Friday 25 June 2021

Paying $1.3 million for 50 year lease?


Hee hee. 

Queenstown Stirling Road got quite a few of these HDB landed terrace houses too:

HDB terraced house in Whampoa sells for record $1.268 million

I grew up amongst them. 

There were a lot more in the old days along Stirling Road and near my former Hua Yi primary school at Margaret Drive. 

I can still recall there were unhappiness when they were enbloc by big daddy decades ago....

Most of us HDB flat dwellers would be ecstatic when kenna enbloc, but now you can appreciate if you were a former owner of these "rare" HDB landed terrace houses, how mad you must be feeling then!

Someone's loss is another person's gain.

The "lucky" owners of the current HDB terrace houses must thank big daddy for making their "rare" properties even "rarer"! 

Its 2 bites of the cherry!

First bite - Blur blur buy direct from SIT or HDB.

2nd bite - Eh? We are untouched? Heng ah!  (One of the rare examples where not chosen for enbloc is good, better, best!)

Would you pay $1.3 million (I not into precision in 3 decimal places) for a property with 50 year lease?

Straight off the bat I can see 2 groups of buyers that would be attracted to such properties. Never mind even if the lease is below 50 years.

1.  The private landed property empty nest downgraders.

Those couples in their 60 or 70s, retired, children overseas or they have their own private properties.

Sell their semi-D for $5 million and downgrade to HDB landed terrace. 

Smaller place, easier to upkeep and cheaper to maintain. HDB conservancy charge only $55 per month for that Whampoa landed terrace house!

If used to landed, another landed is "easier" transition than highrise condo or HDB. 

I mean "downgrading" is already "sad", don't have to make it "sadder" than it has to be...

Not afraid 50 years later the value of their landed HDB terrace goes to zero?


Children got their own private properties. (You know something has gone wrong if your children is eyeing your property)

Sold semi-D for $5 million. (You are not asset rich; cash poor)

Land owners think differently from peasants.

$1.3 million divide by 50 years divide by 12 months = $2,200 per month.

Average rent for HDB 5 room flat in Whampoa is around $2,800 per month.

This Whampoa terrace house is 210 sqm; average HDB 5 room flat is 110 sqm.


Bargain or what?

For those who are paying rent for their homes, or commercial properties for your business, how nice for the next 50 years, no landlord will come knocking on your door to increase the rent!!!

Now that's control!


2.  Those who aspire to be their own nano REIT manager

You have a successful career. 

Current property you staying is fully paid.

Your CPF has exceeded 1M65 long ago.  

You are in your early 50s.

You are planning for your retirement in your 60s.

Not working completely does not appeal to you. You were never into FIRE anyways.

Be your own boss after retirement by starting a business? 

No, you not gonna lie to yourself. If you were an entrepreneur, you would started your own business in your youth! 

Leaving money in CPF and depending on big daddy to take care of you sounds distasteful too. 

Those who are successful in their careers are shepherds; not sheep.

Being a nano REIT manager yourself is quite doable you say to yourself.

Buy this Whampoa terrace house by getting funds OUT of CPF before they are locked-up.

2 critical success factors:

a)  You are confident to rent out this Whampoa terrace house for more than $2,200 per month to make it an yield accretive investment. 

b)  The rental you get is more than what CPF can offer you.

If not, why bother?

Its not passive. Got to deal with tenants from hell... 

And then its not "bao jiak" as you can have months, even years where you can't rent out your property...

But hey! That's why its better!

Got something to do and keep our minds active after we retire!!!

First 10 years could be boring. No leverage since you paid in full with CPF. Still debt free. 

But once the collected rentals over the years are enough for the 20% down payment for a 2nd investment/rental property, you are now on your way to adding another property to your nano REIT!

Wash, rinse, and repeat.

If not, why do REIT investors pay management fees to REIT managers for? 

A property expiring "worthless" once its lease is up is never a problem. 

Provided you know how to milk the yield accretive cash flows to fund your next yield accretive purchase. 


