Wildy the Journeyman (into_the_wild) wrote,
Wildy the Journeyman

The Midas - Analyzed

The Midas - Analyzed

30 March 2010
Latest Sold Unit    : THE MIDAS, 26 Lorong 30 Geylang #03-02 (1098sqft)
Last Sold for    : $ 650,000 ($ 592 psf) on Feb 11, 2010

I have been having a keen interest in the properties in Geylang. I know that most people would be turned away by the various kind of vices that lurk in Geylang, but I see certain potential in this area.

For starter, let me do a quick summary of the pluses and minuses for Geylang:

+ Many freehold developments below $650psf
+ Located close to Aljunied and Dakota MRT
+ Located close to city area
+ Many popular eateries
+ Near the upcoming Sports Hub (spillover effect?)
- Certain Lorongs are populated for the wrong reasons, wholesome families may shun Geylang
- Difficulty in obtaining bank loans (esp for Lor 28 and below for even numbered Lorongs)
- URA restrictions and need for building uniformity

However, at this current juncture (March 2010), if you go to PropertyGuru and search for good-sized (I'm referring to size 800sft and above and not Mickey Mouse units below 500sft) apartments that are below $800,000 and below $650psf, you are likely to be only about to find them at these locations:

1. Geylang
2. Old walkups at Joo Chiat
3. Near Changi Prison
4. Furthest end of Pasir Ris
5. Remote localities in Sembawang

Okay, back to The Midas.
The Midas is a freehold apartment development located at 26 Lorong 30 Geylang, Singapore 398359, in District 14, minutes walk to Aljunied MRT Station. Completed in 2007, it comprises 28 units. The Midas is close to the Singapore Post Centre and Geylang Serai Malay Village. If you are familiar with The Atrium, it is built just right beside The Midas. In fact, in the past few years, there were a few developers buying off land in Lorong 28 and Lorong 30, including the shophouses along Geylang Road.
And we get The Midas, The Arizon and The Atrium making this area the newly rejuvenated area in Geylang.

What is interesting is that while other developments in other 'more favourite' districts (see my analysis on The Botanic on Llyod) have risen in relative psf (per square foot) and become rather expensive, the developments in Geylang have not been affected by Singaporean's buying spree. For a simple summary:

1. Financial crisis in 2008 - property prices fall across the board
2. Financial rebound in 2009 - bargain hunting starts and the popular districts get snapped up
3. Late 2009 - Saturation point is reached, and we have overseas and really rich buyers snapping up luxury homes, while the average Singaporean continues to hunt for undervalued properties NOT IN THE MENTIONED LOCATIONS 1-5.
4. Early 2010 - Rich Singaporean unaffected and unfazed. Average Singaporean realizes that his or her 20% cash cum CPF can now buy only limited properties. Most wait out. Some start to focus on properties within their reach, in locations 1--5.
5. Rise in value of properties in 1-5?

If you compare the $/sft of The Midas vs the monthly Avg PSF in District 14 (Geylang), you will realise that, while being a new development at a quieter Lorong, it is still undervalued at $600psft as compared to $700 for the district. In fact, when we made our rounds at the various Lorongs, we were surprised that Waterina at Lorong 40 is going for about $760psf! The Atrium Residences is going for about $619psf. Based on a fixed deposit for 2-3 years for this sold unit, we are expecting about a monthly repayment of about $2,000 or so. However, for a spacious 3-bedroom unit like this in Geylang we can easily rent this out for about $3,000.

Based on a 80% loan over 30 years, if we include the monthly maintenance and wear and tear of furniture (and maybe include property tax), we could expect perhaps an additional $400 a month or so. This works out to be an income of $600 or so, and since it is freehold land, you get the property paid over time. And of course, should the property creep upwards like what it has been doing, you can choose to sell it at the end of the 2 or 3 year commitment.

Sounds plausible? Very, in fact, especially when there is a good rental demand for modern Geylang developments.
We will continue to track The Midas and update you along the way.
Tags: property

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