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The Great Room raises more than $5 mil in Series-A funding


The 10,000 sq ft extension of The Great Room at One George Street has been 100% taken up even before its opening at the end of this month. The Great Room co-working space will therefore occupy the entire floor plate of 25,000 sq ft on the 10th floor of One George Street.

This is a far cry from a year ago when The Great Room first started operations. Occupying half a floor of about 15,000 sq ft, it opened with just 30% occupancy, according to its co-founder and CEO Jaelle Ang. “[Occupancy] was much lower than we had projected.” However, the space was fully taken up within four months, she adds.

Dedicated office space
Dedicated office space

The Great Room has secured a second location at Pontiac Land Group’s Centennial Tower in the Marina Centre area. The 36,000 sq ft space spans two floors and is slated to open before end-4Q2017.

Overseas expansion

On Sept 20, The Great Room announced its first overseas location — 30,000 sq ft located at the newly built Gaysorn Tower in the heart of Bangkok’s CBD. It is scheduled to open in 1Q2018.

The co-working operator has closed its Series-A funding, having raised more than $5 million. The funding round was led by CapitaLand’s corporate venture fund, C31 Ventures, with participation from iGlobe Partners and the family office of Goldbell Group.

The funds raised will allow The Great Room to expand its footprint across Asia to pursue “synergistic partnerships” with developers that own prime commercial real estate assets in Asia.

Hospitality inspired workplace
Hospitality inspired workplace

“It is crucial to find the right partners,” says Ang. “In addition to capital, partners can also offer access to their portfolio of assets. We currently have a lot of interest from asset owners.” For example, Ang is in talks with a developer in Hong Kong with a portfolio of commercial real estate.

She intends to grow the number of co-working sites to seven by next year. Besides Singapore and Bangkok, she is planning for The Great Room to be in Hong Kong and Jakarta as well.

Hospitality-inspired workspace

Ang conceived the idea of The Great Room three years ago. She was then head of development at Thai Stock Exchange-listed property company Country Group Development and based in Bangkok. She continues to sit on its board of directors today. Country Group Development is the developer of the Four Seasons Hotel and Four Seasons Private Residences, as well as the Capella Hotel Bangkok.

It was while she was looking for an operator to manage the group’s portfolio of commercial properties that Ang realised there was a gap in the market. She felt there was a need to create a “hospitality-inspired workspace”. She predicts that “co” will soon be dropped over time, and it will just be “working”. “Co-working will become a critical component of many companies’ real estate strategies, for office occupiers and building owners alike,” she adds.

Incidentally, the other co-founders of The Great Room are Ang’s husband and CFO, Yian Huang, and his sister, Su Anne Mi, who is COO. According to Ang, the co-founders visited more than 60 buildings before deciding on One George Street, which is 50%-owned by CapitaLand Commercial Trust in a joint venture with insurance giant FWD Group. The latter is part of Hong Kong tycoon Richard Li’s Pacific Century Group.

Targeting grown-up start-ups

The Great Room at One George is now at full capacity. Ang also tries to curate the members by attracting “marquee tenants”. Today, about a third of the members are tech companies, another one-third are in finance and the remainder are in the creative and lifestyle industries. The target market segment is “grown-up start-ups”, says Ang, who defines them as companies that are funded and on a growth trajectory.

Meeting room at The Great Room
Meeting room at The Great Room

Existing members at The Great Room at One George Street include Thailand-based fintech start-up Omise, famed for raising US$25 million ($33.6 million) in an Initial Coin Offering; New York-based Sprinklr, which provides social media management to companies; and Berlin-headquartered Design Hotels, which provides hospitality servi ces to boutique and luxury hotels in more than 50 countries.

Services beyond space

The Great Room is also receiving requests from MNCs and banks looking to accommodate 200 to 300 of their staff at its premises. “Previously, MNCs and banks housed their marketing or innovation teams in co-working spaces to have them close to the pulse of the market,” observes Ang. “That has since changed. Now, they want flexibility and are looking to partner co-working operators for up to one-third of their space requirement and, ideally, in the same building.”

Increasingly, co-working space will be a “must-have amenity” for office landlords, as a service to their other tenants, she adds.

The hospitality-inspired theme at The Great Room is not just in its interior design and spaces but also services. On Mondays, complimentary breakfast and coffee are served, while in the evening, there is a “turndown service”, where members who work late are offered complimentary hot chocolate and cookies. “These are little ways to take care of people and make them feel comfortable,” she says.


This article first appeared on Edgeprop

En bloc market updates 2017 Sept


Ever since the en-bloc market sprang to life in late 2016, there has been a flurry of activity. Developers have been bidding and gunning for sites aggressively, and owners are fast-tracking their sales committees to get to market and take advantage of the upturn.

How has the en-bloc market developed so far? A research house has so kindly compiled a list of en-bloc deals that have happened, is happening and might happen.

On the left, the government didn’t release a lot of land for the 2H17 land sales programme. Result: developers can’t replenish their land bank. They become desperate (because having land and building on it is how they make money).

What happens? The developers go to the private market, find old developments that have potential to be en-bloced, and buy them.

On the right, concluded deals has contributed about 7,495 units to developers. Add those presently on the market, you get (7,495 concluded en-bloc deals + 5,950 on the market) = 13,445 units.

Add another 17,546 which are in the pipeline, you get (13,445 + 17,546) = 30,901 units.

Sources of residential land
Sources of residential land

Completed and in-progress deals

En bloc deals completed and on market as of 2017 Sept
En bloc deals completed and on market as of 2017 Sept

Developments with en-bloc potential

For property investors, it might be worth a visit to some of these developments which have en-bloc potential.

Look at the “Current units” and “Potential units” columns in the middle. A big difference means a developer can come in, buy out the present owners, knock down the development and rebuild it with more units.

Potential en bloc deals as of 2017 Sept
Potential en bloc deals as of 2017 Sept

If you’re on a house hunt, check out these other developments.

Beach road commercial land sale in 2017


The land sales market has been springing to life since end 2016, with developers growing increasingly bullish on the prospects for the Singapore property market.

In this post, we look at the Beach Road prime commercial land tender that is closing on 28 Sept. With the backdrop of market conditions turning bullish, the results for this land tender is expected to be healthy, even fully valued. We’ll have to wait and see how the results come out before we can get a read on how developers are looking at the property market.

Beach road site location

First up, the site is located along beach road, Nicoll Highway and Rochor Road. The location is prime and walking distance from Bugis MRT station and Suntec City Mall. The site will also be indirectly connected to DUO. Other office buildings in the area include Shaw Tower. Bidding for the site is expected to be strong given the shortage of commercial land supply.

Beach road land siteBeach road land site

Site conditions

The government has laid out the following conditions for the site

  • At least 70% of the maximum 88,313 sqm of GFA for offices
  • This is comparable in size to the nearby developments DUO and South Beach tower (570,000 and 510,000 sqft net lettable area respectively)
  • Remaining 30% can be used for hotel, serviced apartments, residential units or retail space
  • Maximum 3,000 sqm for retail uses


A survey of property consultants by The Straits Times showed that bids are expected to come in a S$1,262 to 1,400 psf.

Save for the Central Boulevard site bought by IOI properties in 2016, the pricing exepcted by consultants is higher than the prices of all office units sold for the last 10 years.

Land prices 2006 to 2017
Likely price for Beach Road site higher than prices in the last 10 years


Maybank Kim Eng has a valuation scenario for the Beach Road site as follows

  • Rents of new office buildings today are about S$9.5 psf. Older offices commanding S$4.5-8
  • MBKE expected rents to reach S$11 psf in 2022 completion
  • Cap rates expected to stay at 3.5%
  • Estimated office capital value of S$3,000 psf
  • Accordingly, gross development value of S$2.4b for office + retail
Beach road valuation scenarios
Beach road valuation scenarios (Maybank Kim Eng)

4 condominiums with at least 4% yield


Property yield, much like a stock or REIT’s dividend yield, plays a factor in giving an investor his desired returns over the long term.

In Singapore, residential property yields have been hovering around the 3-3.5% mark across the island. It’s at the higher end in the Mass Market segment while more compressed in the central districts.

How is yield calculated?

Let’s recap – how is yield calculated? If you remember high school math, the numerator (the number above) is the rental income generated by the property, while the denominator (the number below) is the price paid by the investor for the property.

There are some variations for example

  • Numerator can be the full rental income before deducting property tax, insurance, maintenance costs etc. It is more accurate to deduct these items.
  • Denominator can be the present market price. For example, the investor bought his house for S$500,000 five years ago and the property at present market price is now worth S$1,000,000. For an investor, it is more accurate to use the price he paid for the property i.e.S$500,000 in this case.

With that out of the way, here are the 4 properties where yields are around the 4% mark.


Sky Suites 17

Development name Sky Suites 17
Property type Apartment
Developer EL Development (Balestier) Pte. Ltd.
Tenure Freehold
Completion year 2015
# of floors 30
# of units 115

SkySuites 17 is a freehold apartment development located at 17 Jalan Rajah, Singapore 329137, in district 12. It is expected to be completed in 2015. SkySuites 17 stands 30 storeys tall and comprises of 115 units. It is located within walking distance to Toa Payoh MRT Station.

Condo Facilities at SkySuites 17

Facilities at SkySuites 17 include 50m lap pool, Jacuzzi, wading pool, BBQ pits, steam bath, children’s playground, gym, fitness corner and clubhouse.

Condo Amenities near SkySuites 17

SkySuites 17 is located close to schools, including the elite CHIJ Secondary, Balestier Hill Primary School and Balestier Hill Secondary School.

Residents can head down to Novena Shopping Mall for amenities such as retail, supermarkets, restaurants, banks, and more.

For vehicle owners, driving from SkySuites 17 to Orchard Road or Central Business District (CBD) takes about 5-10 minutes, via the pan Island Expressway (PIE).

Laguna Green

Development name Laguna Green
Property type Condominium
Developer Far East Organization
Tenure 99 year leasehold
Completion year 1999
# of floors 4
# of units 121

Laguna Green Laguna Green is a 99-years leasehold development located at 20 Jalan Hajijah 468726 in District 16 near Bedok MRT and Tanah Merah MRT Station. Completed in 1999, it comprises of 4 storeys and 121 units. Located nearby are Temasek Junior College and Bedok Polyclinic.

Condo Facilities at Laguna Green

Laguna Green has full facilities, which includes covered car park, 24 hours security, wading pool, swimming pool, BBQ pits, gym, tennis court, sauna, and a clubhouse.

Condo Amenities near Laguna Green

It is a short bus ride to Bedok train station, and there are several bus services available close by. Established schools such as Victoria School are a short ride as well. Numerous restaurants are located within walking distance of the development.

Residents can head down to the nearby food and market centre or Siglap Centre Shopping Mall for a host of amenities including restaurants, and supermarkets. Recreational facilities nearby include the East Coast Park. In addition, the Saint Andrew’s Community Hospital is located just a stone’s throw away.

For vehicle owners, it takes less than 20 minutes to get to the business hub and the Orchard Road shopping district, via East Coast Parkway

The Hillford

Development name The Hillford
Property type Apartment
Developer World Class Development (North) Pte Ltd
Expected completion 2017
# of units 281

The Hillford is a 281 Units of 60-year Leasehold Apartment and 20 Commercial units located at Jalan Jurong Kechil in District 21. It will be completed in 2017.

The Hillford is close to NS2 Bukit Batok MRT Station and not far from several Schools such as German European School Singapore (Deutsche Europäische Schule Singapur) (GESS) – Primary , Canadian International School (CISS) – Toh Tuck Campus and Anglo-Chinese School (Secondary).

Resident at The Hillford can get to the nearest NTUC Fairprice Supermarkets at Bukit Timah Plaza and 280 Bukit Batok East Ave 3. It is also nearby to Bukit Timah Shopping Centre, Beauty World Centre, Beauty World Plaza and Bukit Timah Plaza Shopping Malls for an array of amenities such as grocery and retail shopping, banks, eateries and more.

Vehicle owners can take Bukit Timah Road, Jalan Jurong Kechil, Pan-Island Expressway (PIE) and Bukit Timah Expressway (BKE) to get to the business hub or shopping district in the city.