Careful hor! Now leverage as in debt is employed. 

Then again, you now in your 60s and retired. FULL TIME active investing versus part-time or passive investing. Which is less risky?

Plus you have a DECADE of "trust but verify", toe in the water experience as your own nano REIT manager. 

Oh boy, you have a ton of your own "crash got sound" stories to share!

If you had depended on a real estate agent in your 50s, he/she would have sold you on buying 2 or 3 rental properties with your $1.3 million CPF!!!

See the difference?




  1. Read? First HDB Blocks In Singapore

    Two different tales of HDB dwellers : One living in HDB blocks and the other opposite neighbors who could afford to buy "expensive" HDB landed at that time.

    Hmm .. rich will become richer! Must have money first before getting lucky! No?

    1. CW,

      When HDB took over these SIT landed terrace houses, they were sold as HDB "3 room" with a fresh 99 year lease.

      So if you were one of those "lucky" buyers of these landed terrace houses in the late 60s, you bought them at HDB "BTO" prices ;)

      My dad bought his HDB 3 room flat at Stirling Road for $7K. Now its worth around $300K.

      That's why I am forever spoilt and immune to 1M65.

      If my dad had put $7K instead to CPF in 1971, there's no way CPF can compound $7K to $300K in 50 years with 5% interests...

      You need CPF 8% to do so ;)

      No. For this case, it has nothing to do with must have MONEY before getting lucky.

      Look, first time buyers of HDB flats are not rich people lah! If so, they won't have qualified for HDB BTO flats in the first place!

  2. Hi Smol,

    Yeah that buyer(s) who put down $1.3M for this HDB landed is likely treating it more as "living expenses" than as investment.

    Can they sell for more in the future? Of course can! Easy? Hey, nobody said it would be easy to do!

    Are those HDB landed along Stirling Rd still there? I used to walk past them on my way to Queenstown Swimming pool more than 20 years ago.

    From google maps, I see some still remain (some being used as ID & Reno contractor companies?), but there's also a big condo called Queens sitting in a big patch of it?

    1. Spur,

      Yup, they still there.

      Some have been renovated into mini Bali retreats, while some are quite run down...

      Easy to spot who bought expensive from resale market, who bought direct from HDB. Wink.

      Yes, there's a condo called Queens built over the former bicycle rental shop and the popular old style coffeeshop bread-maker.

      There's a new condo coming up near the temple. That site broke record as most expensive site sold by big daddy that year.

      It was a Chinese developer. Chinese power!

      Eh? You former Queenstown urchin? Or you did your NS as riot police! The camp still there.

  3. I followed this ad on prop guru since it was just listed and really think its crazy to pay 1.25-1.3mil for 50yo LH HDB. This flat was sold by my friend's relative, n guess they did a good job selling.

    Indeed, I agree with you that property really make quite a lot of Singaporeans rich. This HDB is kachang puteh compared to the Nano founder's wife GCB.

    Bought 26 over mil GCB in 2003, and sold for 129 mil in 2021. That is more than 5.7 mil per year.

    Even running decent business net profit also never so high!

    1. Rolf,

      I'm quite impressed with the property agent's Youtube ad.

      Not easy for old school snake oil like me. My time its classified ads or leaflets.

      Now property agents must know how to make Youtube videos!? LOL!

      No wonder SPH suffering... How to compete with social media and dedicated property websites and platforms?

      Yup. My anecdotal observation is more Singaporeans have made money in properties than in equities ;)

      I remember reading decades ago an interesting newspaper article. This rich Singaporean tai tai in her 50s, who married well, just by upgrading to 3 landed properties during her marriage, has made more money than her female single peer, who climbed the corporate ladder all the way to CEO, has made over her peer's entire corporate career!!!

      Of course I believe you when you say getting lucky in landed properties can be better than running a small medium business ;)

      Oh! Congratulations to you in upgrading yourself to join the landed property club :)



Related Posts Plugin for WordPress, Blogger...