:19:48,120
In the sense that Singapore has technically built its own MOAT.

572[Melvin Lim]
00:19:48,120 –> 00:19:50,280
So Singapore is vastly different in the sense that

573[Melvin Lim]
00:19:50,280 –> 00:19:53,840
it has close to about 1.2 mil HDB apartments.

574[Melvin Lim]
00:19:53,840 –> 00:19:54,680
And that’s why Singapore

575[Melvin Lim]
00:19:54,680 –> 00:19:58,120
has one of the highest homeownership rates in Singapore.

576[Melvin Lim]
00:19:58,120 –> 00:19:59,680
Our local government is so smart

577[Melvin Lim]
00:19:59,680 –> 00:20:02,360
because they have planned it since our early founders days.

578[Melvin Lim]
00:20:02,360 –> 00:20:05,480
This has built such a great foundation in Singapore

579[Melvin Lim]
00:20:05,480 –> 00:20:07,160
and that’s one of the core reasons

580[Melvin Lim]
00:20:07,160 –> 00:20:10,560
why it allows a lot of people to propel upwards

581[Melvin Lim]
00:20:10,560 –> 00:20:12,280
towards the mass market condominiums.

582[Melvin Lim]
00:20:12,280 –> 00:20:14,760
And when families mature into their profession,

583[Melvin Lim]
00:20:14,760 –> 00:20:16,320
husband and wife work harder,

584[Melvin Lim]
00:20:16,320 –> 00:20:18,480
they build their businesses, build their careers,

585[Melvin Lim]
00:20:18,480 –> 00:20:20,040
they then move on from mass market condos

586[Melvin Lim]
00:20:20,040 –> 00:20:22,880
to landed properties or condominiums in the central region

587[Melvin Lim]
00:20:22,880 –> 00:20:23,680
and things like that.

588[Melvin Lim]
00:20:23,680 –> 00:20:26,280
Or they buy additional second or third properties.

589[Melvin Lim]
00:20:26,280 –> 00:20:28,720
If you study how our base support level works

590[Melvin Lim]
00:20:28,720 –> 00:20:30,120
in the residential market,

591[Melvin Lim]
00:20:30,120 –> 00:20:32,520
technically speaking, the base support level

592[Melvin Lim]
00:20:32,520 –> 00:20:34,720
comes from this level that we are showing you.

593[Melvin Lim]
00:20:34,720 –> 00:20:37,000
Technically speaking, how do our government

594[Melvin Lim]
00:20:37,000 –> 00:20:38,280
pump money into the real estate market

595[Melvin Lim]
00:20:38,280 –> 00:20:41,800
is through subsidised new flats through our BTO system

596[Melvin Lim]
00:20:41,800 –> 00:20:43,280
and through our resale grants.

597[Melvin Lim]
00:20:43,280 –> 00:20:45,520
Of course, our government’s intention is very good

598[Melvin Lim]
00:20:45,520 –> 00:20:47,680
in the sense that it is to support marriages,

599[Melvin Lim]
00:20:47,680 –> 00:20:50,960
it’s to support new families to build their families early,

600[Melvin Lim]
00:20:50,960 –> 00:20:52,480
it’s to support young couples

601[Melvin Lim]
00:20:52,480 –> 00:20:54,480
to buy their first home earlier,

602[Melvin Lim]
00:20:54,480 –> 00:20:56,200
rather than having to rent.

603[Melvin Lim]
00:20:56,200 –> 00:20:57,240
Because technically speaking,

604[Melvin Lim]
00:20:57,240 –> 00:20:59,120
if you look at the amount of resale grants

605[Melvin Lim]
00:20:59,120 –> 00:21:02,040
that HDB is giving in terms of CPF housing grant,

606[Melvin Lim]
00:21:02,040 –> 00:21:03,880
it can go up to $160K.

607[Melvin Lim]
00:21:03,880 –> 00:21:04,840
Averagely, of course,

608[Melvin Lim]
00:21:04,840 –> 00:21:06,720
if you have a median income as a fresh grad,

609[Melvin Lim]
00:21:06,720 –> 00:21:09,000
you might qualify with proximity housing scheme,

610[Melvin Lim]
00:21:09,000 –> 00:21:11,360
maybe about $80K or $100K.