Suites at Orchard

Development name Suites at Orchard
Property type Condominium
Developer Allgreen Properties Limited
Tenure 99 year leasehold
Completion year 2015
# of floors 10
# of units 118

Suites at Orchard is a 99-year leasehold condominium development located at 38 Handy Road, Singapore 229239, in district 09. Expected to be completed in 2015, it stands 10 storeys tall and comprises a total of 118 residential units. Suites at Orchard is located within walking distance to Dhoby Ghaut MRT Station and Bras Basah MRT Station.

Condo Facilities at Suites at Orchard

Suites at Orchard has full condo facilities such as basement car park and swimming pool.

Condo Amenities near Suites at Orchard

The schools in the vicinity include the elite St Margaret’s Primary School, Chatsworth International School and Stamford Primary School.

Suites at Orchard has a host of amenities that are readily available, such as major shopping centres, supermarkets, restaurants and eating establishments, banks, library, cinemas and other entertainment facilities that can be found at Plaza Singapura, The Cathay and Park Mall.

Does war have an impact on real estate prices?


What effect does war or large scale, prolonged military conflict have on property prices?

On a first principles basis, this is what we know about real estate

  1. Inflation hedge. Rents and prices for property generally rises together with the inflation rate.
  2. Derived demand. i.e. demand for houses due to population growth results in demand for houses, apartments etc. Demand for legal services results in demand for office space. Demand for retail therapy results in demand for shopping mall space
  3. Tangible. Real estate can be felt, touched and seen
  4. Requires management. You can’t buy a house, office or retail space without managing it.
  5. Low liquidity. You can’t go to your broker, snap your fingers and get cash in exchange for your property.


What would happen in a time of war?

If you’re living in a conflict zone, your property might be bombed out and reduced to rubble. In that case, quite simple. No more property = lost of asset and money (unless you have insurance).

But what if you’re not living in a conflict zone like Syria, Iran and Ukraine etc? For those living in Asia, the South China Sea conflict could boil over. For those in the Middle East, there’s a war between factions being waged. In South America, there’s drug wars.

How do these events affect property prices in the surrounding neighborhood?

I propose a Target Board framework to look at it. Location is really important to real estate, and this helps us break down the question into parts based on geography.

With that, I propose the Target Board.

Target Board

The 3 parts to the target board. You and your property are

  1. In the conflict zone.
  2. In the immediate area surrounding the conflict zone i.e. 5-10km.
  3. In the country/region surrounding the conflict zone. If you’re in a large country, you could be on the other side e.g. Australia and the US’s East and West coast. North of South Korea and North of North Korea. Or you might be in a small country e.g. Hong Kong, Singapore
War impact on property
War’s impact on property

If you’re in the conflict zone, you’re down on your luck. Your property will most likely be destroyed. Good on you if you manage to escape with your life.

Anticipating war’s effect on property in the conflict zone is easy.


The more interesting question is what happens if your property is in the surrounding area?

Let’s look at it from a demand and supply perspective.

Will people, companies and businesses be demanding space in the surrounding area? Unlikely. This suggests prices and rents could fall. On the other hand, there won’t be supply because developers, builders and engineers won’t want to build and construct in the area.

If there is peace after the conflict and your house or building happens to still stand, you’d be in luck. Businesses and people coming back to the area would need somewhere to put down roots. Your property would be in demand.

If you’re on the other side of the country, it would be most likely that your property won’t be affected directly by the conflict. Sentiment in the economy and capital markets would affect your property, though the influence would be less than the effect the immediate surrounding has.

So then, it’s not so easy anticipating the impact war has on property. But the Target Board framework built on first principles does make it easier.

Rebound in the mid and high end property segment

UOB produced a note with their views on the mid and high end segment of the property market picking up. Main findings from their report reproduced below.


  • Foresee nascent recovery spreading to the mid-range and high-end segments in the next wave
  • Driven by replacement demand from enblocers and a pick-up homebuying interest from foreigners
  • Expect Singapore property prices to rise by 5-10% next year after bottoming out this year.

What’s new?

  • Enbloc fever picking up. Still in the early cycle of recovery.
  • Historically, spikes in enbloc sales have preceded property sector price recovery. This happened in the past cycles in 2007 and 2011.
  • Singapore is becoming more appealing to foreign players after the levelling of taxation costs

Room for more enbloc sales

  • Collective sales still at the one-fifth mark of 2006/07 cycle. Suggests ample room for more enbloc sales.
  • Collective sales value transacted in 8M17 has topped S$3b, exceeding the combined transactional value in the previous four years (2013-16).
  • Surge in enbloc sales could span between six to eight quarters. The collective sales in 2016/17 ytd only 21% of the cumulative sales transacted in 2006/07, suggesting further room for more enbloc sales.

Replacement demand to fuel mid/high end properties

  • Replacement demand from enbloc sales to fuel mid-/high-end segment. The 2006/07 enbloc sales cycle took out around 10,000 units and correspondingly minted a similar number of millionaires seeking replacement properties.
  • In the nascent cycle from 2016-17 ytd, about 2,000 units have been taken out, with another 1,000 units in advanced stages. As the cycle progresses further, collective sales could be fuelled by more replacement demand. The wealth effect would likely see the millionaire enblocers upgrading to the mid/high-end segment, and further feeding the cycle.

Risks of oversupply

  • Risk of oversupply once enbloc fever subsides. While the 2006/07 enbloc sales cycle took out around 10,000 units, it put back twice as many units into the market.
  • According to JLL, the 3,000 units (including the ones launched for tender) could yield 12,000 units in new developments.

Enbloc market a source of supply

  • Enbloc market as a key source of supply for the mid-range/high-end segment. The GLS programme has focused mainly on the mass market segment, with only a few sites in the mid-/high-end segment.
  • In the 2H17 GLS programme, the mid-/high-end segment made up just 24% of the potential 7,810 units. With the governments focusing on the mass market, GLS will rarely have sites in the mid-/high-end segments. Hence, developers looking to develop in the mid-high end will look to the enbloc market as a source of supply. There are about 30-40 residential properties islandwide trying to enbloc at various stages.

Foreign buyers have tax advantage in Singapore

  • Levelling of playing field to bring foreigner buying interest back to Singapore. Foreign purchases have tapered down, especially after the implementation of Additional Buyers Stamp Duties (ABSD) 10% from Dec 11 and 15% from Jan 13.
  • As overseas regimes caught up with harsher property cooling measures to moderate housing prices and limit foreigners’ participation, we expect buying to move up to the mid-high end segment, driven by foreign demand.
  • In Nov 16, Hong Kong doubled its stamp duties on overseas property buyers to 30% eclipsing that of Singapore’s 15%. In Taipei, a punitive divestment gains tax of as high as 45% was unveiled in Jan 16, dwarfing Singapore’s Sellers Stamp Duty (SSD) of 12%. Australia and Canada have also raised the transaction costs for foreigners to own property.

Spike in enbloc sales an indicator for turnaround

  • Inflection point? Traditionally, spikes in enbloc sales are early indicators of a turnaround in the residential property market in Singapore.
  • The two enbloc fevers in 2006/07 and 2010/11 both preceded the rally in the Property Price Index of Residential Properties.
  • Recovery should trickle up to the mid/high-end segment. Expect property prices will bottom out in 2017, followed by a 5-10% increase next year.

This article first appeared on UOB Kay Hian’s research page.

Latest memo from Howard Marks: Yet Again?


There They Go Again . . . Again” of July 26 has generated the most response in the 28 years I’ve been writing memos, with comments coming from Oaktree clients, other readers, the print media and TV.  I also understand my comments regarding digital currencies have been the subject of extensive – and critical – comments on social media, but my primitiveness in this regard has kept me from seeing them.

 The responses and the time that has elapsed have given me the opportunity to listen, learn and think.  Thus I’ve decided to share some of those reflections here.

Media Reaction

The cable news shows and blogposts delivered a wide range of reactions – both positive and negative.  The best of the former came from a manager who, when asked on TV what he thought of the memo, said, “I’d like to photocopy it and sign it and send it out as my quarterly letter.”  Love that guy.

 I haven’t spent my time reveling in the praise, but rather thinking about those who took issue.  (My son Andrew always reminds me about Warren Buffett’s prescription: “praise by name, criticize by category.”  Thus no names.)   Here’s some of what they said: 

  • “The story from Howard Marks is ‘it’s time to get out.’ ”
  • “He’s right in the concept but wrong to execute right now.”
  • “The market is a little expensive, but you should continue to ride it until there are a couple of big down days.”
  • “There are stocks that are past my sell points, and I’m letting them continue to burble higher.”
  • “I appreciate Howard Marks’s message but I think now is no more a time to be cautious than at any other time.  We should always invest as if the best is yet to come but the worst could be right around the corner.  This means durable portfolios, hedges, cash reserves . . . etc.  There is no better or worse time for any of these things that we can foresee in advance.”

 I take issue with all these statements, especially the last, and I want to respond – not just in the sense of “dispute,” but rather to clarify where I stand.  In doing so, I’ll incorporate some of what I said during my appearances on TV following the memo’s publication. 

Numbers one and two are easy.  As I explained on CNBC, there are two things I would never say when referring to the market: “get out” and “it’s time.”  I’m not that smart, and I’m never that sure.  The media like to hear people say “get in” or “get out,” but most of the time the correct action is somewhere in between.  

I told Bloomberg, “Investing is not black or white, in or out, risky or safe.”  The key word is “calibrate.”  The amount you have invested, your allocation of capital among the various possibilities, and the riskiness of the things you own all should be calibrated along a continuum that runs from aggressive to defensive.  

And as I told CNBC, what matters is “the level that securities are trading at and the emotion that is embodied in prices.”  Investors’ actions should be governed by the relationship between each asset’s price and its intrinsic value.  “It’s not what’s going on; it’s how it’s priced. . . .  When we’re getting value cheap, we should be aggressive; when we’re getting value expensive, we should pull back.”  

Here’s how I summed up on Bloomberg:  

It’s all about investors’ willingness to take risk as opposed to insisting on safety.  And when people are highly willing to take risk, and not concerned about safety, that’s when I get worried. 

If it’s true, as I believe, that (a) the easy money in this cycle has been made, (b) the world is a risky place, and (c) securities are priced high, then people should probably be taking less risk today than they did three, five or seven years ago.  Not “out,” but “less risk” and “more caution.” 

And from my visit to CNBC: 

All I’m saying is that prices are elevated; prospective returns are low; risks are high; people are engaging in risky behavior.  Now nobody disagrees with any of the four of those, and if not, then it seems to me that this is a time for increased caution. . . .  It’s maybe “in, but maybe a little less than you used to be in.”  Or maybe “in as much as you used to be in, but with less-risky securities.” 

Numbers three and four – arguing that it’s too early to sell even if the market is expensive or holdings are past their sell point – are interesting.  They’re either (a) absolutely illogical or (b) signs of the investor error and lack of discipline that are typical in bull markets. 

  • If the market is expensive, why wouldn’t you lighten up?
  • Why would you prefer to sell after a few big down days, rather than today? (What if the big down days are the start of a slide so big that you can’t get out at anything close to fair value? What if there’s a big down day followed by a big up day that gets you right back where you started? Does the process re-set? And is it three big down days in a row, or four?)
  • And if you continue to hold past your sell points, what does “sell point” mean?

Bottom line: I think these things translate into “I want to think of myself as disciplined and analytical, but even more I want to make sure I don’t miss out on further gains.”  In other words, fear of missing out has taken over from value discipline, a development that is a sure sign of a bull market.  

The fifth and final comment – that one should exercise the same degree of care and risk aversion at all times – gives me a lot to talk about.  In working on my new book, I divided the things an investor can do to achieve above average performance into two general categories: 

  • selection: trying to hold more of the things that will do better and less of the things that will do worse, and
  • cycle adjustment: trying to have more risk exposure when markets rise and less when they fall. 

Accepting that “there is no better or worse time” simply means giving up on the latter.  Whereas Buffett tells us to “be fearful when others are greedy and greedy when others are fearful” – and he’s got a pretty good track record – this commentator seems to be saying we should be equally greedy (and equally fearful) all the time. 

