GILSTEAD BROOKS

CLUSTER-HOUSING

AT GILSTEAD ROAD (DISTRICT 11)

Inter-terraces with Common Condo Facilities

Enjoy resort-style Landed-living (Inter-Terrace) complete with condo facilities (Pool, Jacuzzi, Security)!
Cluster-housing = Inter-Terrace + Condo Facilities. Simply the best of both worlds!

Frequently Asked Questions (FAQ)

These are typical questions asked by buyers and would-be sellers at Gilstead Brooks. It is being compiled here for easy reference.

How are the sizes in Gilstead Brooks like?

Other than the semi-d and jacuzzi units, all the other non-jacuzzi units are almost the identical size internally. The size quoted includes the 2 carpark-lots plus 4 patio/balconies, and bay-windows, and whatever net liveable space left is again sub-divided across 4 storey (including basement).

 

What are the facilities?

There is a small swimming pool. There’s no manned-security, no gym, no function room, no tennis court and no on-site management office. As such, this cluster-house typically is popular with smaller family without children.

 

What are the types of units?

There’s total of 28 units, of which 26 are terrace houses and 2 are semi-d. Among the terraces, only 4 of them have a attached private jacuzzi (next to the patio) and have direct access to the swimming pool (you can jump right into the pool from your patio). Do not be confused with non-jacuzzi units which DOES NOT have direct access to pool. Some units faces the pool but are at opposite side of the pool so they do not have the advantage of jumping into pool from patio.

 

Can foreigner buy Gilstead Brooks?

No, foreigners are NOT ALLOWED to buy Gilstead Brooks, unless approved by Singapore Land Dealing Unit (LDU) as this clusterhouse is classified with the same restriction as landed properties. Foreigner has to become Singapore PR first before applying for approval, even though the approval is not guaranteed. Once approved, these foreigner can only stay in it and not allowed to rent it out. This means in the event of having to leave Singapore abruptly for good, they likely have to sell this restricted property at prevailing market rate.

 

What’s the historical prices at the height of 2007?

As shown in the historical price chart above, for non-jacuzzi units the highest record price is $2.88m ($939psf)while jacuzzi-units achieved $3.3m (1018psf) when Novena/Netwon area hit $2000psf in the same period that year. Do NOT be mislead to think that Gilstead Brooks terrace has hit $3.3m in 2007, as this is only true for Jacuzzi units. Any price higher than $2.88m for non-jacuzzi unit will set a new record price. Will there be any buyer willing to pay above 2007 peak price during recession when Newton/Novena area is still only $1800psf? This remains to be seen. The lack of ‘foreigner buying’ means prices here are expected to be more muted as compared to condo.

 

What are the launch prices in Gilstead Brooks?

The original owners had bought direct from developer at around $500psf on average, at around $1.5m ++.

What’s the latest transacted price?

As of Oct 2009, Gilstead Brooks (2874sqf non-jacuzzi unit) just sold in Oct 2009 for $2.65m, which is about $100k above bank valuation at that time. This works out to be about S$922 psf, which is just S$17 away from the historical high of S$939psf in late 2007 for non-jacuzzi unit.

Note: Price might not appear in Caveat if buyer did not take a bank loan (i.e. buying in cash).

Proof of such this transaction is available.

 

Why is $PSF price in Gilstead Brooks lower than around same location?

Notice that even in the crazy market of 2007, Gilstead Brooks $PSF are almost half of the highest $PSF in the Newton area. It is normal. There’s several reasons for this.