611[Melvin Lim]
00:21:11,360 –> 00:21:14,320
This grant is extremely important because with this grant,

612[Melvin Lim]
00:21:14,320 –> 00:21:17,360
you technically don’t need a full set of down payment

613[Melvin Lim]
00:21:17,360 –> 00:21:18,680
in your CPF account

614[Melvin Lim]
00:21:18,680 –> 00:21:20,920
to funnel into your first resale property.

615[Melvin Lim]
00:21:20,920 –> 00:21:23,200
And you can get your first resale property immediately,

616[Melvin Lim]
00:21:23,200 –> 00:21:25,680
provided, of course, there’s not a lot of COV involved

617[Melvin Lim]
00:21:25,680 –> 00:21:26,600
in the resale flat,

618[Melvin Lim]
00:21:26,600 –> 00:21:28,200
which is what’s happening on the ground right now.

619[Melvin Lim]
00:21:28,200 –> 00:21:30,200
Secondly, if you’re able to wait balloting process,

620[Melvin Lim]
00:21:30,200 –> 00:21:32,160
wait another three to five years,

621[Melvin Lim]
00:21:32,160 –> 00:21:33,560
then you can go for BTOs,

622[Melvin Lim]
00:21:33,560 –> 00:21:35,360
which are also highly subsidised as well.

623[Melvin Lim]
00:21:35,360 –> 00:21:37,400
And most of the time, after five years,

624[Melvin Lim]
00:21:37,400 –> 00:21:39,760
once you’ve completed your minimum occupation period,

625[Melvin Lim]
00:21:39,760 –> 00:21:42,240
BTO definitely, highly likely,

626[Melvin Lim]
00:21:42,240 –> 00:21:44,040
always sees an upward appreciation

627[Melvin Lim]
00:21:44,040 –> 00:21:46,400
in terms of the entry price towards the exit price,

628[Melvin Lim]
00:21:46,400 –> 00:21:48,160
when they hit that five years MOP status,

629[Melvin Lim]
00:21:48,160 –> 00:21:49,600
we’ve seen it throughout so many years.

630[Melvin Lim]
00:21:49,600 –> 00:21:51,800
Resale property, we always mention,

631[Melvin Lim]
00:21:51,800 –> 00:21:55,240
if you buy a property at $600K, you get a grant of $100K.

632[Melvin Lim]
00:21:55,240 –> 00:21:57,440
Even if you sell after five years at $600K,

633[Melvin Lim]
00:21:57,440 –> 00:21:59,560
technically the $100K is still yours to keep,

634[Melvin Lim]
00:21:59,560 –> 00:22:00,400
you don’t have to return it,

635[Melvin Lim]
00:22:00,400 –> 00:22:03,560
as long as you do not touch another brand new BTO,

636[Melvin Lim]
00:22:03,560 –> 00:22:05,480
you don’t touch another sales of balance flat,

637[Melvin Lim]
00:22:05,480 –> 00:22:06,440
you don’t touch an EC.

638[Melvin Lim]
00:22:06,440 –> 00:22:09,120
You can keep that resale grant throughout your entire life,

639[Melvin Lim]
00:22:09,120 –> 00:22:10,680
if you move on continuously

640[Melvin Lim]
00:22:10,680 –> 00:22:13,320
towards resale HDB properties or private properties.

641[Melvin Lim]
00:22:13,320 –> 00:22:16,160
So this forms the base support level

642[Melvin Lim]
00:22:16,160 –> 00:22:19,680
for our overall residential market structure,

643[Melvin Lim]
00:22:19,680 –> 00:22:21,360
because this creates an early entry point

644[Melvin Lim]
00:22:21,360 –> 00:22:24,320
into the residential market through HDB apartments.