I feel strongly that it’s possible to improve investment results by adjusting your positioning to fit the market, and Oaktree was able to do so by turning highly cautious in 2005-06 and highly aggressive in 1990-91, 2001-02 and immediately after the Lehman bankruptcy filing in 2008.  This was done on the basis of reasoned judgments concerning: 

  • how markets have been acting,
  • the level of valuations,
  • the ease of executing risky financings,
  • the status of investor psychology and behavior,
  • the presence of greed versus fear, and
  • where the markets stand in their usual cycle.

Is this effort in conflict with the tenet of Oaktree’s investment philosophy that says macro-forecasting isn’t key to our investing?  My answer is an emphatic “no.”  Importantly, assessing these things only requires observations regarding the present, not a single forecast.  

As I say regularly, “We may not know where we’re going, but we sure as heck ought to know where we stand.”  Observations regarding valuation and investor behavior can’t tell you what’ll happen tomorrow, but they say a lot about where we stand today, and thus about the odds that will govern the intermediate term.  They can tell you whether to be more aggressive or more defensive; they just can’t be expected to always be correct, and certainly not correct right away. 

The person who said “there is no better or worse time” was on TV with me, giving me a chance to push back.  What he meant, he said, was that the vast majority of people lack the ability to discern where we stand in this regard, so they might as well not try.  

I agree that it’s hard.  Up-and-down cycles are usually triggered by changes in fundamentals and pushed to their extremes by swings in emotion.  Everyone is exposed to the same fundamental information and emotional influences, and if you respond to them in a typical fashion, your behavior will be typical: pro-cyclical and painfully wrong at the extremes.  To do better – to succeed at being contrarian and anti-cyclical – you have to (a) have an understanding of cycles, which can be gained through either experience or studying history, and (b) be able to control your emotional reaction to external stimuli.  Clearly this isn’t easy, and if average investors (i.e., the people who drive cycles to extremes) could do it, the extremes wouldn’t be as high and low as they are.  But investors should still try.  If they can’t be explicitly contrarian – doing the opposite at the extremes (which admittedly is hard) – how about just refusing to go along with the herd? 

Here’s what I wrote with respect to the difficulty of doing this in “On the Couch” (January 2016): 

I want to make it abundantly clear that when I call for caution in 2006-07, or active buying in late 2008, or renewed caution in 2012, or a somewhat more aggressive stance here in early 2016, I do it with considerable uncertainty.  My conclusions are the result of my reasoning, applied with the benefit of my experience (and collaboration with my Oaktree colleagues), but I never consider them 100% likely to be correct, or even 80%.  I think they’re right, of course, but I always make my recommendations with trepidation. 

When widespread euphoria and optimism cause asset prices to meaningfully exceed intrinsic values and normal valuation metrics, at some point we must take note and increase caution.  And yet, invariably, the market will continue to march upward for a while to even greater excesses, making us look wrong.  This is an inescapable consequence of trying to know where we stand and take appropriate action.  But it’s still worthwhile.  Even though no one can ascertain when we’re at the exact top or bottom, a key to successful investing lies in selling – or lightening up – when we’re closer to the top, and buying – or, hopefully, loading up – when we’re closer to the bottom. 


There’s been a lot of discussion regarding my comments on the FAANGs – Facebook, Amazon, Apple, Netflix and Google – and whether they’re a “sell.”  Some of them are trading at p/e ratios that are just on the high side of average, while others, sporting triple-digit p/e’s, are clearly being valued more on hoped-for growth than on their current performance. 

But whether these stocks should be sold, held or bought was never my concern.  As I said on Bloomberg: 

My point about the FAANGs was not that they are bad investments individually, or that they are overvalued.  It was that the anointment of one group of super-stocks is indicative of a bull market.  You can’t have a group treated like the FAANGs have been treated in a cautious, pessimistic, sober market.  So that should not be read as a complaint about that group, but rather indicative [of the state of the market]. 

That’s everything I have to say on the subject. 


As I said earlier, there has been particularly spirited response to my comments on digital currencies.  It prompted me to sit down with people ranging from some of my Oaktree colleagues to Steven Bregman and Murray Stahl of Horizon Kinetics (my July memo incorporated some of Steven’s observations on ETFs), and I learned that I’ve been looking at Bitcoin the wrong way.  In particular, I realized that the memo incorporated the wrong joke from my father; instead of “the half-million-dollar hamster,” it should have been this one:  

Two friends meet in the street, and Jim tells Sue he has some great sardines for sale.  The fish are pedigreed and pure-bred, with full papers and high IQs.  They were individually de-boned by hand and packed in the purest virgin olive oil.  And the label was painted by a world-renowned artist. 

Sue says, “That sounds great.  I could use a tin.  How much are they?” and Jim tells her they’re $10,000.  Sue responds, “That’s crazy, who would eat $10,000 sardines?”  “Oh,” says Jim, “these aren’t eating sardines; these are trading sardines.” 

I had been thinking about digital currencies like Bitcoin as investing sardines, and that may have been a mistake.  Their fans tell me they’re spending sardines, and while that may be the case, I think at the moment they’re being treated largely as trading sardines.  The question remains open as to whether Bitcoin is (a) a currency, (b) a payment mechanism, (c) an asset class, or (d) a medium for speculation. 

The main complaint expressed in my memo was as follows: 

Serious investing consists of buying things because the price is attractive relative to intrinsic value.  Speculation, on the other hand, occurs when people buy something without any consideration of its underlying value or the appropriateness of its price, solely because they think others will pay more for it in the future.  

In the memo I talked about Bitcoin as an investment asset that should have a value that can be appraised.  While its fans tell me this isn’t the right way to view it, I note that in their February “Bitcoin Review,” even Steven and Murray called it “a new asset class.”  I think this is the weakest claim being made about Bitcoin.  As I said in the memo, “it’s not real” – there is no intrinsic value behind it.  

What Bitcoin partisans have told me subsequently is that Bitcoin should be thought of as a currency – a medium of exchange – not an investment asset.  Given that the evolution of Bitcoin is so topical, I think further discussion is in order.  To start, I’m going to present the case for it as a currency.  What are the characteristics of a currency?   

  • Most importantly, it’s something that people agree can be used as legal tender (to buy things and pay debts), used as a store of value, and exchanged for other currencies.
  • Currencies generally are created by governments. However, there have been exceptions: banks issued their own currencies in our nation’s first century, and it can be argued that the “Green Stamps” of my childhood, and airline miles today, have a lot in common with currencies.
  • For a long time currencies were backed by (and exchangeable for) gold or silver, but that’s no longer the case. The truth is, there’s nothing behind currencies these days other than their issuing governments’ “full faith and credit.” But what do they promise? New currencies are sometimes created out of thin air (like the euro, which wasn’t legal tender sixteen years ago), and sometimes they’re devalued.
  • Currencies change in value relative to each other, in theory based on differential purchasing power, and in practice based on changes in supply and demand (which can stem, among other things, from changes in purchasing power).

Bitcoin fans argue that it qualifies as a currency under these criteria: most importantly, it’s something that parties can agree to accept as legal tender and a store of value.  That actually seems right.  

When I first responded to comments on the memo – even before my recent enlightenment – I found myself admitting that much of the criticism I had leveled at Bitcoin is applicable to the dollar as well.  Whereas I said Bitcoin “isn’t real” because it has no intrinsic or underlying value, that’s certainly true of the dollar and other fiat currencies: there’s nothing behind them either.  You can no longer exchange them for gold (and what is gold, anyway?  But that’s another subject).  In fact, government-issued fiat currencies are accorded value only because of a government edict.  Why, the fans of Bitcoin ask, is such an edict superior to an agreement among people to accept a non-government-issued currency?  Fiat currencies have value simply because of faith in the governments that issue them.  If enough people believe in it, why can’t faith in Bitcoin suffice?  If you consider the properties of fiat currencies, these are darn good questions. 

So my initial bottom line is that I see no reason why Bitcoin can’t be a currency, since it shares the characteristics listed above, especially the fact that there are people (and businesses and even countries) that accept it as legal tender. 

But that’s not good enough for Bitcoin’s fans.  It’s not the same as the dollar, they say; it’s better.   In all the following ways, they’ve told me, Bitcoin is superior to government-issued currency: 

  • All the relevant data regarding Bitcoin – number outstanding, number newly created, and transactions – are recorded in the “blockchain,” a sort of transparent electronic ledger of which everyone can have his or her own copy.
  • Bitcoin can’t be debased by unlimited issuance, since the blockchain process has been set to permit only a gradual increase from today’s 16 million, to 21 million in 2140. In this sense Bitcoin is better than the dollar, of which a lot more can be issued at any time, diminishing its purchasing power through inflation. As Steven and Murray have written, “a purchase of Bitcoin is nothing other than a short sale of the currencies of the world.Merely by limiting the growth of supply, Bitcoin would become more valuable as other currencies devalue.”
  • Since the blockchain exists on each person’s individual computer, rather than in a central location, it can’t be hacked, and thus Bitcoin can’t be stolen, counterfeited, or secretly created in amounts exceeding the authorized total. Likewise, Bitcoin isn’t subject to the currency controls on portability that are often imposed by failing governments. (But I wonder whether the technological claims made for the blockchain might be its Achilles’ heel. While I certainly don’t have the ability to assess these claims for myself, I wonder how many of Bitcoin’s advocates do either.)

Where will we go from here?  The partisans claim the outlook for Bitcoin as a currency is bright:  

  • Since very few people own it today but millions more will want it in the future, demand is sure to rise faster than supply, meaning the price will rise.
  • Specifically, the U.S. money supply is almost $14 trillion, so if people and businesses decide to hold just one-third of their wealth in Bitcoin rather than dollars, (and who wouldn’t want to do so given all the advantages described above?), the value of the Bitcoin in circulation will rise to $4.5 trillion, from today’s $73 billion, for a gain of roughly 60x.
  • There’s sure to be a network effect: the more people join the Bitcoin movement, the more it will be accepted as legal tender, the more useful it will be, and the more demand will increase.
  • Ignoring Bitcoin’s utility as currency, many people will buy just because they believe someone else will pay them more for it. (This time-honored “greater-fool theory” lies at the heart of all speculative manias.) Likewise, people will buy it because of fear of missing out, another bull-market standard.

There’s absolutely no reason why Bitcoin – or anything else – can’t serve as a currency if enough people accept it as such.  While I’d point out that no private currency has gained widespread use in a long, long time, there’s nothing to say it can’t happen. 

Being willing to agree that Bitcoin may become an accepted medium of exchange is not the same as saying you should buy it now to make money.  Think about the fact that the price of Bitcoin has risen more than 350% so far this year and 3,900% in the last three years.  To the degree people argue that Bitcoin is a currency, then (a) why is it so volatile? and (b) is that desirable?  You might want to consider whether a real currency can do that, or whether speculative buying is determining Bitcoin’s price.  And whether what’s gone up can come down. 

The immediate issue of Bitcoin as a currency still comes down to the question of whether today’s price is right.  The price of a Bitcoin is around $4,600 today.  Can one Bitcoin buy the same amount of goods as 4,600 dollar bills?  Or the much higher amounts that Bitcoin bulls think it will soon be worth?  I don’t think we have enough information to know, but the question isn’t irrelevant.  If it were, this would be another case of “there’s no price too high.” 

The other purported use for Bitcoin, given its status as what Marc Andreessen calls a “digital bearer instrument,” is as a payment mechanism.  Its advantages in this regard include the following: 

  • transactions in Bitcoin can be anonymous (I understand it is often used to pay for opioids),
  • payments are made without fees like those charged on credit card transactions and wire transfers,
  • there can’t be fraud and merchant charge-backs like with credit cards, and
  • it can be particularly useful in emerging nations lacking developed payment systems.

But I see two issues here: 

  • First, I expect there to be many competing transaction systems. Will the banks and other financial institutions cede this territory to Bitcoin? Wouldn’t banks’ systems be more likely to gain acceptance from people other than perhaps millennials? What would happen to Bitcoin’s utility as a payment mechanism if Amazon announced its own? Would you rather transact in Bitcoin or Amazonians?
  • Second, if Bitcoin were to become the leading non-governmental payment system, what would cause it to appreciate? If you want to pay me in Bitcoin and I’ll accept it, what would cause its price to rise?Adherents would argue that the limited supply relative to the growing use will make the price rise. But that assumes there’s no price so high for Bitcoin that transferees won’t accept it in lieu of dollars. The “pro” side of the argument foresees limitless appreciation, but that doesn’t make sense. Think of any other currency: isn’t there a price at which you wouldn’t accept it? Would you sell your house for euros that are said to be worth two or three times as much as the dollar?