  1. The foreigner ownership restriction prevented foreigners, who are known to pay huge premiums, from participating in this project. Even for small number approved, they are restricted from renting out. This puts them at tremendous risk from investment perspective. In a downturn, locals can rent out to ride out the crisis but foreigners (including Singapore PR) cannot. Yet, incidentally it is always the downturn that foreigners are the first to lose their jobs and may need to leave Singapore, while locals are protected with job-supporting stimulus parkage from the government. As such, most foreigners rather engage in CONDO/APT instead as a safer investment from this perspective. This explains why condo has more transactions which caused prices to move significantly above clusterhomes. And this is, perhaps, the biggest reason.
  2. The lack of good facilities at Gilstead Brooks, which only have swimming pool and auto-gate security, (to some buyers) defeats the whole purpose of owning a clusterhome. This effectively makes it no difference, in terms of life-style, compared to landed property with swimmming pool. The reason why clusterhomes are popular because it usually have facilities like club-house, tennis-court, gym, and the safety of a manned-security. Those who eligible to buy Gilstead Brooks might decides buying other clusterhome or even landed terrace with swimming pool instead, since one can always installed a rented deck-pool for only $500/mth these days (saved from management fee). There’s many clusterhomes in central Singapore that offers full facilities like a huge pool, clubhouses and manned guardhouse.
  3. Gilstead Brooks is a Strata-property meaning the buyer will not own the land, but just the air-space directly above the land. Since this project is more local buyers oriented, to the locals , Singaporean still see owning a landed property as the real prestige, therefore would rather buy landed property instead of strata-property. What is scarce in Singapore is Land, not air-space which is in abundance. The more rare something is, the more valuable it is in future. Isn’t buying a FreeHold property in the first place is meant for future generations, and thus future value matters?
  4. Out-door space are valued at half-price only, a fact many un-initiated buyers may not know. Gilstead Brooks size quoted on paper includes 2 carpark-lots, and 4 patio/balcony estimated size of car each (1 front patio, 1 backyard, 2 balconies at top floor), and many bay-windows. Therefore the net live-able space is actually smaller; and with the outdoor-space valued at half-price, naturally this resulted in lower effective PSF. This perhaps explains why bank valuation here is always lower in PSF compared to nearby similar-age condos.

 

What’s the expected rental?

Like most properties, rental price in Gilstead Brooks peaked in 2007, achieving high of $11k. However, as we are currently at a depressed rental market, currently units are asking between $7.5k-$8.5k. Rental market is not expected to return to the last high as soon due to the fact the weak incoming foreigners numbers and more property supplies are expected to enter the market next year and more in the following years.

(According to URA Press Release dated 23 Oct 2009 , total 59,728 more units expected 2009-2013 & beyond.)

 

Extracted from URA Press Release 23-Oct-2009 Annex E-2. Click here to the full PDF

 

What’s the current fair value?

There’s many ways to derive the current fair values. Three of popular methods are discussed here, namely by historical peak price, rent-vs-buy analysis, and by comparison with similar projects. These are merely attempts to objectively and mathematically guess the fair value, and not mean to define the actual price.

 

Judge By Historical Peak Price: When Newton area condo hit a high of $2000psf in late 2007, the highest price PSF in Gilstead Brooks was $939psf for non-jacuzzi unit in the same period. Judging from the fact that latest transacted price of $922psf when Newton area condo is currently at high of $1800psf, it is safe to assume a fair value today for this foreigner-restricted clusterhouse to be around $900psf – $940psf. A serious seller would price a unit here around $2.55m – $2.8m, anything higher the buyer will likely be caught at the peak. Remember, property prices follows a cycle.

UPDATE (Dec 2009): Newton One, a 6mth old condo nearby but next to Newton MRT, after hitting a high of $1680psf in Oct 2009, has started to fall to $1480psf – $1578psf in Nov 09, and finally to only $1460psf in Dec, that’s about 13% decline from Oct to Dec 09. Properties around the area, such as Residences @ Evelyn ($1402psf in Dec 09), sees the similar decline between Oct to Dec 2009. As the last transacted of Gilstead Brooks at $2.65m was done in Oct 2009, some buyers may inferred that the fair value of Gilstead Brooks in Dec 09 might be down to around $2.38m - $2.5m, after factoring in the same decline of about 5% – 10%.

 

Judge By Rent-VS-Buy: Another angle a perspective buyer may look at for establishing its fair-value is to analyse from rent-vs-buy perspective. At certain sale price, sometimes it makes more sense to rent. For example, assuming 2.5% bank loan over 30yrs, at sale price of $2.65m the monthly loan would be about $8377, excluding maintainance fees ($400-$500 est.). Comparing renting at $7.5k-$8.5k, some may still be willing to buy. But at $2.8m, monthly loan would be $8.8k plus $500 management fee, totals $9.3k. At $3m, monthly total would be $10k. At $3.3m, monthly is almost $11k. Clearly, the higher the sale price, the more a buyer might decide it’s smarter to rent instead, just to enjoy the same property.

