Who can forget 2008? It was the peak of the Global Financial Crisis (GFC).
For me, it was a very unforgettable experience.
I had just collected my Diploma (with Merit) in Real Estate Business and was dipping my toes into the real estate market before deciding on the path to take into higher learning in the university.
If you were reading the news then, you would be hearing all these terms:
- subprime loans
- property crash
- debt crisis
- great recession
The mood was so dark and gloomy – and here I was trying to make people buy properties from me!
No wonder my parents were mad at me for trying to become a property agent.
But being young means no sense of jadedness.
And I sincerely believed opportunities are always available if I knew where to look.
A Weird Location in Little India
To date, it remains one of the condominiums in Singapore that I have a sentimental attachment to.
I remembered this place as my very first condo project that I worked on – from keys collection at the TOP stage to one particular apartment unit changing hands 4 times!
In 2008, City Square Residences was on the verge of completion.
Its location was at Little India and the immediate reaction of most investors and buyers then: This property won’t make money.
There was this particular 3-bedder unit which the first owner bought at $727K when it was launched about 4 years prior.
The first owner was a foreigner who wanted to cash out on the profits.
He probably did not expect the returns to grow exponentially in the next couple of years due to lack of confidence in our local property market as well as the global crisis at that point in time.
I came into the picture when he decided to put it up for sale at $1 million and we eventually closed it at $970K.
At that time, that $970K price tag was the highest in the ENTIRE City Square Residences development.
My Client Became the 2nd Owner
The 2nd owner was my client.
At the age of 21 years old, I managed to convince my client to buy this MOST EXPENSIVE almost a million dollar unit at City Square Residences.
In 2009, a 3-bedder was being sold at $970K.
In 2010, he sold the same 3-bedder unit at $1.7 million.
He made a very cool $730K in just 1 year.
There were factors in play that convinced me that a $970K unit was an excellent investment.
Factor #1: Location
City Square Residences was the only freehold development in the city fringe area that is directly next to a shopping mall and Farrer Park MRT station.
Apart from the immediate amenities, the development is strategically located within the city and only a short commute by public transport to Orchard Belt, Marina Bay Area and Central Business District.
The North East line opened in June 2003.
It was already operational when City Square Residences was launched and obtained TOP status in 2008.
Even till today, it remains as one of the most popular condominiums for both investors and tenants.
City Square Residences remains easily accessible and its convenient location is a huge draw.
I was very familiar with the condominium.
I knew that this is one of the best units to command a high price eventually when he wants to sell it as it had the
- Best layout
- Best view
- No other comparable developments in the nearby vicinity
I remember telling him:
“If you don’t buy, you can’t even hold. Then you will totally miss this opportunity of owning a freehold unit in the city fringe.”
I had to practically force him and somehow he trusted this 21-year old rookie agent…
But reflecting back… if I did not possess the market knowledge, I am sure I would not have been able to convince him on this price tag.
Factor #2: Freehold vs Leasehold
The experience gained over the past few years as an agent helped me gain insights on certain outdated property investment ideas.
For example, the idea that a freehold property is the most superior choice in an investment decision.
But when I dig into the data – a property’s type of lease might not have much impact on your likely investment returns.
Both Citylights and City Square residences are similar – Same age, same facilities, same district 8.
Their only difference? The type of lease.
Citylights is a 99-year leasehold development whilst City Square Residences is freehold.
But if you see the PSF prices, Citylights pricing is more stable when compared to City Square Residences.
This basically means that popularity and price appreciation do not rely primarily on lease tenure.
In fact, leasehold projects can serve buyers better – it can potentially appreciate better than freehold developments.
Factor #3: Strong Rental Demand
As the saying goes – “The entrance strategy is more important than the exit; but plan for it before entering.”
At that time, when the ground sentiments in Singapore were dampened by global news of a further and prolonged recession, there were mixed reactions from prospective buyers and investors.
But one aspect stayed constant – there was always a good flow of tenants coming forth and desiring to live in this condominium.
The then-strategy was to hold on and continue leasing out the property until my client can fetch his ideal price. With the short turnover time needed to get another tenant, the unit was a perfect investment choice for him.
Glad we went ahead with it.
Reflecting on the 10-year Challenge
In 2008-2009, pessimism was strong but I chose to look the other way.
For most people, the financial crisis of 2008 was a very good reason to avoid entering the market.
For some, it was a distraction from their daily routine.
For others, it was as an opportunity.
What was crucial to them: managing the risks and the uncertainties.
There is some truth in the quote by Warren Buffet: “Be fearful when others are greedy and be greedy when others are fearful.”
I chose to look at the underlying strong fundamentals of City Square Residences.
I looked beyond the Great Financial Crisis and saw the great potential of this investment back in 2010.
It was something I would have bought if I could.
But since I couldn’t, the next best thing was convincing my client to buy it.
I believe opportunities are still available even now but you have to be willing to look for it.
This freehold development is now 10-years old and yet it continues to entice investors.
This article was dated in Dec 2017.
“A property agent from ERA Realty Network who has brokered the sale of several units at City Square Residences this year and has six units there listed for sale on EdgeProp.sg.
According to her, the location and prices at the freehold City Square Residences are big draws for investors, and units are under-priced compared with leasehold properties in the area.”
The ERA agent quoted above is not me. LOL.
The 2018 cooling measures have opened up new opportunities – if you know where to look.
Even in the most uncertain future – buying a property must be viewed as a long-term investment and fundamentals remain key.
Markets will eventually recover. The property market is a cyclical one; the next peak will surpass the previous one.
Did you know – the S&P 500 has gained 334% in the 121 months since its Great-Recession low in March 2009?
Those who took action despite fear and uncertainty – are reaping the rewards today.
Keen to learn more on property investment? I invite you to contact me for a no-obligation discussion.