Image from: URA Masterplan PDF

Future Demand is a Better Metric for Valuing Your Property Than Price-Location Shopping

Property investment(s) can be fitted for your current financial ability. But only can be optimised by understanding future demand.

Imagine this, you’re 39 and thinking of moving out of your first apartment. You go to check the price, and your current apartment only grew by 0.5% over the last 4 years.

Back then,
You negotiated a good (per square foot) PSF entry price.
The location was good.
There were schools just a few bus stops away.
There were amenities found all around you.
The buses connect you across the island,
and the MRT station is located nearby.

This type of property valuation is based on Price-Location Shopping.
The price was good because you haggled a S$800PSF price from S$840PSF.
The location was good because everything you ever wanted could be found nearby.

But it looks like you picked an apartment in an already developed area.
That means, no room for growth.

Why Price-Location Shopping is not reliable

We are commonly taught to look at a property’s historical growth rates to predict its future growth rates. But graphs and numbers rarely tell us where a property value will be when we choose to sell it in the future.

Property value will generally always be on the rise, especially in Singapore—due to our limited land space, demand is kept available. What gives us the edge in decision making will be our ability to foresee other factors affecting the value of your property in the future. That is why, I help my clients value their property purchases using future demand.

Future Demand
The demand (value) of your property in the future (when you sell) based on existing industry indicators.

The most important factor affecting future demand in Singapore is the URA Master Plan. The URA Master Plan is a statutory land use plan which guides Singapore’s development over the next 10 to 15 years. Hidden in plain sight, this plan is published for the public eye and a key resource for property valuation. We are able to peer into the future and see the developments which will be completed during your tenure and projected selling dates.

*Sourced from: https://www.ura.gov.sg/Corporate/Planning/Master-Plan

Case Study: Jurong East Central (2008—Present)

If you had considered a property in Jurong East Central before 2008 with Price-Location shopping, it may not be all that great. Back then, Jurong was still seen as mainly an industrial town. And most of today’s lively malls, namely JEM, JCube and Westgate only opened between 2012 to 2013. But the URA Master plan would have laid out the a clear plan to transform Jurong with office, retail, home and leisure facilities.

“Jurong Regional Centre became Jurong Lake District (JLD) in 2008, with a new plan to help shed its industrial image and bring more offices, retail, homes and leisure to the area. Today, JLD brings some of the buzz, brands and mix of uses of the city to western Singapore.”

Quote from: https://www.jld.gov.sg/Western-Business-District/Key-Milestones

According to the Jurong Lake District Master Plan, there is still going to be extensive facilities upgrading and developments happening up till 2040 and beyond. And any property within the area is still a worthwhile purchase. However, like most things too good to be true, there are exceptions to the rule. If you are planning to find a property in the area, do seek professional help.

Jurong Lake District Website: https://www.jld.gov.sg/

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