Therefore, at certain price point, a buyer may find it’s better to rent instead. For example, at $7.5k per month rental, that’s a total of $180k in 2yrs (tenant do not need to pay commission). Contrast that to buying which incurs stamp-duty (3% less $5400), maintenance fee (about $10k in 2yrs), and agent commission (1% when cashing out), that itself totals almost $100k to $120k (depending on purchase price), excluding loan interest. If buyer is offered a property at historically low price with clear upside, then it’s smarter to buy. But if a buyer enters at historical high price point, then the risk of downside becomes more pronounced.

When market corrects, it does not merely correct $50k or $100k. For example, in Gilstead Brooks (non-jacuzzi unit) after its high of $2.88m in 2007, a similiar unit is only worth $2.1m – 2.2m in Q1 2009. Many smart buyers who decided to rent in late 2007 (when market is HIGH), after 2yrs rent, ended buying at the low in year early 2009 (when market is LOW) at the end of their rent. While they lose $200k in rental cost, they ended up saving $600k at the end of 2yrs (original price $2.8m less 2009Q1 valuation of $2.2m). Net saving $400k, excluding any capital-gain profit. So, it ready depends on a buyer’s view of the market going forward to decide what’s smart. Buyer buys at high price only because they believe they could sell higher to the next buyer, but if one is already buying near the historical peak, how high more can he sell?

Judge by Comparison to Similar Projects: A 3rd respective is to look at comparable type of projects in prime districts. People who consider FH Gilstead Brooks tends to compare to 99-yr Teneriffe clusterhouse too. Such comparison will allow one to study the relative price and can be used to gauge the fair market value. Gilstead Brooks, being FREEHOLD will always transact higher than 99-yr Teneriffe, so the question is “higher by how much”. Then, by studying the pricing trend of Teneriffe and add a buffer to that price, one should be able to gauge Gilstead Brooks’ current fair price.

Remember, property investment is like playing the “musical box-passing” game. When the “music stops”, the one still holding the “box” is the one that suffers. Now that the “box” has complete one round back (return to last peak), how long more will this “music” last?

Are we at the high point or low point in sales market? Are we at the low point or high point of rental market?

Will Gilstead Brooks price continue upwards & breach beyond 2007 high?

Maybe not. Maybe yes, but how much more? This is a question even analysts could not be 100% sure.

Nevertheless, these facts remains:

  • Gilstead Brooks, at $922psf, is almost already near the 2007 peak price of $939psf for non-jacuzzi units.
  • The property market in general has already recover back to 2007 prices. In fact, it took only 1 year in 2008 to lose all that it had gained thru 2006-2007 to drop to 2006 prices. Yet it took only 6mths (2009 Q2-Q3) for it to recover what it took 2 years to build previously, to return back to 2007 levels. To the authorities, this may be a cause for concern for Singapore to establish itself a competitive place among Asia. The market price seems to rise too fast for comfort.Update (9th Nov 2009): As reported by Channel News Asia “MAS says today Speculative bubble in property market a risk…” and suggests although Singapore has already introduced several measures in September, more anti-speculation measures might be introduced.  Click here for the full MAS Financial Stability Review (PDF).
  • The property bull-run in 2006-2007 was largely due to the believe that the Casino/IR is coming in 2009. With 2-3 years away then, there seems to be strong upside by virtue of the time-factor. During that time, media, sellers and agents alike are using the Casino/IR as the “future-push” factor to support the increased in price. Today, with just 3-6mths away from Casino/IR opening, question is what’s there to look forward to beyond that? And for those who bought property at premium price on the Casino/IR story, and once the Casino/IR arrives, what story are they going to harp to convince the next buyer to buy from them even higher? Property investment is a “musical box-passing” game, passing the box until the “music” stop. When will this “music” likely to stop? The nearer we are to the “factor that started it all”, the more nervous the market may becomes.Update (9th Nov 2009): As reported by MediaCorp Radio, ”This is because the nascent recovery in the world’s biggest economies… have largely been dependent on government stimulus. There’s a risk that once these stimulus policies are withdrawn, their recoveries will take a hit, thus affecting Asian economies, especially those that are export-dependent, such as Singapore. And if economic recovery stalls, corporate earnings may come under renewed strain and corporate refinancing may become more difficult. “
  • On the world-stage, a disbalance is now being created between the East and the West. While the West (US, UK, etc) is struggling to recover, the East (especially South East Asia) has flourished with real-estate prices increasing almost back to pre-crisis levels. If this trend continues, the time will come when the East is at the high price point while the West is at the lowest point. International investors at this point might decide it’s smarter to cash out from Asia at its highest and buy in to the US/UK at its lowest. Afterall, investment is about “buy low sell high” mantra, isn’t it?
  • If history is any lesson to learn from, one would remember the property market rises high in 1995-1996 only to crash in 1997, then quickly recover around 2000 before crashing again in 2001. Today, having just witness the peak in 2007 and crash in 2008, and now 2009 it again a sharp recover amidst recession. Will this recovery be as short-lived as 2000? Nobody really knows for sure, and that is the problem.