645[Melvin Lim]
00:22:24,320 –> 00:22:25,800
Once the young families,

646[Melvin Lim]
00:22:25,800 –> 00:22:27,640
they’re in their mid-30s or late 30s,

647[Melvin Lim]
00:22:27,640 –> 00:22:29,720
and once they’ve built their career after five years

648[Melvin Lim]
00:22:29,720 –> 00:22:32,960
of MOP period, they’ve built capital through the five years

649[Melvin Lim]
00:22:32,960 –> 00:22:34,560
by paying down their instalments,

650[Melvin Lim]
00:22:34,560 –> 00:22:36,200
paying down their principal as well.

651[Melvin Lim]
00:22:36,200 –> 00:22:38,640
When they sell, they can then use this capital

652[Melvin Lim]
00:22:38,640 –> 00:22:41,000
that is currently trapped in their HDB apartments

653[Melvin Lim]
00:22:41,000 –> 00:22:42,960
and unlock it and then repurpose that

654[Melvin Lim]
00:22:42,960 –> 00:22:43,840
into their next private property.

655[Melvin Lim]
00:22:43,840 –> 00:22:45,840
And most of the time, they would then upgrade

656[Melvin Lim]
00:22:45,840 –> 00:22:48,520
to mass market condos or they might sell their HDB apartments,

657[Melvin Lim]
00:22:48,520 –> 00:22:50,000
buy a mass market condo,

658[Melvin Lim]
00:22:50,000 –> 00:22:53,400
invest in maybe a smaller condo in the RCR or CCR region.

659[Melvin Lim]
00:22:53,400 –> 00:22:55,160
So that is usually the trend

660[Melvin Lim]
00:22:55,160 –> 00:22:57,200
and which is why this support level

661[Melvin Lim]
00:22:57,200 –> 00:22:58,880
would then funnel into the OCR market,

662[Melvin Lim]
00:22:58,880 –> 00:23:00,880
it would then funnel into RCR and CCR market,

663[Melvin Lim]
00:23:00,880 –> 00:23:03,400
or it might then go up to the landed market.

664[Melvin Lim]
00:23:03,400 –> 00:23:05,520
So this is a beautiful concept.

665[Melvin Lim]
00:23:05,520 –> 00:23:07,760
On the surface level, it seems invisible,

666[Melvin Lim]
00:23:07,760 –> 00:23:09,120
but if you do deep dive in,

667[Melvin Lim]
00:23:09,120 –> 00:23:10,440
you will then see that Singapore

668[Melvin Lim]
00:23:10,440 –> 00:23:12,880
has this very beautiful inherent MOAT

669[Melvin Lim]
00:23:12,880 –> 00:23:15,720
that’s plugged into our entire residential market.

670[Melvin Lim]
00:23:15,720 –> 00:23:17,600
So if you are talking about whether will our price crash,

671[Melvin Lim]
00:23:17,600 –> 00:23:18,960
it will not crash.

672[Melvin Lim]
00:23:18,960 –> 00:23:20,720
I’m very confident to say that it will not crash

673[Melvin Lim]
00:23:20,720 –> 00:23:22,920
because we have a strong base level of

674[Melvin Lim]
00:23:22,920 –> 00:23:24,600
homeownership in Singapore.

675[Melvin Lim]
00:23:24,600 –> 00:23:26,760
We are mainly homeowners in Singapore,

676[Melvin Lim]
00:23:26,760 –> 00:23:28,560
and there’s no need for a lot of people

677[Melvin Lim]
00:23:28,560 –> 00:23:30,440
to sell their HDB homes unless they’re upgrading

678[Melvin Lim]
00:23:30,440 –> 00:23:31,840
or they’re shifting locations.

679[Melvin Lim]
00:23:31,840 –> 00:23:33,640
They can hold on to their properties.

680[Melvin Lim]
00:23:33,640 –> 00:23:34,920
And with HDB as the base level,

681[Melvin Lim]
00:23:34,920 –> 00:23:38,000
condominiums, a lot of people are buying for own stay.

682[Melvin Lim]
00:23:38,000 –> 00:23:41,800
And with such strong cooling measures, plucked in all the way,

683[Melvin Lim]
00:23:41,800 –> 00:23:46,320
25% down payment, TDSR, Additional Buyer’s Stamp Duty,

684[Melvin Lim]
00:23:46,320 –> 00:23:48,280
homeownership being 90+%.

