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into_the_wild

Dreams are what you wake up from.

14 years of Livejournalling, and hopefully, more to come.


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Crazy
into_the_wild

:: Wildy's Property Update ::

:: Wildy's Property Update ::

 

A Quick Peek at July's Rental/Sale Ratio

One of my current client, with a budget of $1.5mil is seeking to invest in a property in the River Valley area, and has requested for an update on the properties with the best rental yield. With prices steadily creeping upwards, where are the best investment properties using rental yield as a consideration?

I identified a basket of properties in the River Valley area (with the exception of The Arris) and prepared a ratio based on the average rent ($psf) transacted over the average sale ($psf) transacted.

Below shows an interesting ranking, based on the best ratio to the worst ratio.

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What does the Chart tells us?
My advice to my client stems from the ratio in the chart. For the best investment, we would have to look at not only this ratio, but also the potential of capital appreciation. Hence, newer developments that are located in a central location (preferably , in an area of potential growth, hence upside) is most preferred.

Let's look at the ranking.

Tribeca is definite a good investment as it is located close to Great World City, and that may have influenced the higher average rent (of a whopping $7.49psf!). Shanghai One is also a relatively new development that located close to Valley Point. These are good investment choices.

However, for slightly older developments such as Domain21 and Millpoint, they have a good rental unit, due to the good location as well as good upkeep and decent interior space, but there is a downside to capital appreciation (esp. Domain 21, which is leasehold). Emerald Park fetches a good rental yield but it is really an old development and hence may experience a slow rate of capital appreciation.

Why Rivergate has a Lower Yield?
I have previous clients interested in Rivergate. It is a spectacular freehold development, and definitely investment worthy. However, its current high sale psf does not make it a good investment property, and my advice would be to steer clear of such developments which has appreciated relatively higher than the rest of the pack.

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Why Arris?

I have always used The Arris as a yardstick for property benchmarking. The Arris is one of the 3 developments in District 1 and 2 that is freehold (the other 2 being the antiquated Chinatown Plaza and Emerald Garden, being surrounded by construction). I see Arris as a gem, which has not appreciated in terms of capital appreciation as compared to Icon (which is an anomaly), but fetches a very decent rental yield.

My advice to my client? Consider Tribeca or Shanghai One, and of course, Arris.

***
 

For more property updates and analysis, please visit the Astute Property Guide.

 
 
 
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wah never knew tribecca was that expensive...

Yeah prices in their most absolute values are deceptive.

Rent/sale ratio?

(Anonymous)
Hey there!

I visit your blog for the informative property postings. Keep it up! :)

Say, did you learn to use the rent/sale ratio some some property portal? Just asking, cos' I'm more used to looking at RY instead. I suppose it works anyway! Haha..


Cheers!

Thank you.

Well, rental yield is one way to look at the investment aspects of a property but unless one averages out the rental yield over a certain time period, it is difficult to know the average RY of a particular development. Hence, using the ratio of a particular development over a certain period of time (6months for eg) of both the average rent to average sale transactions per square feet makes the comparison more suitable for a development INSTEAD of a particular unit.

Once we focus on a particular development, we will then move towards using the rental yield method.

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