Marc Andreessen wrote an excellent article in The New York Times’ Dealbook, titled “Why Bitcoin Matters” (January 21, 2014).  The article outlined Bitcoin’s potential as a payment system and described many of the advantages listed above.  But it didn’t include one word about why these advantages give Bitcoin appreciation potential. 

So what’s my real bottom line? 

  • Advocates say if Bitcoin is accepted as described above, you’ll make more than 50 times your money. Thus success doesn’t have to be highly probable for buying Bitcoin to have a huge expected return. This is called “lottery-ticket thinking,” under which it seems smart to bet on an improbable outcome that offers a huge potential payoff. We saw it in full flower in the dot-com boom in 1999-2000, and I think we’re seeing it in action again today with regard to Bitcoin.Nothing is as seductive as the possibility of vast wealth.
  • Several of the “seeds for a boom” that I listed in “There They Go Again . . . Again” are at work in the Bitcoin surge: (a) there is a grain of underlying truth as set out above; (b) there’s the prospect of a virtuous circle: widespread demand will lead to wider acceptance as legal tender, which will lead to widespread demand; and (c) thus this tree may grow to the sky, as there is no obvious limit to this logic. None of these things necessarily make Bitcoin a mistake. They merely say elements that contributed to past bubbles can be detected today with regard to Bitcoin.
  • Finally, Bitcoin isn’t alone. There are hundreds of digital currencies already – including eleven with market capitalizations over a billion dollars – and no limits on the creation of new ones. So even if digital currencies are here to stay, who knows which one will turn out to be the winner? Hundreds of e-commerce start-ups appreciated rapidly in the tech bubble based on the premise that “the Internet will change the world.” It did, but most of the companies ended up worthless.

Thanks to the people who took the time to educate me, I’m a little less of a dinosaur regarding Bitcoin than I was when I wrote my last memo.  I think I understand what a digital currency is, how Bitcoin works, and some of the arguments for it.  But I still don’t feel like putting my money into it, because I consider it a speculative bubble.  I’m willing to be proved wrong.Passive Investing

Passive investing can be thought of as a low-risk, low-cost and non-opinionated way to participate in “the market,” and that view is making it more and more popular.  But I continue to think about the impact of passive investing on the market. 

One of the most important things to always bear in mind is George Soros’s “theory of reflexivity,” which I paraphrase as saying that the efforts of investors to master the market affect the market they’re trying to master.  In other words, how would golf be if the course played back: if the efforts of golfers to put their shot in the right place caused the right place to become the wrong place?  That’s certainly the case with investing. 

It’s tempting to think of the investment environment as an unchanging backdrop, that is, an independent variable.  Then all you have to do is figure out the right course of action and take it.  But what if the environment is a dependent variable?  Does the behavior of investors alter the environment in which they work?  Of course it does. 

The early foundation for passive or index investing lay in the belief that the efforts of active investors cause stocks to be priced fairly, so that they offer a fair risk-adjusted return.  This “efficiency” makes it hard for mispricings to exist and for investors to identify them.  “The average investor does average before fees,” I was taught, “and thus below average after fees.  You might as well throw darts.” 

There’s less talk of dart-throwing these days, but much more money is being invested passively.  If you want an index’s performance and believe active managers can’t deliver it (or beat it) after their high fees, why not just buy a little of every stock in the index?  That way you’ll invest in the stocks in the index in proportion to their representation, which is presumed to be “right” since it is set by investors assessing their fundamentals.  (Of course there’s a contradiction in this.  Active managers have been judged to be unable to beat the market but competent to set appropriate market weightings for the passive investors to rely on.  But why quibble?) 

The trend toward passive investing has made great strides.  Roughly 35% of all U.S. equity investing is estimated to be done on a passive basis today, leaving 65% for active management.  However, Raj Mahajan of Goldman Sachs estimates that already a substantial majority of daily trading is originated by quantitative and systematic strategies including passive vehicles, quantitative/algorithmic funds and electronic market makers.  In other words, just a fraction of trades have what Raj calls “originating decision makers” that are human beings making fundamental value judgments regarding companies and their stocks, and performing “price discovery” (that is, implementing their views of what something’s worth through discretionary purchases and sales).  

What percentage of assets has to be actively managed by investors driven by fundamentals and value for stocks to be priced “right,” market weightings to be reasonable and passive investing to be sensible?  I don’t think there’s a way to know, but people say it can be as little as 20%.  If that’s true, active, fundamentally driven investing will determine stock prices for a long time to come.  But what if it takes more? 

Passive investing is done in vehicles that make no judgments about the soundness of companies and the fairness of prices.  More than $1 billion is flowing daily to “passive managers” (there’s an oxymoron for you) who buy regardless of price.  I’ve always viewed index funds as “freeloaders” who make use of the consensus decisions of active investors for free.  How comfortable can investors be these days, now that fewer and fewer active decisions are being made? 

Certainly the process described above can introduce distortions.  At the simplest level, if all equity capital flows into index funds for their dependability and low cost, then the stocks in the indices will be expensive relative to those outside them.  That will create widespread opportunities for active managers to find bargains among the latter.  Today, with the proliferation of ETFs and their emphasis on the scalable market leaders, the FAANGs are a good example of insiders that are flying high, at least partially on the strength of non-discretionary buying. 

I’m not saying the passive investing process is faulty, just that it deserves more scrutiny than it’s getting today. 

The State of the Market

There has been a lot of discussion about how elevated I think the market is.  I’ve pushed back strongly against people who describe me as “super-bearish.”  In short, as I wrote in the memo, I believe the market is “not a nonsensical bubble – just high and therefore risky.”  

I wouldn’t use the word “bubble” to describe today’s general investment environment.  It happens that our last two experiences were bubble-crash (1998-2002) and bubble-crash (2005-09).  But that doesn’t mean every advance will become a bubble, or that by definition it will be followed by a crash. 

  • Current psychology cannot be described as “euphoric” or “over-the-moon.”Most people seem to be aware of the uncertainties that are present and of the fact that the good times won’t roll on forever.
  • Since there hasn’t been an economic boom in this recovery, there doesn’t have to be a major bust.
  • Leverage at the banks is a fraction of the levels reached in 2007, and it was those levels that gave rise to the meltdowns we witnessed.
  • Importantly, sub-prime mortgages and sub-prime-based mortgage backed securities were the key ingredient whose failure directly caused the Global Financial Crisis, and I see no analog to them today, either in magnitude or degree of dubiousness.

It’s time for caution, as I wrote in the memo, not a full-scale exodus.  There is absolutely no reason to expect a crash.  There may be a painful correction, or in theory the markets could simply drift down to more reasonable levels – or stay flat as earnings increase – over a long period (although most of the time, as my partner Sheldon Stone says, “the air goes out of the balloon much faster than it went in”).  

Investing in a Low-Return World

A lot of the questions I’ve gotten on the memo are one form or another of “So what should I do?”  Thus I’ve realized the memo was diagnostic but not sufficiently prescriptive.  I should have spent more time on the subject of what behavior is right for the environment I think we’re in. 

In the low-return world I described in the memo, the options are limited: 

  • Invest as you always have and expect your historic returns.
  • Invest as you always have and settle for today’s low returns.
  • Reduce risk to prepare for a correction and accept still-lower returns.
  • Go to cash at a near-zero return and wait for a better environment.
  • Increase risk in pursuit of higher returns.
  • Put more into special niches and special investment managers.

 It would be sheer folly to expect to earn traditional returns today from investing like you’ve done traditionally (#1).  With the risk-free rate of interest near zero and the returns on all other investments scaled based on that, I dare say few if any asset classes will return in the next few years what they’ve delivered historically. 

Thus one of the sensible courses of action is to invest as you did in the past but accept that returns will be lower.  Sensible, but not highly satisfactory.  No one wants to make less than they used to, and the return needs of institutions such as pension funds and endowments are little changed.  Thus #2 is difficult. 

If you believe what I said in the memo about the presence of risk today, you might want to opt for #3.  In the future people may demand higher prospective returns or increased prospective risk compensation, and the way investments would provide them would be through a correction that lowers their prices.  If you think a correction is coming, reducing your risk makes sense.  But what if it takes years for it to arrive?  Since Treasurys currently offer 1-2% and high yield bonds offer 5-6%, for example, fleeing to the safety of Treasurys would cost you about 4% per year.  What if it takes years to be proved right? 

Going to cash (#4) is the extreme example of risk reduction.  Are you willing to accept a return of zero as the price for being assured of avoiding a possible correction?  Most investors can’t or won’t voluntarily sign on for zero returns. 

All the above leads to #5: increasing risk as the way to earn high returns in a low-return world.  But if the presence of elevated risk in the environment truly means a correction lies ahead at some point, risk should be increased only with care.  As I said in the memo, every investment decision can be implemented in high-risk or low-risk ways, and in risk-conscious or risk-oblivious ways.  High risk does not assure higher returns.  It means accepting greater uncertainty with the goal of higher returns and the possibility of substantially lower (or negative) returns.  I’m convinced that at this juncture it should be done with great care, if at all. 

And that leaves #6.  “Special niches and special people,” if they can be identified, can deliver higher returns without proportionally more risk.  That’s what “special” means to me, and it seems like the ideal solution.  But it’s not easy.  Pursuing this tack has to be based on the belief that (a) there are inefficient markets and (b) you or your managers have the exceptional skill needed to exploit them.  Simply put, this can’t be done without risk, as one’s choice of market or manager can easily backfire. 

As I mentioned above, none of these possibilities is attractive or a sure thing.  But there are no others.  What would I do?  For me the answer lies in a combination of numbers 2, 3 and 6. 

Expecting normal returns from normal activities (#1) is out in my book, as are settling for zero in cash (#4) and amping up risk in the hope of draws from the favorable part of the probability distribution (#5) (our current position in the elevated part of the cycle decreases the likelihood that outcomes will be favorable).  

Thus I would mostly do the things I always have done and accept that returns will be lower than they traditionally have been (#2).  While doing the usual, I would increase the caution with which I do it (#3), even at the cost of a reduction in expected return.  And I would emphasize “alpha markets” where hard work and skill might add to returns (#6), since there are no “beta markets” that offer generous returns today. 

These things are all embodied in our implementation of the mantra that has guided Oaktree in recent years: “move forward, but with caution.”  

Since the U.S. economy continues to bump along, growing moderately, there’s no reason to expect a recession anytime soon.  As a consequence, it’s inappropriate to bet that a correction of high prices and pro-risk behavior will occur in the immediate future (but also, of course, that it won’t).  

Thus Oaktree is investing today wherever good investment opportunities arise, and we’re not afraid to be fully invested where there are enough of them.  But we are employing caution, and since we’re a firm that thinks of itself as always being cautious, that means more caution than usual.  

This posture has served us extremely well in recent years.  Our underlying conservatism has given us the confidence needed to be largely fully invested, and this has permitted us to participate when the markets performed better than expected, as they did in 2016 and several of the last six years.  Thus we’ll continue to follow our mantra, as we think it positions us well for the uncertain environment that lies ahead. 

September 7, 2017

This article was first published at Oaktree.

300% return of share price with Suntec REIT

Singapore reits best performing year to date

Suntec REIT has been a standout performer, with its share price rising from about S$0.5 in the depths of the financial crisis to about S$1.90 recently.

With such a run up in prices, is there still room for growth in the future?

How will Singapore’s and Australia’s retail and office market performance impact the REIT?

This post looks through Suntec REIT’s 2Q 2017 results presentation and will make it simple for a first time investor thinking of purchasing the REIT or a seasoned professional looking to refresh on Suntec REIT’s performance.

Let’s get started.

Overall portfolio performance

Respectable 2Q2017 increase of 4.3% year on year in distributable income to S$66m.

For yield investors, annualized yield is 5.18%. Personally, I feel this is on the low side compared to 6% average for all S-REITs.

Financing cost is healthy at 2.41%, reflecting the low interest rate environment.

Occupancy for both the office and retail portfolios are healthy at 98.7% and 99% respectively.

After the asset enhancement initiative, Suntec City mall has registered healthy footfall growth of 11% on a year to date basis i.e. Total in the first 6 months of 2017 compared to the first 6 months of 2016.