685[Melvin Lim]
00:23:48,280 –> 00:23:49,080
I think Singapore

686[Melvin Lim]
00:23:49,080 –> 00:23:50,960
is really in a such a different phase right now.

687[Melvin Lim]
00:23:50,960 –> 00:23:54,560
In fact, this phase has started way back in the past 10 years,

688[Melvin Lim]
00:23:54,560 –> 00:23:57,920
and you will only see very, very gradual upward appreciation

689[Melvin Lim]
00:23:57,920 –> 00:24:00,680
throughout the next five, 10, 15, 20, 30 years.

690[Melvin Lim]
00:24:00,680 –> 00:24:03,720
And most importantly, if you’re a Singaporean,

691[Melvin Lim]
00:24:03,720 –> 00:24:05,080
I think it’s very important to note

692[Melvin Lim]
00:24:05,080 –> 00:24:07,520
that the key fundamental differences

693[Melvin Lim]
00:24:07,520 –> 00:24:09,960
between a HDB apartment and a private property apartment,

694[Melvin Lim]
00:24:09,960 –> 00:24:12,680
because when we talk about eight inherent characteristics,

695[Melvin Lim]
00:24:12,680 –> 00:24:15,520
of course we are not advocating that, you know,

696[Melvin Lim]
00:24:15,520 –> 00:24:18,120
you should definitely sell a certain type of property.

697[Melvin Lim]
00:24:18,120 –> 00:24:19,680
But what we’re saying is that

698[Melvin Lim]
00:24:19,680 –> 00:24:22,000
if you have the fundamental ability

699[Melvin Lim]
00:24:22,000 –> 00:24:24,680
to take a deep dive into understanding

700[Melvin Lim]
00:24:24,680 –> 00:24:25,640
your investment horizon,

701[Melvin Lim]
00:24:25,640 –> 00:24:28,280
your investment horizon is technically quite short

702[Melvin Lim]
00:24:28,280 –> 00:24:29,120
for everybody,

703[Melvin Lim]
00:24:29,120 –> 00:24:31,640
because from the time you start work, 20+, 30, 35,

704[Melvin Lim]
00:24:31,640 –> 00:24:32,480
up to 65,

705[Melvin Lim]
00:24:32,480 –> 00:24:34,800
that would be where your investment horizon

706[Melvin Lim]
00:24:34,800 –> 00:24:35,880
for a property is.

707[Melvin Lim]
00:24:35,880 –> 00:24:37,360
It takes a lot of things to clap.

708[Melvin Lim]
00:24:37,360 –> 00:24:39,000
You have proof of income.

709[Melvin Lim]
00:24:39,000 –> 00:24:40,600
You must have tenure to loan.

710[Melvin Lim]
00:24:40,600 –> 00:24:43,800
You must be able to sustain your monthly mortgage

711[Melvin Lim]
00:24:43,800 –> 00:24:45,560
through the years of investment as well.

712[Melvin Lim]
00:24:45,560 –> 00:24:47,280
These eight inherent characteristics,

713
00:24:47,280 –> 00:24:48,920
there’s one very key important thing is that

714[Melvin Lim]
00:24:48,920 –> 00:24:50,600
the type of asset that you’re holding,

715[Melvin Lim]
00:24:50,600 –> 00:24:52,880
if let’s say you’re holding onto an HDB apartment

716[Melvin Lim]
00:24:52,880 –> 00:24:54,040
vis-a-vis a private property,

717[Melvin Lim]
00:24:54,040 –> 00:24:56,240
is that the one fundamental difference is that

718[Melvin Lim]
00:24:56,240 –> 00:24:57,400
for HDB apartment,

719[Melvin Lim]
00:24:57,400 –> 00:24:59,720
no matter how much paper gain that your property makes.

