Price versus Value of property, Price vs Value of Singapore Properties, Trusted Advisor

Price vs Value of Singapore Properties

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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”

(Source from URA Website: https://www.ura.gov.sg/Corporate/Guidelines/Development-Control/Planning-Permission/Folder/DC-Charge-Rates#How-to-calculate)

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. 🙂

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