Singapore Property Investing: Is It Better To Flip Or Hold?
Investing in Singapore property can be a profitable venture, but investors must choose the right strategy to maximize their returns....
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TLDR
Undervalued properties are harder to find in Singapore due to market transparency, but deals still exist. Target areas with new or recent launches—resale condos nearby may be underpriced before prices adjust. Watch for small price gaps between premium and standard units, and look out for bargains at property auctions or from foreign sellers needing quick sales in prime districts. Boutique developments and the “worst house in the best neighbourhood” approach can also present opportunities but come with risks like uncertain resale value. Always base your decision on your personal situation and seek data-driven advice.
Finding undervalued properties is now more challenging. In the past, the market was less transparent and relied on word-of-mouth or classifieds. Today, the internet lets everyone easily compare prices. However, some sellers still list properties below market value, and acting quickly can help you find these deals. Here are some useful tips to begin your search:
1. The more recent the launch, the larger the price difference.
New launch condos usually cost more than resale ones. If you find an area with new launches coming up or a recently sold site, it could be a good opportunity.
Buying a resale condo in that area might be cheaper than the new launch. Over time, the new launch will likely raise resale prices nearby. By purchasing early, you benefit from lower prices before they increase.
It’s best to look for upcoming launches, but you can also consider areas where new projects have just finished. There will be a short time when resale prices haven’t yet adjusted to the new developments.
Additionally, check if the new project improves the area. Sometimes, developments add valuable amenities that can boost existing resale prices. For instance, The Poiz Residences improved local retail options, and Seneca Residences added essential commercial facilities to Tanah Merah Kechil Link.
2. Premium pricing might not be significantly different from standard pricing.
Developers may charge more for a unit if it has benefits like a better view or easier access to amenities. However, the extra cost is not always justified.
Deciding on this requires experience. For example, does a greenery view justify a $50,000 price difference? Is a $75,000 increase worth it for a private lift instead of a regular one? There’s no clear answer, and each case needs to be evaluated individually. You can contact us on Stacked for comparisons.
Generally, if the premium is too low compared to the unit’s advantages, it’s likely an undervalued unit.
A smaller premium can also result from temporary developer promotions, such as selling units on different floors at the same price. These limited-time offers can be a chance to save money if you time it right.
3. Securing advantageous deals at property auctions.
Some sellers choose to auction their property instead of selling it normally. This doesn’t mean they are desperate; buyers may prefer auctions for various reasons, like a lack of recent sales in the area or trying to sell unique units like penthouses.
If it’s a mortgagee sale, the auction agency will usually make that clear. You have a better chance of finding a bargain at these sales compared to others.
Don’t be surprised if the unit doesn’t sell at the auction but later through private negotiations. This often happens. Watch the auction to see what others are willing to pay, and then consider making a private offer if it doesn’t sell.
4. Be vigilant regarding foreign sellers in key locations.
Finding properties may be harder in 2024, as foreign owners are holding onto their properties more tightly. If they sell, they face a 60 per cent Additional Buyer’s Stamp Duty (ABSD) on any new property.
However, foreign sellers in prime locations sometimes sell their properties below market value if they need to move back quickly. The largest losses often happen in areas with many foreign owners, like Sentosa or Districts 9 and 10.
Generally, foreigners in a hurry may prioritise speed over price. If they can complete a sale quickly, they might choose that over waiting for better offers.
On the downside, foreign ownership is less common in more affordable mass-market condos, making these opportunities rare.
5. Boutique properties and low transaction volumes result in price fluctuations, which in turn create opportunities.
Some properties, like walk-up apartments or small boutique buildings with under 50 units, have few sales. There might be just one or two sales every few years, so if the last sale is unusually low, it can lower the average price. This might affect the property’s value, making it seem cheaper than anticipated.
However, this situation has a downside too. When you decide to sell, the resale profits can become much less certain due to the low number of transactions.
6. Apply the principle of the “worst house in the best neighbourhood.”
This approach highlights the importance of location over the current value of a specific property. For example, purchasing an older condo near Bayshore MRT (like Bayshore Park from 1986) can be a good investment as the new Bayshore Estate develops. Prices for older condos are often lower than newer ones but will likely increase as the area improves.
The main idea is that properties can be upgraded through renovations, but locations cannot be changed. To find undervalued properties, focus on the best locations and then buy and renovate the cheapest properties there.
However, don’t oversimplify this idea: you still need to think about renovation costs and potential lease decay over time.
Should You Buy, Sell or Wait?
If you’re reading this, you must be trying to figure out the best course of action right now: is it the right time to buy or sell?
It’s difficult to give an exact answer since everyone’s situation is unique and what works for one person may not necessarily work for you.
I can bring you a wealth of on-the-ground experience and a data-driven approach to provide clarity and direction. From beginners to experienced investors, our top-down, objective approach will help you on your real estate journey.
I can help you by:
- Offering Strategic Real Estate Advice – I can help create a comprehensive plan to guide you through your property journey.
- Connecting Your Home with the Perfect Buyers – Through stunning visuals, an effective communication strategy, and an in-depth knowledge of the market, we’ll ensure your home is presented in the best possible way to fulfill your goals.
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