Price vs Value of Singapore Properties
Would like to share my opinion on the concept of Price vs Value of Property in Singapore.
As a Trusted Advisor for property advisory, when engaging with clients, common questions are: “… the price of property is too high’, ‘… the property is overpriced“.
Ever wonder, whenever there is a launch of the new project, how developer comes out with the pricing of $$$$ psf?
Price of Singapore Property
Just to share, technically, there is a intrinsic calculation to the price of properties in land scarce Singapore. With the number of factors affecting price include: 1. Location, 2. Type of Property, 3. Finishes of the property, 4. Land Bid Price, 5. URA Master Plan, 6. Development Charges, 7. Construction Cost
For items 1 to 5, the information is readily available for the public, where it can be found in the developer’s brochures, google map, and even developer’s P&L for the item no. 7 construction cost.
For Item no. 6 Development Charges, briefly, by definition :
“Development charge is a tax that is levied when planning permission is granted to carry out development projects that increase the value of the land. For instance:
- rezoning to a higher value use
- increasing the plot ratio”
Development Charges which can be found in the URA Master Plan, forms part of the calculation of price (psf) during launch. For those interested can contact me for a further discussion 🙂
Value of Property
So the next question pertaining to the Header: Price vs Value of Singapore Properties, what is value of the property? Is it simply the valuation report from the Valuers? I would think the Value of the property is much More than that.
I feel that value of property is more towards how individual client perceived this property is to him/her. There are a number of questions (not exhaustive) Trusted Advisor would ask the individual clients to determine whether this property is of value to him/her. These questions include:
- What is the life stage that the client is at that require eg. more space? Additional of a baby? Inviting parents to stay over to take care of them?
- Purchase this property for a holiday / retirement home?
- Purchasing this property for investment / retirement needs? (will dwell more on future posts, as it will lead to how would this purchase/sale affects your plans )
- More for foreign clients, for diversification of investment risk and geo-political risk, as Singapore is relatively more stable politically and economically?
- Value of the immeasurable prestige and status that comes with the address of the property?
When able to answer these questions (again not exhaustive) will have a value that Clients can see that how this value of the property fit into their long term plans, fit into their bigger picture of life stage.
Just sharing my thoughts. 🙂