Suntec REIT 2Q2017 highlights
Suntec REIT 2Q2017 highlights

Distributable income is up 4.3% year on year while distribution per unit is down 0.3%.

This is due to a bigger denominator (number of issued units) because of a principal amount of S$212 million of convertible bonds which were converted in May 2017.

No big issue with the exercise of convertible bonds as the DPU trend for Suntec REIT has been healthy.

Suntec REIT distributable income
Suntec REIT distributable income


Gross revenue and net property income are both up by 10.6% and 12.8% respectively.

Gross revenue is S$87.3m in 2Q2017, or about S$29.1m per month, while net property income is S$59.4m or S$19.8 per month.

Net property margin is 68%. This is not a deviation from industry standards so no red flags here.

Suntec REIT gross revenue performance
Suntec REIT gross revenue performance


As a recap, Suntec REIT’s joint ventures include One Raffles Quay, Marina Bay Financial Centre, Marina Bay Link Mall and Southgate in Australia.

The decline in JV performance is due to One Raffles Quay and MBFC.

No further information could be found for these 2 in this quarter’s slides but looking back, the JV performance is as follows

Something to watch out going forward on whether the weak performance of joint ventures persists.

Suntec REIT JV performance
Suntec REIT JV performance


177 Pacific Highway was acquired in Aug 2016 and contribution to the portfolio has been healthy.

Suntec Singapore under the retail section refers to the convention centre. Performance in 2Q2017 was poor, pulling down the overall retail segment performance.

Historically, the revenue contributed by “Suntec Singapore” Convention Centre has been volatile. It tends to be higher during the fourth quarter of each year because of more events during the festive periods.

Suntec REIT gross revenue by segment
Suntec REIT gross revenue by segment
Suntec REIT NPI by segment
Suntec REIT NPI by segment

The office sector, composed of Suntec City Office, One Raffles Quay and MBFC Towers 1 & 2 in Singapore; 177 Pacific Highway and Southgate Complex in Australia contributes most of the net property income for the REIT.

Suntec REIT is predominantly an office REIT with ancillary retail assets.

In terms of asset concentration, Suntec City contributes 56% of the net property income to the portfolio. This suggests that Suntec REIT’s performance is tied closer to the Singapore office market than Australia.

Suntec REIT NPI contribution
Suntec REIT NPI contribution

Financial indicators

Leverage is healthy at 36.1% compared to the average of S-REITs at about 32-37% (depending on which research analyst you ask).

One concerning thing is the percent of fixed/hedged debt at 65%. Most other REITs hedge at least 85% of their interest rate or currency exposure.

As of 20 Sept 2017, NAV per unit of S$2.119 is a premium to the share price of S$1.87. This explains partly the low dividend yield of 5.1%.

I personally would wait for prices to drop to the S$1.5 or S$1.6 range which would equate to a dividend yield of about 6 to 6.3%.

Suntec REIT balance sheet and financials
Suntec REIT balance sheet and financials

Capital management

FY19 and FY22 are two years to watch with S$800 mil and S$700 mil of loans coming up due.

Generally, it’s better for loans to be due on a spread out basis e.g. 20% each over 5 years.

If there is concentration in one year, such as in FY19 and FY22, the REIT may have to pay a higher interest rate when they refinance the loans due in those 2 years.

However, if interest rates are low in those 2 years, the REIT will benefit as the refinancing is done at a lower interest rate.

Generally, REITs should not take on unnecessary risk or take a position on forecasting future interest rates, so it’s better if interest rate maturities are spread out.

Nevertheless, Suntec REIT’s management appears to be capable in managing the finances as seen from the next slide, so it should not be a worry that the REIT’s interest rates will rise much higher from the present 2.41%.

Suntec REIT proactive capital management
Suntec REIT proactive capital management
Suntec REIT financing track record
Suntec REIT financing track record

Office portfolio performance

Now we come to the brick and mortar of the portfolio.

The office portfolio consists of 3 Singapore office buildings – Suntec City Office, One Raffles Quay (owned 1/3) and MBFC Towers 1 & 2 (owned 1/3).

The Australia portfolio consists of 177 Pacific Highway and Southgate Complex (25% owned by Suntec REIT, 25% by PIP Trust and 50% by Dexus).

Suntec REIT office summary
Suntec REIT office summary


One concerning thing is the downtrend in Suntec REIT’s office occupancy. A peak was reached in 2012 when occupancy hit 99.9% but it has since fallen to 98.8% in Jun 2017.

Overall, the occupancy rate in 2015, 2016 and 2017 has been lower than in the previous 3 years as the Singapore economy slowed, office supply increased and major industries (banks and legal firms) reduced space needs.

On the upside at least the occupancy rate is higher than Singapore’s overall CBD Grade A figures.

Suntec REIT office occupancy
Suntec REIT office occupancy

Office occupancy at 98.7% is healthy.

Suntec REIT office leasing strategy
Suntec REIT office leasing strategy


For the remainder of FY17, there is only 3.8% of leases by net lettable area remaining to expire. A smaller number is generally better as the leases signed earlier in the year provides certainty of income to the REIT and its unitholders.

For FY2018, 2019 and 2020, the percentage of leases that are expiring are evenly spread out, so Suntec REIT should be able to take advantage by getting diversification in the rates new leases are signed at.

Suntec REIT office lease expiry
Suntec REIT office lease expiry


One point to note is the rents of S$8.79 for leases signed in the quarter. Depending on which broker you ask, market rents could be higher or lower than this.

If the market rent is higher, this means Suntec REIT lost out on signing a higher rental rate, and getting higher rental income. The converse is also true.

However, the 1.5% quarter on quarter increase in signed rents is a good sign. This could be due to the capability of the leasing team in negotiating terms favourable for the REIT or it could be the market generally picking up.

Suntec REIT Suntec office
Suntec REIT Suntec office
Suntec REIT Australia portfolio
Suntec REIT Australia portfolio

Retail portfolio performance

Similar to the office portfolio, the retail portfolio is dominated mainly by Suntec City Mall where it contributes 94% of the income to the portfolio.

Marina Bay Link Mall is next, contributing 4% of rental income. The remaining 1% is by Southgate Complex, a very minor portion of the portfolio.

Suntec REIT retail summary
Suntec REIT retail summary

Occupancy is healthy at 99%.

Suntec REIT retail leasing strategy
Suntec REIT retail leasing strategy

The shorter WALE of 2.19 years in the Singapore portfolio is balanced by the longer WALE of 6.56 years in the Australia asset. However, as seen earlier, the Australia asset contributes only 1% of the rental income, so the portfolio WALE is at the lower end of 2.3 years.

In the near term of 2017 and 2018, there are fewer leases expiring so risk is lower. 2019 and 2020 will be the years to watch when 32% and 26.4% of net lettable area respectively is going to expire. Key to the performance is where rents will be in those 2 years.

Suntec REIT retail lease expiry
Suntec REIT retail lease expiry

Good sign with occupancy, footfall and tenant sales all up.

Increase in tenants sales means that the landlord, Suntec REIT, will benefit, if rents are linked to performance of tenants. If not, it still is good because the tenants are in a healthy operational state and have lower risk of suddenly vacating the space.

Suntec REIT retail performance
Suntec REIT retail performance

Convention events

The following shows the events that were held in 2Q and 3Q 2017.

Notable shows include Santana, USANA and TechInAsia 2017.

Suntec REIT 2Q17 events
Suntec REIT 2Q17 events
Suntec REIT 2Q2017 events
Suntec REIT 2Q2017 events
Suntec REIT 3Q2017 events
Suntec REIT 3Q2017 events

Share price performance

Suntec REIT is presently trading at 5.35%. To me, this yield is not attractive enough for my requirement of about 6%.

That said, Suntec REIT is well run and backed by a strong management team that may explain its tighter trading yield.

I will personally enter at around the S$1.5 or S$1.6 range. Apart from the global financial crisis, the historical low of about S$1 at the end of 2011 would be my support level.

Suntec REIT Unit performance
Suntec REIT Unit performance


Suntec REIT delivered growing distributions per unit from 2005 to 2009, after which it fell in 2010 after the global financial crisis hit. Distributions per unit was flat for the next 5 years but has slowly picked up.

Could this be a reversal of Suntec REIT’s heyday? Possibly. And it could also be the reason why they are beginning to look to Australia where growth has been better than in Singapore.

Annualizing 1H17’s distribution per unit, it would seem that FY2017 DPU could fall from 2016’s level. When the news hit the markets, I may see that as an opportunity to enter if there is price correction.

Of course I would have preferred to see a rising distribution per unit trend but stability sometimes has its place in a portfolio.


Portfolio valuation

Suntec REIT’s portfolio valuation is dominated mainly by Suntec City Mall, Suntec City office and MBFC.

Suntec REIT Portfolio valuation
Suntec REIT Portfolio valuation


So that wraps up the overview of Suntec REIT’s 2Q2017 results.

If you like the post, keep updated on property developments by visiting and liking us at Facebook, Linkedin, YouTubeTelegram or subscribing to our mailing list.

For REIT investors, check out our REIT database with information on yields, dividends, prices and other important figures.

2 properties for the price of 1 with dual key units


Dual key units have taken the Singapore residential property and investment market by storm in the recent years. Dual key units actually aren’t present just in Singapore but also in Australia, though it is a relatively new property type.

For the uninitiated, dual key units in layman terms can be described as 2 units in one. The more technical explanation is where there are 2 homes sharing a common foyer in a single title.

Dual key units were first introduced in the Caspain project by Frasers Centrepoint in 2009. Soon after, this housing format took off when owners and investors realized the potential for making good returns with this housing type.

Since there are 2 ‘units’ in a dual key unit, there are endless permutations for home owners and investors with regards to their living arrangements. Following are some examples.

Studio unit Other unit (usually 1/2/3/4 br)
Couple Aged parents
Couple Parents and children
Tenant Landlord (couple, family etc)
Tenant Tenant with more people
Aged parents Adult children with their own kids
Maid 🙂 Family
Office use* Family/couple
AirBnB tenant* Family

*If allowed by the government

Dual key units provide the following advantages

  • Privacy. The studio unit has its own toilet, bath and kitchen for the person staying there to live in a self contained manner, separate from the other unit.
  • Rental potential. If there were no dual key facility, the total rental for the unit will be less than if the studio and other larger unit were rented out separately

3 bedroom example of dual key units

In the 3 bedroom dual key unit, the main entrance to the dual key unit is at the bottom right.

Going straight leads one to the studio unit composed of a dry kitchen, master bath, dining area and balcony.

The other side leads to the 3 bedroom unit.

The balcony of the studio has its own privacy because the person standing there won’t be able to look into the 3 bedroom unit. The privacy is afforded by the aircon ledge.

This dual key unit example is from Rivertrees Residences condo development.

3BR DK in Rivertrees Residences

4 bedroom example of dual key units

For a 4 bedroom dual key unit taken from Jewel at Buangkok condominium, the entrance is at the bottom right.

People coming in will enter the foyer, after which there will be 2 doors leading to the studio and 4 bedroom unit respectively.

The studio has a kitchenette, bath area and study space. However, the studio unit in this example unit does not have a balcony unlike the Rivertrees Residences example.

4BR DK at Jewel at Buangkok

Seeing the 2 examples above show that there is a lot of flexibility in planning living arrangements with a dual key unit. For most buyers and property investors, the privacy provides a very strong attraction point.

Projects with dual key units

The following is a list of property developments with dual key units. Projects with blue font are developments where we have units being marketed. If you’re interested in any dual key unit, even in projects we do not cover, contact us and we will find out for you.

Project name Development type Bedroom sizes with dual key
Jewel at Buangkok Private condo 4 BR
Rivertrees Residences Private condo 3 BR
Trilive Private condo 2, 3 and 4 BR
Kingsford Waterbay Private condo 3 BR
Sims Urban Oasis Private condo 2, 3 and 4 BR
North Park Residences Private condo 2 and 3 BR
High Park Residences Private condo 4 BR
Sophia Hills Private condo 2 BR
City Gate Private condo 2 and 3 BR
GEM Residences Private condo 2 BR
The Crest Private condo 2, 3 and 4 BR
Bijou Private condo 2 and 4 BR
Bellewaters EC 3 BR
Ecopolitan EC 3 and 4 BR
One Canberra EC 3, 4 and 5 BR
Twin Fountains EC 4 BR
Twin Waterfalls EC 4 BR

List of developments with dual key units and sale status as of 13 Sept 2017


If you’re interested in furthering your knowledge of the property and REITs market, check out our REIT database with information on yields, dividends, prices and other valuable information. We also have a schedule of property events and talks that we compile for your convenience.

