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Crazy

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

:: August 2010 Rent/Sale Transaction Ratio ::

:: August 2010 Rent/Sale Transaction Ratio ::

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.

 

The Midas

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).


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Totally agree that the rental yields and price premiums can run in opposite directions. Many people shunned Domain 21 because it was in District 3, compared with the neighbouring developments in District 10. However, most rental clients only see it as somewhere convenient, with two nearby petrol stations and a supermarket, and a stone's throw from Orchard.

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