720[Melvin Lim]
00:24:59,720 –> 00:25:02,280
Let’s say, you buy a BTO for $450K

721[Melvin Lim]
00:25:02,280 –> 00:25:05,560
and now it is worth $750K after five years of MOP,

722[Melvin Lim]
00:25:05,560 –> 00:25:07,320
that equity is trapped.

723[Melvin Lim]
00:25:07,320 –> 00:25:09,280
It’s basically a paper gain that cannot be withdrawn.

724[Melvin Lim]
00:25:09,280 –> 00:25:10,680
That equity is trapped.

725[Melvin Lim]
00:25:10,680 –> 00:25:11,960
It’s unlike private property.

726[Melvin Lim]
00:25:11,960 –> 00:25:14,120
Private property, if your property appreciates

727[Melvin Lim]
00:25:14,120 –> 00:25:16,640
you technically do not have to kill the golden goose.

728[Melvin Lim]
00:25:16,640 –> 00:25:19,320
You can extract equity through an equity term loan.

729[Melvin Lim]
00:25:19,320 –> 00:25:20,240
You can extract it out,

730[Melvin Lim]
00:25:20,240 –> 00:25:21,960
you can then use it for different reasons.

731[Melvin Lim]
00:25:21,960 –> 00:25:23,920
You don’t have to kill the golden goose,

732[Melvin Lim]
00:25:23,920 –> 00:25:25,520
if you still love that property.

733[Melvin Lim]
00:25:25,520 –> 00:25:27,440
For HDB apartments it’s different.

734[Melvin Lim]
00:25:27,440 –> 00:25:29,200
There’s no equity withdrawal option.

735[Melvin Lim]
00:25:29,200 –> 00:25:31,440
Your equity is being trapped in the property.

736[Melvin Lim]
00:25:31,440 –> 00:25:33,720
And that will, of course, hit an inception point

737[Melvin Lim]
00:25:33,720 –> 00:25:35,600
because there will definitely be a year

738[Melvin Lim]
00:25:35,600 –> 00:25:38,680
that you suddenly see your HDB value starting to dip.

739[Melvin Lim]
00:25:38,680 –> 00:25:40,320
Of course, we’re not talking about the fact that

740[Melvin Lim]
00:25:40,320 –> 00:25:43,280
if it’s in the seller’s market, everything just goes up

741[Melvin Lim]
00:25:43,280 –> 00:25:45,120
like what has happened in the past two years

742[Melvin Lim]
00:25:45,120 –> 00:25:45,960
and even right now.

743[Melvin Lim]
00:25:45,960 –> 00:25:47,160
And the key fundamental reason

744[Melvin Lim]
00:25:47,160 –> 00:25:50,560
why now HDB apartments have continued to rise up gradually

745[Melvin Lim]
00:25:50,560 –> 00:25:52,440
is because private property has went up so much,

746[Melvin Lim]
00:25:52,440 –> 00:25:54,680
the HDB apartment will have no choice

747[Melvin Lim]
00:25:54,680 –> 00:25:56,400
but to go up gradually.

748[Melvin Lim]
00:25:56,400 –> 00:25:58,200
We also talked about that in the last episode.

749[Melvin Lim]
00:25:58,200 –> 00:26:00,560
So when people cannot afford the increase

750[Melvin Lim]
00:26:00,560 –> 00:26:03,560
due to the fast upward rise in property prices,

751[Melvin Lim]
00:26:03,560 –> 00:26:05,760
they would then have to fall back on HDB apartments,

752[Melvin Lim]
00:26:05,760 –> 00:26:07,240
which will then cause an upward trend

753[Melvin Lim]
00:26:07,240 –> 00:26:08,120
in HDB apartments as well.