Gem residences photos and dual key floor plans

GEM residences 2 BR DK Type B5
GEM residences 2 BR DK Type B5



Sims Urban Oasis photos and dual key floor plans



Sophia Hills photos and dual key floor plans





Office use of studio space not allowed by URA

In some cases, there have been professionals and freelance workers using the studio as their working/office space.

For productivity’s sake, some people recommend a separation between a person’s work and leisure space. This means that the office, with its desk, printer, work computer, stacks of paper should not cross an imaginary boundary into the person’s leisure or personal space i.e. bedroom, living and dining room etc.

Use of residential space for office and income generating purposes is not allowed by the Singapore government. URA has a full text on the usage of the term “Small office home office”.

However, under the Home-Office Scheme, owners of residential units can use their homes to conduct small-scale businesses, provided they do not cause disamenity to other residents. To do so, the owner must register for the home-office use under the Home Office Scheme (see http://www.ura.gov.sg/uol/home-office/Register/Guidelines/about.aspx for details). Only small-scale businesses that comply with the planning guidelines applicable to home-offices (e.g. not hiring more than two non-resident employees) are permitted within residential units. Other commercial businesses or uses that do not meet the guidelines are not allowed

Residential cannot be used for office purposes
URA’s legislation that residential space cannot be used for commercial purposes

Long in short, those who have a dual key unit and choose to use the studio for commercial purposes must first get the government’s approval. In reality, I’m not sure how many homeowners do so…

MND’s legislation regarding dual key units

To ensure a stable and sustainable property market, MND on 11 Jan 2013 came out with a policy to limit sales of new dual-key EC units to multi-generational families only.

Seems like the government got wind of what private investors were doing and profiting from a quasi-public type of housing.

MND EC measure
MND measure on limiting sales of dual key units to multi-generational families only

Full text of MND’s statement on cooling measures

With this measure, investors have little way to profit from the flexibility afforded by a dual key unit.

In practice, the multi-generation family (children, parents and grandparents) could stay in the larger unit and rent the studio out. This would however mean quite a squeeze for the multi-generational unit. I’m not sure how many families would be fine with the arrangement.

Cons of dual key units

No post is complete without pointing out the cons of a certain property purchase and investment decision. I personally think that the pros of dual key units outweigh the cons, but the following are some cons to consider.

  • Security may be compromised if tenants in the studio are undesirable. To that, I would say this risk is not reduced even in a non dual key unit. Mitigation of tenant security is by screening them first.
  • The studio in dual key units are small. This is true to a large extent. Property buyers can reduce this risk by making sure of how large the studio is before buying. It is also important to know what developers build into the studio. Most provide a bedroom, bathroom and kitchenette. If you’re fortunate, you would get a pantry and proper fridge area. Otherwise, tough luck.
  • Soundproofing. People living in the two dual key units might be able to hear each other pas the walls. I don’t think this is a major issue because the wall separating the units is usually the same as any other in the unit. In other words, the walls are usually quite thick as built by developers to the government’s specifications.
  • Since dual key units are a fairly new phenomenon, some developers may price it as if 2 units were being sold. I would say this is unfair as there is only one title to the unit. Nevertheless, the pricing of dual key units in Singapore are commensurate with the total floor area of the units. In other words, there could be 3 separate units in that single unit, but the total price would be based on the total floor area, not as if there were 3 units being sold.
  • Banks and lenders may refuse lending to purchasers of dual key units. There has been no known case where this has happened.

At the end of the day though, dual key units will still remain a popular choice among home buyers for the privacy and flexibility it offers. Essentially, home owners can view themselves as getting 2 units for the price of 1.

Dual key units present a type of housing that is likely to hold its value over the long term. I.e. ‘Normal’ units may lose more value than dual key units in a downturn.

Share with us in the comments below – are dual key units something you would buy? Why?

Congrats! You made it to the end of the post. We know you like dual key units. Since you’re here, like us at Facebook, Linkedin, YouTubeTelegram and sign up to our mailing list to be updated on latest developments with dual key units and the property market.

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More foreigners buying Singapore property


Foreigners have been buying Singapore property in a big way in the recent few years. This has come about because of Singapore’s status as an open, free and well-governed country.

Furthermore, cooling measures in Hong Kong and Australia have driven some cross-border investors into Singapore in search for good purchases.

This post will be a little more ‘meaty’ and heavy with multiple charts, but I will strip it down and make it as simple and relevant as possible.

As much as I can, I will put in “this suggests…”, “this implies…” to make it relevant and down-to-earth for readers who may be potential sellers, buyers, investors and participants in the property market.

Pick up in sales of developer’s units

Developer sales refer to units that are launched by developers. These are first hand, new, unbuilt units.

In the bar, the orange column is higher than most of the other bars, indicating that sales in 2017 are higher than in the past 3 years.

Imply: Residential market appears to be picking up based on sales volume

New developer sales excluding EC
New developer sales excluding EC

New EC units sold by developers picking up

Same as the previous chart, the orange column which is higher indicates that sales in 2017 is higher than in the past 3 years, implying some form of recovery in the EC segment.

New developer EC sales
New developer EC sales

Pick up in 2017 sales for all private residential properties (private and EC)

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Combining the earlier 2 charts, the red column which is higher than the rest indicates that sales in 2017 are robust. This suggests a pick up in the property market.

Private residential property new developer sales
Private residential property new developer sales

More PRs and foreigners purchasing

Going into the PR and foreigner segment, there has also been a pick up in purchasers by this group of people.

Increasing blue column = rising number of purchases by PRs

Increasing orange column = rising number of purchasers by foreigners

This implies that PRs and foreigners have a good view of Singapore, thereby putting their money in the country. With these 2 groups of people buying, it could suggest that Singaporeans as a category of buyers could begin coming into the market.

Residential status of private residential purchasers
Residential status of private residential purchasers

Uptrend in purchases by foreigners

The 3 columns on the most right hand side, being taller than the others, indicate that purchases in 1H2017 by foreigners are on the uptrend.

Foreigner purchase by market segment
Foreigner purchase by market segment

More sales in the Core Central Region

Similarly, the columns on the right side are higher than the rest, indicating that 1H2017 sales figures are recovering in the Core Central Region segment (district 1, 2, 6, 9, 10, 11).

CCR Foreigner purchase of private residential properties
CCR Foreigner purchase of private residential properties

In the Rest of Central Region too

Same story in the Rest of Central Region (districts 3, 5 ,13, 14, 15) where columns on the right side of the chart are significantly higher than the rest.

RCR Foreigner purchase of private residential properties
RCR Foreigner purchase of private residential properties

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Foreigner purchasers not picking up so much in the Outside Central Region

In the Outside Central Region (districts 16, 18, 19, 22, 23, 27), foreigner purchase levels has been fairly constant (all bars roughly same height).

This indicates that demand here is probably less speculative, less for investment and more for owner occupation. This shows up in the stability of the sales from 1H2015.

OCR Foreigner purchase of private residential properties
OCR Foreigner purchase of private residential properties

District 10 still most popular

D10 (Bukit Timah, Holland, Balmoral) on the left side of the chart continues to be the most popular district for foreigners. This is followed by district 3 (Alexandra, Commonwealth) and district 15 (Joo Chiat, Marine Parade, Katong).

Foreigner purchase by districts
Foreigner purchase by districts

Chinese, Malaysians, Indians and IndonesianS most active

Foreign Asian buyers are the most active in the Singapore property market in 1H2017. This has always been the case.

Left side bars are higher than the rest, showing the top nationalities being Chinese, Malaysians, Indians and Indonesians.

Total PR and foreigner purchase of private residential property
Total PR and foreigner purchase of private residential property

Now that you know foreigners are buying more Singapore properties, why not you diversify your holdings to include overseas properties? Life Asoke Rama 9 in Bangkok has units going for as low as S$130,000. There are no stamp duties, and units can be flipped for a quick profit. Check out the introduction to Life Asoke Rama 9.

If you’re more interested in the equity market and REITs, check out what we have to say about Cromwell REIT before their IPO at the end of Sept. If you’re on the lookout for a property purchase, consider these 3 units where prices are below S$1m.

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Bangkok Life Asoke Rama 9 CBD residential property for ONLY S$1xxk


Life Asoke Rama 9 is one of Bangkok’s hottest property to hit the market presently. As a follow up to two earlier posts on Life Asoke Rama 9 and the attractiveness of the investment, this will elaborate further on what investors can expect from the development.

Important event information

  • Development has been sold out!
  • Pre launch event is on 24 Sept Sunday 2-4pm. 
  • 1 bedroom starts at S$130,000 average price per unit.
  • 6 to 7% yields are achievable
  • 15% downpayment with remaining at key collection. Remaining 85% due upon collection in 2021.
  • Only S$2,000 is required to book a unit
  • Immediate resale is allowed for Thai projects. I.e. Flipping allowed.
  • Transfer fee is only required at TOP so an investor can flip before TOP and avoid the transfer fee
  • Up to 70% financing allowed by UOB Thailand
  • No ABSD, stamp duties, agent or lawyer fee as you’re dealing directly with the developer
  • For retirees, a 1 year visa is available


  • Life Asoke Rama 9 is in the New CBD Rama IX
  • 300m from Rama 9 MRT station
  • 600m or 1 stop to Makkasan Airport Rail Link – MRT Phetchaburi Interchange
  • 2 stops to Asoke – Sukhumvit BTS (Green) line
  • The residential complex is opposite Bangkok Stock Exchange & the upcoming Super Tower slated to be the tallest building in SEA
  • Near Singha Complex and Makkasan Complex

Life Asoke Rama 9 Prime Location

Life Asoke Rama 9 is right in the centre of Bangkok’s New CBD, the headquarters for multinational companies such as Unilever and AIA, as well as the new Stock Exchange of Thailand. Grand Central Plaza Rama 9 is a new shopping complex, and across Rama IX Road are Fortune Town and the Mercure Hotel, and a little further, the Embassy of The People’s Republic of China.

Rama 9 Central Business District (CBD)

  • Grand Rama 9 CBD : G Tower, The Super Tower, UNILIVER House, Central Plaza Rama 9, Ninth Towers, New World Hotel Grand Rama 9, The Shoppes Grande Rama 9
  • Stock Exchange of Thailand (SET), AIA Capital Centre, Embassy of China, Grand Mercure Hotel, Fortune Town, Explanade Shopping Mall, The Streets Ratchada, Night Train Market Ratchada, Show DC Mall, RCA Lifestype
  • PhaRam 9 Hospital, PIyavet Hospital, Bangkok Hospital, Rutnin Eye Hospital, Asoke Skin Hospital
  • Wattana Wittaya Academy, Srinakharinwirot University
  • Asoke CBD : Terminal 21, Exchange Tower, SINGHA Complex

Transport Hub & Superb Accessibility

  • Only 300m or ~3-mins Walk to MRT Rama 9
  • Only 1-stop to MRT Thailand Cultural Centre (Future Orange Line Interchange)
  • Only 600m or 1-Stop to Airport Rail Link (ARL) Makkasan – MRT Phetchaburi Exchange
  • Only 2-Stops to MRT Sukhumvit – BTS Asoke Exchange
  • Close Proximity to the Sirat Expressway
  • 2 x Driveway Access & 1 Walkway Access

Project details

Project name Life Asoke Rama 9
Developer AP
Address 300m from MRT Rama 9 Station
Type of development Residential condominium
Tenure Freehold, foreigners eligible
Site area 803011 Rai (approx 151,169 sqft)
No of units 2 buildings: Tower A & B

Total no of units: Tower A (1,298 units) + Tower B (950 units + 2 shops)

No of levels: Tower A (7-41 floor) & Tower B (7-44 floor)

Car park 905 (40%) on 2-6th floor
Expected TOP 2021
Facilities Ground floor

2 grand lobbies

2 retail shops

Green area – jogging track & pavilions (3 Rai or approx 51,000 sqft)

