[Discussions] Long Term Returns of Singapore Properties

[gerdhold]

On the topic,

Properties are like stocks need to find a right time to invest, but I think most would agree it only make sense to invest if one could leverage up without the need or ability to leverage up then well its not that attractive.

Given how frothy the property market is I don't see much upside but plenty of downside so I would sit the market out. aka don't see the point in investing 1.2 - 1.5 just to potentially make 200k (barring en bloc aside), the downside risk is aplenty. Plus nett yield in this rental climate is maybe 1.5 - 2% ish?

Property management is another factor, I've dealt with termite issues, deadbeat tenants, fussy tenants, burst water pipes, broken equipment, squabbling agents, mcst politics etc the returns need to be darn good if I were to consider another investment property.

Very true. My yardstick is to sell when the current yield goes under the 10y which is currently at around 2.1% this makes managing tenants and property upkeep totally not worth the effort. If someone else wants to buy it off me at below risk free yield then by all means since I'm not bullish on capital appreciation from here on.

 

[Mecisteus]

Properties are like stocks need to find a right time to invest, but I think most would agree it only make sense to invest if one could leverage up without the need or ability to leverage up then well its not that attractive.

Apart from a primary residence and assuming you have a few hundred thousands of cash.

These few hundred thousands of cash may be dragging on lousy returns if you wait for a very long time.

Even if you think the time is right, you only have 1 chance to execute it correctly.

For someone who is in such a position, I think he is better off splitting the cash into some other stocks. And he can choose to DCA into the market.

 

[existential_reality]

I still am exposed to property but trying to sell (assuming the price is right), for one of my units thankfully I manage to find a buyer for slightly below the peak price of that development.

I'm already vested in stocks back in 2016 (both REITS and regular stocks), back in 2016 it was fairly easy to find a decent value stock but now the market is riding fairly high. I'll need to do more fact finding to find good companies I'm comfortable to investing in.

Apart from a primary residence and assuming you have a few hundred thousands of cash.

These few hundred thousands of cash may be dragging on lousy returns if you wait for a very long time.

Even if you think the time is right, you only have 1 chance to execute it correctly.

For someone who is in such a position, I think he is better off splitting the cash into some other stocks. And he can choose to DCA into the market.

 

[Mecisteus]

Uncle Ervino is like a prata flipper aka a CCR property agent.

No matter what points you mentioned, he will always try to quote your point and twist to his advantage.

 

[Mecisteus]

Why? Why because what AK advocate didn't support you so you make such jealous comments and personal character attack on me like "prata flipper"? Who flip prata? Sounds that there is a racist attack here?

Looks like you are the one with character problem? Otherwise why you can't even honestly answer a honest question I have been asking you (this is like the 10th time):

Prata flipper is a very common phrase in HWZ. You must open up your eyes to read more.

That leveraged 10-12% annualized returns are pathetic considering that you are taking a risky bet with a big amount of loan in order to achieve such rate.

Also, this number is too optimistic on the upside. I have not factored in lots of others costs and charges. There are also management and vacancy costs involved.

 

[ExtremeWays]

The compound annual growth rate (CAGR) of private property prices in Singapore since 1993 is about 4%per annum

 

[mummy1234]

To make money in property, u must buy at the right time and at the right location and buy the right type of property. Same like shares, need to buy the right type of shares at the right time.
The money invested in property is usually much larger than shares, but returns are also higher in absolute amounts. Like for me, already made S$300k plus from my first EC ( sold) and S$700k (paper profit) in my freehold terrace.

 

[Mecisteus]

Firstly, That leveraged 10-12% annualized returns are NOT pathetic because it is almost 3x that of GIC Annualized returns of 3.7% p.a.!

Secondly, in fact, GIC Annualized returns of 3.7% p.a. also involve quite risky bets, otherwise it won't lose US$4 Billions just on investment in just 1 bank called UBS!

Uncle why do you like to compare to the performance of a sovereign fund which is handling billions and billions of dollars?

Maybe GIC should hire you because you can achieve >25% for stocks, >40% for properties and >1000% for futures.

And most importantly, do you understand the allocation of GIC portfolio?

You might as well compare to the savings rates from banks.

The Reference Portfolio comprises 65% global equities and 35% global bonds, which is a generally accepted passive alternative portfolio.

http://www.gic.com.sg/our-business/investment-framework

As usual, hypocritical people like you always like to sensationalize the headlines about losing money with UBS.

Those profitable investments made by GIC are rarely discussed.

 

[koja6049]

The compound annual growth rate (CAGR) of private property prices in Singapore since 1993 is about 4%per annum

if you take the CAGR since 2009, is it still 4%?

 

[mummy1234]

if you take the CAGR since 2009, is it still 4%?