    PPI in the previous bull-run between 1996-2001

Approaching the current market with caution might be the best wisdom.

Words of Wisdom: Market crashes when people least expected it.

 

Why did Property Market increased so much while still in Recession?

When property market started to U-Turn in Q2 2009, many Analysts were shocked with disbelief. They have been predicting prices will continue to fall through 2009. They scramble to justified the reasons.

This one seems the most likely, among the many factors.

In mid 2007, those who have sold high at the peak (either from open-market sale or enbloc) are sitting on handsome profits. Then US market crashed. Those who sold in Jan-Mar 2007 likely have again bought back into the market, having tasted the cherry, thinking the market is still strong. Only those who sold in mid 2007 to late 2007 saw the crash as it unfolds. So instead of buying back, they wisely decided to rent a home to ride out the crisis. Their 2-year lease would end around mid 2009 to late 2009. With leases starting to end from mid 2009, they would have to consider buying a property by March of 2009, as it typically takes 3 months to complete a property sale. By Feb-March of 2009, most properties had already drop to 2006 levels. While some predicted price might fall further, to this group of lucky 2007 sellers sitting on cash, they feel the price is low enough, and they can’t wait anymore as was lease ending soon. While the rest have difficulty getting loans in Q1 2009, this cash-rich group are buying worry-free. They smartly reasoned that, at 2006 levels (the year Casino/IR was announced), prices probably wouldn’t fall pre-2006 level, afterall Casino/IR story is still on. The first batch moves in the attack, increases the demand a little, and thus prices started to stop free-fall. Soon news broke out about price recovering and in fact starting going up, more buyers who was in rental quickly jumped in. More soon follows. Within months, prices recover back to 2007 level. Interestingly, those whose lease is up only in late 2009 or early 2010 majority of them “miss the boat”, as they thought they still have time.

Of course, there’s many other reasons. But it does not matter now. Price is now back to near 2007 level. Like it’s almost impossible to sell at the top (only 1 unit per condo can do it), it also difficult to buy at the bottom (only 1 buyer per condo can do it). Today, those who are caught in 2007′s peak are now thankfully off-loading. To them, it’s like a second-chance to off-load at cost-price. They had considered themselves lucky to be sheltered by high rental locked in 2 years ago. Going forward, with more supply coming, one wonders if next buyers caught in the next peak would be so lucky without the protection of high rentals.

 

What’s considered a good investment then?

Obviously, a good investment is one which has not reach the 2007 peak and have forsee-able upside. There’s plenty of clusterhouse at range of $2.3m – $2.8m, that still under its peak values. Buyers are spoiled for choices.

 

Disclaimer: The above comments are purely personal views of the author, and does not represent any form of professional advise.

Readers are advised to speak to relevant financial, investment, and economy professionals for guidance.

 

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