754[Melvin Lim]
00:26:08,120 –> 00:26:10,720
So, but of course, in the stabilised market,

755[Melvin Lim]
00:26:10,720 –> 00:26:11,760
in the stabilised market,

756[Melvin Lim]
00:26:11,760 –> 00:26:13,920
you will find an inception point

757[Melvin Lim]
00:26:13,920 –> 00:26:17,560
where suddenly in this phase in time for your HDB apartment,

758[Melvin Lim]
00:26:17,560 –> 00:26:20,320
that you will see the value starting to dip gradually,

759[Melvin Lim]
00:26:20,320 –> 00:26:21,680
going into a downward curve,

760[Melvin Lim]
00:26:21,680 –> 00:26:24,520
especially also when you have a lot more new apartments

761[Melvin Lim]
00:26:24,520 –> 00:26:25,360
coming out in your estate,

762[Melvin Lim]
00:26:25,360 –> 00:26:26,320
there are more and more BTOs,

763[Melvin Lim]
00:26:26,320 –> 00:26:29,040
more and more beautiful, brand new apartments

764[Melvin Lim]
00:26:29,040 –> 00:26:30,520
that’s popping up year after year

765[Melvin Lim]
00:26:30,520 –> 00:26:32,400
and they hit their MOP period,

766[Melvin Lim]
00:26:32,400 –> 00:26:34,720
they will always be the cream of the crop

767[Melvin Lim]
00:26:34,720 –> 00:26:36,360
because everybody loves new things.

768[Melvin Lim]
00:26:36,360 –> 00:26:39,000
Everybody loves to buy that brand new five years

769[Melvin Lim]
00:26:39,000 –> 00:26:41,800
to 10 years old, new HDB apartment that just hit the market

770[Melvin Lim]
00:26:41,800 –> 00:26:43,520
after fulfilling their MOP period.

771[Melvin Lim]
00:26:43,520 –> 00:26:44,680
So something to note,

772[Melvin Lim]
00:26:44,680 –> 00:26:47,160
if you do have that ability, do plan forward,

773[Melvin Lim]
00:26:47,160 –> 00:26:49,480
because most importantly is that if you’re still young,

774[Melvin Lim]
00:26:49,480 –> 00:26:51,040
you’re still building a career,

775[Melvin Lim]
00:26:51,040 –> 00:26:52,600
you have the financial capability,

776[Melvin Lim]
00:26:52,600 –> 00:26:53,920
you have done your financial prudence,

777[Melvin Lim]
00:26:53,920 –> 00:26:56,200
you have sat down and worked out your finances

778[Melvin Lim]
00:26:56,200 –> 00:26:58,400
that you are able to hold a private property

779[Melvin Lim]
00:26:58,400 –> 00:27:00,320
for the next five, 10, 15 years,

780[Melvin Lim]
00:27:00,320 –> 00:27:02,960
then I think you should really make that decision

781[Melvin Lim]
00:27:02,960 –> 00:27:04,360
to really sit down with your spouse,

782[Melvin Lim]
00:27:04,360 –> 00:27:06,320
discuss with a professional consultant

783[Melvin Lim]
00:27:06,320 –> 00:27:10,200
and try to plan out a roadmap for the next 10, 20, 30 years.

784[Melvin Lim]
00:27:10,200 –> 00:27:11,840
I think we have come to the end of today’s episode,

785[Melvin Lim]
00:27:11,840 –> 00:27:13,000
Episode 19.

786[Melvin Lim]
00:27:13,000 –> 00:27:14,760
Of course, we hope that this episode will help you

787[Melvin Lim]
00:27:14,760 –> 00:27:17,080
to understand a little bit more about our MOAT Analysis,

788[Melvin Lim]
00:27:17,080 –> 00:27:20,160
as well as some of the key inherent characteristics

789[Melvin Lim]
00:27:20,160 –> 00:27:21,560
of real estate in Singapore.

790[Melvin Lim]
00:27:21,560 –> 00:27:24,000
And we hope to see you soon on Episode 20.

791[Melvin Lim]
00:27:24,000 –> 00:27:25,000
My name is Melvin Lim.

792[Melvin Lim]
00:27:25,000 –> 00:27:26,720
Thank you for staying tuned with us on Nuggets On The Go.

793[Melvin Lim]
00:27:26,720 –> 00:27:27,400
In the meantime, take care.

794[Melvin Lim]
00:27:27,400 –> 00:27:28,160
I will see you soon.

795[Melvin Lim]
00:27:28,160 –> 00:27:28,920
Cheers.