2 main driveways (in and out) via Asoke-Din Daeng Rd & Chaturathit Road

1 walkway (in and out) via Asoke-Din Daeng Rd

2nd floor: Super co-working space

2nd to 6th floor: Parking (905 lots)

7th floor

Pocket garden – Outdoor “Nook” working space, jogging route, open lawn court (1.25 Rai or 20,000 sqft)

36th floor (Tower A): Pocket Garden

42nd floor (Tower A)

Sky deck (viewing deck)

40m infinity edged lap pool


Kid’s pool

Theatre room

Social deck

45th floor (Tower A & B)


Sky lounge

Sky fitness 9weights, calisthenics, private studio, functional zone, cardio)

50m infinity edge lap pool

Kid’s pool

Lifestyle sky pool


Floor plans

Studio Type A 25 SQM
Life Asoke Rama 9 Unit Plans

Studio Type A 27.5 SQMLife Asoke Rama 9 Unit Plans Life Asoke Rama 9 Unit Plans

1 Bedroom Type B 32 SQMLife Asoke Rama 9 Unit Plans

1 Bedroom PLUS Type C 35 SQMLife Asoke Rama 9 Unit Plans

Life Asoke Rama 9 Unit Plans

1 Bedroom PLUS Type C 40 SQMLife Asoke Rama 9 Unit Plans

2 Bedroom Type D 45 SQMLife Asoke Rama 9 Unit Plans

Life Asoke Rama 9 Unit Plans

2 Bedroom Type E 45 SQMLife Asoke Rama 9 Unit Plans

Life Asoke Rama 9 Unit Plans Life Asoke Rama 9 Unit Plans



External views


Comparative market analysis

Development name Completion year THB psm price
Life Asoke Rama 9 2021 111,000
Ashton Asoke Rama 9 2020 275,000
The Line Asoke Ratchada 2019 176,321
Rhythm Asoke 2017 154,629
Chewathai Residence Asoke 2017 178,989
Belle Avenue Ratchada Rama 9 2015 133,635
Ideo Mori Rama 9 2014 162,153
Condoletter Midst Rama 9 2015 163,172
Aspire Rama 9 2014 120,698
Rhythm Asoke 2 2016 165,788
Life Asoke 2018 143,767
Esse Singha 2020 275,000
Ideo Mobi Asoke 2018 184,902

Life Asoke Rama 9 Comparative Market Analysis

Developer track record

AP (Thailand) Public Company Limited was established in 1991 to develop projects in Bangkok Metropolitan Area (BMA). Its core business today is on the development of townhouses, single-detached houses and condominiums.

In 2000, the company was listed on the Stock Exchange of Thailand (SET). TOday AP (Thailand) PLC ranks in the top 10 listed property firms in terms of revenue.

In 2014, AP (Thailand) established a joint venture partnership with leading Japanese property developer, Mitsubishi Estate Group (MEC) co-developing more than 8 condominium projects to date, averaging more than 85% sales take-up rate.

Developer profile Developer profile



Elevation and site plans


Financing and tax matters

Tax calculation assuming a 10 million baht (approx 400k SGD) sale and appraised value of 8 million baht (approx 325k SGD).

Life Asoke Rama 9 Payment Schedule and Tax

Category Sale of freehold land and property Liability to tax
Transfer fee 2% of official appraised value Seller/Buyer
Specific business tax (applicable only within 1st 5 years of ownership) 3.3% of official appraised value or the contracted sale price, whichever is the higher or N.A. Seller
Stamp duty (applicable from 6 years of ownership) 0.5% of official appraised value or the contracted sale price, whichever is the higher or N.A. Seller
Withholding tax If seller is company: 1% of official appraised value or the contracted sale price, whichever is the higher or N.A.

If seller is individual: 5% – 35% of official appraised value or the contracted sale price, whichever is the higher or N.A.


Life Asoke Rama 9 Payment Schedule and Tax

Personal income tax rates in Thailand

Taxable income (baht) Tax rate (%)
0-150,000 Exempt
More than 150,000 but less than 300,000 5
More than 300,000 but less than 500,000 10
More than 500,000 but less than 750,000 15
More than 750,000 but less than 1,000,000 20
More than 1,000,000 but less than 2,000,000 25
More than 2,000,000 but less than 4,000,000 30
Over 4,000,000 35


Tax guide from CBRE


Payment schedule


S$2,000 administration fee to Huttons upon reservation


15% of purchase price via telegraphic transfer within 5 days from unit reservation

Balance payment

85% of purchase price payable via telegraphic transfer to developer bank account prior to title transfer
Life Asoke Rama 9 Payment Schedule and Tax


  • All transfer must be in any foreign currency. Do not transfer in Thai Baht
  • Do not use a remittance company or purchase in Thai Baht.

Miscellaneous fees on title transfer

  • THB500-THB100 per sqm – sinking fund (one time)
  • THB45-THB100 per sqm/month – maintenance fees (annual)
  • 2% transfer fee on registered value
  • THB2,000 estimated administration charges
  • THB4,000 estimated electrical activation charges

3 condominium units with prices below S$1mil


Check out these 3 units with prices below S$1 mil. Priced attractively, City Suites, Kingsford Waterbay and Espada offer compelling value for money at great locations.

City suites

City Suites 1
City Suites
  • Location: Balestier Road, 329999 Balestier/Toa Payoh
  • 1 bed, 1 bath
  • S$860,000
  • Type: Apartment
  • Tenure: Freehold
  • Floor size: 527 sqft
  • PSF: S$1,631
  • TOP: 2017
  • Floor level: High
  • Furnishing: Partial

✔️ City fringe, convenient location, huge tenant base.
✔️ Stone throw away to amenities, Whampoa food centre & market.
✔ Close proximity to Novena MRT station
✔ Mins drive to Orchard Road Shopping Belt, CBD and Marina Bay Financial District
✔ Easy access via Pan Island Expressway (PIE) and Central Expressway (CTE)
✔ Short walk to Singapore Medical Hub and Medical facilities
✔ Surrounded by Supermarkets, Eateries and Shops
✔ Reputable schools in vicinity that namely Hong Wen School, St Joseph’s
Institution Junior, Balestier Hill Primary School, Farrer Park Primary School, Bendemeer Primary & Secondary School, CHIJ Primary & Secondary (Toa Payoh)
✔ International Schools namely Global Indian international School (Balestier
campus), Italian Supplementary school (Embassy of Italy), Eton House International School (Newton), Insworld Institute and SJI International school


Kingsford Waterbay

Kingsford Waterbay 2
Kingsford Waterbay
Kingsford Waterbay 1
Kingsford Waterbay
  • Location: Upper Serangoon View, 539999 Hougang/Punggol/Sengkang
  • Type: Apartment
  • Tenure: 99 years
  • Floor size: 678 sqft
  • PSF: S$1,254
  • TOP: 2017
  • Furnishing: partial
  • Floor level: High floor

Selling points:
– free shuttle bus to Hougang MRT
– short drive to CBD / Orchard via KPE
✔ AMAZING SCENIC RIVERSIDE VIEW!! Rare at this price!!! Don’t miss this chance!
✔Surrounded by amenities:
– Right beside Punggol Park
– Near famous eateries
– Heartland Mall
– Upcoming kovan Marketsquare
– Hougang Ave 9 community centre
✔Surrounded by top schools:
Serangoon Sec (0.16km), Rivervale Pri (0.18km), CHIJ Our Lady of The Nativity (0.65km), Holy Innocent’s Pri (<1km), Nan Chiau Pri
✔Condo Facilities:
– State of the art / LONGEST pool in Singapore’s Condos!!
– 24hr security
– Child play area
– BBQ pits



Espada 1
  • Location: 48 Saint Thomas Walk, 238126 Orchard/River Valley
  • Type: Condominium
  • Tenure: Freehold
  • Floor size: 377 sqft
  • PSF: S$2,454
  • TOP: 2013
  • Furnishing: partial
  • Floor level: High floor
GREAT WORLD MRT(TS15) (0.4 km)
SOMERSET MRT (NS23) (0.4 km)
ORCHARD MRT (NS22/TS14) (0.8 km)Schools
*SCAPE (0.4 km)
[email protected] (0.4 km)Childcare Centres

15 condominiums where prices are below previous highs


For house hunters and investors, nothing beats being able to buy a unit below market prices.

This post will uncover some condominium projects where the recent transacted prices are below their historical highs that were achieved either in the previous few years.

Depending on the project, historical peak prices were achieved in 1997 before the Asian Financial Crisis, 2007 before the Global Financial Crisis or more recently, 2013 before the government instituted many cooling measures.

This post will look mainly at condominium projects in districts 9, 10 and 11 where recent transacted prices are below their historical peaks.

Investors can use this information to narrow down where they focus their attention since the projects listed here have recent transacted prices that are at a discount to historical peaks.

The greater the discount, the better it is for investors because of a greater margin of safety.

At the same time, sellers and buyers will be taking references from recent transactions. Since these recent transactions are at a discount, future buyers of units at these developments will have stronger bargaining power.

District Development Property type Tenure Historical high date Historical high S$psf Recent sales S$psf Discount %
10 Garden Ville Condo Freehold Aug 1997 4,090 1,900 55
10 St Regis Residences Singapore Apt 999 yrs May 2017 4,650 2,200 53
9 Skypark Apt Freehold Jun 2011 3,240 1,620 50
9 Helios Residences Apt Freehold Jan 2013 3,980 2,020 50
9 Luma Apt Freehold Aug 2007 3,350 1,760 48
10 Draycott Eight Condo 99yrs from 1997 May 2007 3,180 1,740 45
9 Bellevue Residences Condo Freehold Mar 2011 3,190 1,810 43
9 Paterson Suites Condo Freehold Sept 2007 3,900 2,240 42
9 The Orchard Residences Apt 99yrs from 2006 July 2007 5,000 2,980 40
 10 D’Leedon Condo 99yrs from 2010 Jul 2015 2,200 1,290 40
9 Suites at Orchard Apt 99yrs from 2007 Jul 2015 2,620 1,590 39
11 Hillcrest at Arcadia Condo 99yrs from 1975 Feb 2014 1,330 810 39
9 Scotts Square Apt FH Jun 2012 4,800 2,980 38
9 The Tate Residences Condo FH Aug 2007 3,500 2,180 38
11 Miro Apt FH Sept 2012 2,440 1,510 38

S$1.6b Cromwell REIT Singapore review


Updated 19 Sept 2017

Cromwell REIT (CEREIT) recently published new information regarding their upcoming IPO on Sept 21, 2017.

Had a look through their latest prospectus (18 Sept 2017) at MAS OPERA to find out the key points.

Assets in Denmark, Poland, Netherlands, Germany, France and Italy

Cromwell IPO portfolio
Cromwell IPO portfolio geographic representation


Diversified portfolio

Greater value of properties in Poland, Netherlands and Italy.

Even exposure to office, industrial and retail. Suggests good diversification benefit. However, manager needs to have expertise to manage properties in different asset classes.

Cromwell REIT breakdown
Cromwell REIT appraised value breakdown by asset class and geography


Yield of 7.5% to 7.7% on face value is attractive

Cromwell REIT yields
Cromwell REIT yields


Majority of leases expire after FY2022

Suggests stable and fairly secure stream of income for the next few years.

Cromwell REIT lease expiry profile
Cromwell REIT lease expiry profile



WALE of 5.1 years

For such a diversified portfolio by asset class, the WALE is average. No pluses or minuses here.

Cromwell REIT WALE
Cromwell REIT WALE


Portfolio tilted towards logistics tenants


Cromwell REIT tenant breakdown
Cromwell REIT tenant breakdown


Expected leverage between 34.2% and 36.5%

Personally would have preferred it to be about 31% or below to be on the safer side and to provide headroom for acquisitions.


Only one rental guarantee

Good sign compared to other recently listed REITs that had rental guarantees/ financial engineering.

While all rental guarantees should be avoided, a small one like this shouldn’t raise many red flags.

Cromwell REIT rental guarantee

Cromwell REIT rental guarantee 1
Cromwell REIT rental guarantee 1


Growth drivers

Positive: Inflation linked leases that protect against inflation erosion. Not a big issue as inflation in Europe is quite low at approximately 1.5% in 2017.

Positive: Leasing up vacant space as occupany of the IPO portfolio was 89.3% at 30 April 2017.


