:: August 2010 Rent/Sale Transaction Ratio ::
Analysis of Investment Properties
As mentioned, I regularly compile rent/sale ratios for a basket of properties.
For property investors that buy a property for capital appreciation but also want to fetch a high rental yield,
I encourage doing this transaction ratio check.
Why so? The reason is a simple one. Premium projects, such as The Cosmopolitan,
Does not necessary fetch a high rental yield as seen in the chart above.
While buyers may place a premium over the development,
Tenants on the other hand have a different set of criteria when it comes to tenancy.
By obtaining the ratio - we are then able to understand which developments will bring
The best rental yield as compared to the initial capital outlay to purchase the unit.
Hence, over time, The Cosmopolitan may move up the charts, while
Older development will tend to move down such as The Tiara.
Another point to note is that this ratio will fluctuate as both the sale
And rent transactions are recorded.
New transactions filed will affect the ratio to a certain extent.
Smaller Outlay Better Yield
An interesting point to note is that developments in District 14 continue to dominate the rankings.
I have added 4 projects in District 14 (highlighted in blue) to compare with those in the River Valley and CBD belt.
Shanghai One, The Pier and Domain21 continue to fetch a high rental value.
However, for investors with a smaller outlay but hoping for a reasonable yield,
District 14 developments would be an option.
Notwithstanding, other older developments such as The Arris and Emerald Park
Continue to maintain their ratios - due to their attractive locations and lower PSF rates
(i.e. lower sale psf but also lower rent psf).