Property investments are traditionally considered 'passive' and safer in nature as compared to investments such as stocks and equities.
However, passive management does not mean that a 'buy and hold forever' strategy works for all types of properties and is automatically a safe approach as value decays over time for leasehold properties.
Aside from Freehold (Or equivalent 999/9999 years leasehold) properties, the growth trajectory of 99 years leasehold properties generally fall into 3 stages called GSD:
Growth
Stagnation
Declination
One simple way to identify the growth prospects of a property is to compare it against the price index of resale and new properties of the same tenure within the same district.
Several factors can affect the growth rate of a property vs its surroundings. The more factors a property fulfils, the higher the likelihood that it will continue to appreciate in the longer term and vice versa.
Number of units (Usually the larger the better)
Fairly or over priced at launch
Remaining tenure
Surrounding HDB upgraders demand
Rental yields (Growing/Stagnating/Declining)
Nearby amenities and/or transportation hubs
Condition and maintenance issues of the project
Regular or irregular layouts
Growth hotspots or the lack of (E.g. URA transformation plans, upcoming MRT stations, high number of upcoming GLS plots etc)
Enbloc potential
It is crucial that investors understand that leasehold properties require active management from time to time to 'recycle' profits and funds from stagnant and declining properties into higher profit potential ones.
This will allow them to continue to outperform the general market and enjoy greater capital growth on their equity.
For an analysis of your property portfolio and a more precise in-depth discussion, reach
out to me for a Property Wealth Planning consultation.