REIT managers

Executive managers of the REIT look fairly experienced based on their past careers.

Will not be able to tell their future performance of team dynamics until after IPO.

Cromwell REIT executive officers
Cromwell REIT executive officers



No mention of a pipeline of properties. Management will need to be able to sniff out good deals on the ground. This cannot be tested until after 1 or 2 years from IPO.


Will I invest?

Yes but the allocation will not be big based on my own portfolio situation. Disclaimer: this decision is based on my own investment circumstances.

  1. I want some exposure to Europe real estate
  2. Yield of approximately 7.5% is quite attractive based on my own portfolio
  3. No income guarantee is a good sign
  4. Sponsor is a reputable company
  5. Negative: The IPO looks like a listing for the sellers to reap a good return off their portfolio. Is the Singapore investing public the suckers?
  6. Preferred not to have such a big portfolio. Can the managers cope with managing 1,000+ leases across logistics, office and retail asset classes?
  7. Preferred the REIT to have gearing of about 30, 31% instead of approximately 35+%


Section below published on 7 Sept 2017

SGX recently announced that Crowmell Property Group, a global real estate manager, is setting up a REIT in Singapore. This post lists reviews a few things before dropping some money in the IPO.

At S$1.6 billion, the IPO is one of the largest REIT IPOs in recent times.

Some REITs that listed recently include EC World, Manulife REIT and BHG Retail REIT. Honestly, I had never heard of Forchn Holdings (sponsor of EC World) and BHG (apparently not the same as the BHG department store in Clementi Mall and Bugis Junction according to BHG’s website).

And when news broke of Cromwell coming to Singapore, I was wondering, why is SGX attracting sponsors of all shapes and sizes?

I do hope that Cromwell does not engage in financial engineering (aka distribution waivers, master-leased arrangements) like other REITs that recently listed.

If all goes well, the IPO will take place at the end of September.

In preparation for possibly investing in the IPO, I decided to do some digging on Cromwell Property Group’s background.

Who are they?


They’re a global property group with AUD$10.1b in assets under management.


Cromwell 1


They’ve got 340+ properties,spanning 4.1 million sqft with 3,600 tenants.

Cromwell 2


3 business lines

  • Direct property portfolio
  • Wholesale funds management
  • Retail funds management


No news is out yet on which business line the Cromwell REIT listed on the SGX will be under.


Crowmwell business lines


Direct property portfolio


They have 30 properties in Australia under their direct property portfolio line. Some of them are notable buildings such as Qantas HQ and Oracle building. This speaks of their tenant quality.


Cromwell direct property portfolio 5 Cromwell direct property portfolio 4 Cromwell direct property portfolio 3 Cromwell direct property portfolio 2 Cromwell direct property portfolio 1



15 assets are in Sydney, followed by Brisbane with 7, Melbourne with 5 and Adelaide with 3.


Cromwell direct property portfolio map


Wholesale funds management


Their wholesale funds management business targets global institutional investors, private equity, banks, capital partners and sovereign wealth funds from around the world.

Their funds mandate contribute AUD9.8 billion to their AUM.

A selected list of their funds on their website include the following


ECREL (European Commercial Real Estate Limited) Parc d’Activités Cromwell Nordics Retail Partnership
Cromwell European Diversified Fund Cromwell Netherlands Diversified Partnership Cromwell Central European Partnership
Cromwell Polish Retail Fund Zenith Portfolio


Cromwell fund mandates 4 Cromwell fund mandates 3 Cromwell fund mandates 2 Cromwell fund mandates 1


Retail funds management

Their retail funds management business has listed and unlisted property funds.

Cromwell Partners with Phoenix Portfolios Pty Ltd, a boutique investment firm, and jointly manage two listed property securities funds.


As a value manager, Phoenix looks to achieve outperformance by identifying securities representing good value and whose fundamental attributes are inconsistent with their current prices and selling once they become overpriced.


Assets are in small European cities


In the straits times, it was reported that

[…] this Reit would comprise European properties with a focus on Europe’s smaller cities […] 

Now this is something that caught my eye, but not in a good way.

Few questions arise

  • Why would Cromwell list an SGX REIT that has a portfolio of properties in Europe’s smaller cities?
  • Naturally, which European cities are these?
  • What asset classes would these assets be in?
  • How are these European cities and asset classes performing?
  • What is the motivation of Cromwell in injecting these assets in the smaller European cities into the REIT?

From JLL’s Office Property clock for European cities, majority of the markets are in the stage where rentals are slowing. Not a good sign.

Brexit would be something to watch out because it can help non-UK countries with space absorption, rental growth and inbound investments etc.

Suffice to say, the macro economy and state of property market in these cities should be something to watch out for.

Based on what I know, the smaller European cities aren’t doing so well in terms of their property market performance.

We shall wait and see which cities the assets are exactly in.

JLL Europe office prop clock


There should be nothing to worry in terms of corporate governance and expertise in real estate investments and asset management.

This is because a mid-tier developer is unlikely to be able to list multiple property funds, partner with sovereign wealth funds and maintain a global presence.

Cromwell also appears to have experience across the capital stack (debt and equity), listed and unlisted, and special situations based on their case study statement.

Cromwell case studies


Sponsor stake

From deal street asia, another important piece of information I picked up is that the sponsor intends to hold 10% in Cromwell REIT following the IPO.

Why the small-ish amount?

It could possibly be that Europe has a widely held rule. The Australia and US version of this tax rule reads something like – if any single investor, person or company, owns more than 10% in the REIT, the REIT will have to pay a higher tax rate.

That’s why no single investor in Frasers Logistics and Industrial trust owns more than 10%. In that way, Frasers logistics and industrial REIT can enjoy a favourable tax regime for all their Australia assets.

Singapore media won’t have much information on the listing, but The Australian has other pieces of good information.


In all, the vehicle could have rights over about $900 million worth of additional properties, which would allow it to give Cromwell’s existing private equity investors in Europe an exit and help the trust grow into one of Singapore’s largest funds.


The statement “[…] give Cromwell’s existing private equity investors in Europe an exit […]” is of importance because it gives a clue as to why Cromwell is listing the REIT.


The next question would be why are the private equity investors looking to exit?


In my experience, most of these sophisticated investors exit when they feel they have extracted full value from the properties. So it means the assets are possibly doing well, and the investors feel it can fetch top dollar.


The IPO route is also one way for private equity investors to exit. Another way is a portfolio sale to another investor.


Bottom line, there must have been a reason for Cromwell to have chosen this exit route. I suspect this has a two pronged purpose

  1. Cromwell to create another route for them to sell their properties in their parent company
  2. The private equity investors feel this is the exit that gives them the highest return. It’s well know that Singapore has a strong appetite for REITs.


The big question that remains for which there is presently no information is the yields commanded by the assets.

With bond yields depressed, equity prices high, real estate valuations high, I won’t be surprised if Cromwell REIT needs some form of financial engineering to give a dividend of 6% which is the average for REITs on SGX.

Then again, ‘smaller’ European cities command higher yields, so that in itself may help the REIT to hit 6%.

The flip side is that investors buy into a REIT that has, uh-hum, crappy assets.

Issue managers are Goldman Sachs and UBS. DBS is the global coordinator.


Invest or not?

Can’t give a yes or no at this present moment, but in summary this is what I will look for.

  • Cromwell is a reputable sponsor. This is good.
  • Any financial engineering? If yes, not good for investors. Though it does not mean that one can’t invest in a REIT that does financial engineering.
  • How is the economy and property market doing in the ‘small’ European cities?
  • Who are the REIT managers and what is their capability? Are they proven? (As seen from the Sabana case, REIT managers are an important factor in how the REIT performs)
  • Size of REIT at S$1b+ is good which should attract institutional investor interest. Liquidity should be ok.
  • For me, oversubscription is not a sign of whether the REIT has sound fundamentals. Heck, investors also subscribe to junk 100 year bonds.
  • Historical performance of properties in the portfolio


Share with us, are you looking to invest in Cromwell REIT? What will you be looking out for?


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22 charts showing 4 room HDB resale prices across Singapore


In Singapore, 80% of the residents stay in HDB flats. Some buy new launches while others buy resale flats. In any case, Singaporeans can’t be blamed for having the mindset of wanting to profit from their capital appreciation of their flats.

In recent years starting from 2013, housing prices have started a decline when the government implemented multiple rounds of cooling measures. This came about because of various rounds of cooling measures ranging from Additional Buyer Stamp Duties (ABSD), Seller Stamp Duties (SSD) and Additional Conveyance Duties (ACD).

The HDB resale market was not impacted as severely as the private residential market, but it was still not spared from the wider market slowdown.

This post seeks to shed some light on prices and trends in the 4 room HDB flat resale market. Specifically, some questions can be answered

  1. How have HDB 4 room resale flat prices performed for the last 10 years?
  2. Were there any towns (as defined by HDB) that performed better or worse than average?
  3. In which town are prices the highest? The lowest?

All information is taken from HDB’s resale statistics website.

We’ll start from A to Z for the towns and show all the charts graphically.

Ang Mo Kio
Ang Mo Kio
Bukit Batok
Bukit Batok
Bukit Merah
Bukit Merah

Bukit Panjang
Bukit Panjang
Choa Chu Kang
Choa Chu Kang

Jurong East
Jurong East
Jurong West
Jurong West
Kallang Whampoa
Kallang Whampoa

Pasir Ris
Pasir Ris

Toa Payoh
Toa Payoh

Town and average price
Town and average price

Few points can be noted from the charts

  1. Prices in all the towns generally flatlined from the beginning of 2013. No surprise because of the cooling measures that hit the private property market.
  2. Few towns had price increases. For example Bishan, Bukit Merah, Clementi, Kallang/Whampoa and Queenstown. One common feature are that these towns are generally older/more mature, and are located closer to the city centre. This suggests that the old adage: location, location, location holds true.
  3. More towns saw flat or declines in prices. For example Bukit Panjang, Choa Chu Kang, Jurong West, Pasir Ris, Sembawang, Sengkang and Woodlands had prices which decreased quite a fair bit. Reflecting point 2 previously, locations of these towns are generally further from the city centre.
  4. The best three performing townsbetween 2Q2007 (earliest date of data) and 2Q2017 are
    1. Clementi (prices rose from S$302,000 to S$610,000 or a 7.1% annual increase)
    2. Kallang/Whampoa (prices rose from S$295,000 to S$568,000 or a 6.6% annual increase) and
    3. Bukit Merah (prices rose from S$371,000 to S$688,000 or a 6.2% annual increase)
  5. Conversely, the worst three performing estates (though not negative) between the same period are
    1. Sembawang (prices rose from S$240,000 to S$350,000 or a 3.7% annual increase)
    2. Choa Chu Kang (prices rose from S$232,000 to S$345,000 or a 3.9% annual increase)
    3. Woodlands (prices rose from S$225,000 to S$346,000 or a 4.3% annual increase)
  6. Prices are the highest in Queenstown (S$695,000) and lowest in Choa Chu Kang (S$345,000)
  7. Only 7 out of the 22 listed towns have prices higher than the average of S$455,000. They are Queenstown, Bukit Merah, Clementi, Kallang/Whampoa, Bishan, Toa Payoh and Ang Mo Kio.
  8. The remaining 15 towns have prices lower than average. This suggests that when people have a good view towards the popularity and attractiveness of an area, others share the same sentiment, and it is usually priced in.

The findings generally aren’t rocket science, but bears out in numbers the hypothesis that location plays a factor in price trends.

The next question is – Since prices have risen quite a fair bit in the better performing estates of Clementi, Kallang/Whampoa and Bukit Merah, will they continue to rise in future? Or could better value be found in the poorer performing estates of Sembawang, Choa Chu Kang and Woodlands where prices have not risen as much?

My suspicion is that prices can’t rise that much more, except in line with inflation and cost of materials. This is because the estates where prices have performed well are generally where flats are older e.g. 30 year old.

The government has a ruling that only a certain portion of a buyer’s CPF can be used for flats that are older, so that would mean the present owners need to find someone who is relatively cash rich to buy their present flat should they wish to sell.

I know that Singapore has the highest population of millionaires in the world and Singaporeans are generally cash rich, but it would definitely be easier to find a buyer who wants to use cash + CPF to pay for their purchase.

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