Cannot be, mine about doubled in price from 2010 to 2014.

 

[crimsontactics]

Mike, you bullshxting again?!
GIC Annualized return for 2017 over 20 years period = 3.7% p.a.
This 3.7% p.a. CAGR already included all the profitable investments GIC made! Who you want to smoke huh?

Why can't compare to the performance of a sovereign fund which is handling billions and billions of dollars?
Warren Buffett's Bershire Hathaway manages about US$500 Billions in portfolio and earns about CAGR of 21.6% p.a. over 50 years!
Warren Buffett's US$500 Billions is much more than what GIC manages right?
And 21.6% p.a. is 580% times the return of that achieved by GIC (of 3.7%) right?

Mike, you want to bluff who huh?

3.7% is excluding inflation wor.

You add inflation it's around 7% a year.

Quite normal mah. The same as stock market growth.

Sent from . using GAGT

 

[NewInvestor]

The compound annual growth rate (CAGR) of private property prices in Singapore since 1993 is about 4%per annum

I did buy a property in 1993. Assuming I bought it at $100K then and the CAGR is 4% from then till today, what is the value now? Am just interested in how you experts calculate.

 

[Mecisteus]

3.7% is excluding inflation wor.

You add inflation it's around 7% a year.

Quite normal mah. The same as stock market growth.

Sent from . using GAGT

For simplicity sake, remove inflation rate in the picture.

All returns and interest rates discussions in this forum so far are nominal values.

So it is alright to compare nominal with nominal values.

 

[mummy1234]

Actually, it is useless arguing cause it depends on your entry and exit points and type of property u bought.

 

[Mecisteus]

Mike, you bullshxting again?!
GIC Annualized return for 2017 over 20 years period = 3.7% p.a.
This 3.7% p.a. CAGR already included all the profitable investments GIC made! Who you want to smoke huh?

Secondly, in fact, GIC Annualized returns of 3.7% p.a. also involve quite risky bets, otherwise it won't lose US$4 Billions just on investment in just 1 bank called UBS!

Do you have a short term memory loss?

You associated UBS with risky bet.

Are you talking to a Primary school kid?

Of course I know 3.5% pa is the returns of the portfolio as a WHOLE.

And for goodness sake, the GIC portfolio includes bonds.

So why are you comparing a property with a portfolio of bonds and stocks?

 

[crimsontactics]

Based on the CAGR 4% p.a. claim, your property should only have market value
= $100k x (1+0.04)^24 = $256k !
Wow! So cheap! What is that you bought? Even cheaper than 4-room HDB flat in Sengkang! Real or not?!

Maybe he meant 4% real return?

Sent from . using GAGT

 

[Mecisteus]

3.7% is excluding inflation wor.

You add inflation it's around 7% a year.

Quite normal mah. The same as stock market growth.

Sent from . using GAGT

On a second look at your post, you are right.

Uncle Ervino is confirmed a #@%&.

Always comparing lemons, oranges and rubbish.

We talking about nominal returns. He go and compare nominal with real returns.

In our 2016/2017 annual report, we announced the annualised 20-year real rate of return for the year ended 31 March 2017 was 3.7%. In USD nominal terms, GIC achieved an annualised return of 5.7%, 4.3% and 5.1% for the 20-year, 10-year and five-year time periods respectively.

 

[Mecisteus]

Oh my God.

Why would anyone compare the nominal rate of returns with the real rate of returns???

In our 2016/2017 annual report, we announced the annualised 20-year real rate of return for the year ended 31 March 2017 was 3.7%. In USD nominal terms, GIC achieved an annualised return of 5.7%, 4.3% and 5.1% for the 20-year, 10-year and five-year time periods respectively.

 

[NewInvestor]

Based on the CAGR 4% p.a. claim, your property should only have market value
= $100k x (1+0.04)^24 = $256k !
Wow! So cheap! What is that you bought? Even cheaper than 4-room HDB flat in Sengkang now! Real or not?!

Does everyone agree that this is the correct way to calculate if CAGR is 4%?

Yes I did buy a property in 1993 but the $100K purchase price is fictitious. i just wanted to see if all of you disputing parties at least agree that if the CAGR 4% is correct, that property should be worth $256K today.

 

[crimsontactics]

Not going to make much difference whether 4% real return or nominal return since that is just 2% difference over 24 years period!

Based on the CAGR 6% p.a. nominal return (=4% p.a. real return) claim, your property should only have market value
= $100k x (1+0.06)^24 = $404k !
Still cheaper than a 5-room HDB flat in Sengkang!

But NewInvestor said is a private property (not HDB flat)!

SG's inflation not 2% wor.

Even CPF uses 3% in their estimate.

Sent from . using GAGT