Property Portfolio Management: Site Analysis, Market Research and Estimation on Gross Development Value (GDV)

This report provides a detailed analysis of the Cuscaden Road in Singapore for property portfolio management. It includes site analysis, market research, and estimation on Gross Development Value (GDV). The report recommends a bid price for investors to invest in the residential project.

Property Portfolio Management

Table of Contents
Introduction................................................................................................................................................2
Site analysis..............................................................................................................................................2
Market research........................................................................................................................................4
Estimation on Gross Development Value (GDV)..................................................................................6
Final recommendation..............................................................................................................................7
Conclusion.................................................................................................................................................8
References................................................................................................................................................9
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Introduction
The Cuscaden Road in the upmarket Tanglin in Singapore is a very famous and
suitable place for the residing. The main purpose of this report is to attract the investors
to invest in this property. A perfect bid has to be maintained for the land so that
investors can invest. The bid that can be unfolded will be about S$410 million
(Singapore-property, 2018). The secondary aim of the project is to analyze the site in
regards to demographics and economy. The demographics of the Cuscaden road are
suitable for making a government residential. The GDP rate of Singapore was estimated
to be quite moderate in the year 2019 because of some changing dynamics in
electronics demand. The residential sector of Singapore followed a strong recovery of
7.4%at the initial period of the year 2018.
The government by seeing this stepped into the implementation of a new set of cooling
attributes on the 6th of July. The Singapore residential sector will be in supply and
demand balance in the recent years. This is being said according to the fact that says
there will an increase of 14.5 percent in the residential units in the coming 4 years. The
government increased the ABSD and lowered the LTV for the subsequent home
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purchase. The sales volumes and collective sales activity have been hampered with the
lowering of home purchase. The Singapore government have rosed the housing loans
to about 1 percent through the three month Singapore Interbank Offered Rate (SIBOR).
This is responsible for the determination of the housing loans. Not only this , but the
implementation of the TDSR that total debt servicing ratio is also being implemented to
prevent the buyers from purchasing property that beyond their financial capabilities.
Although there was a spike in transactions, the evening before the measures’ became
effective. But still, with the global economic uncertainties and some weaker sentimental
issues, people will buy houses and lands that come with good location and pricing too
(Citypopulation, 2018). The market activities are mainly centered on the mass housing
in area known as Outside Central Region. The population in Singapore rose by 1.2
percent. It is expected that the growth rate will increase by 36 percent in coming years.
The population in Cuscaden road is about 1000, so it is perfect for setting up a
residential complex as it is the sparsely populated area. The 2018 year is being divided
into two halves. In the first half, the excitement of residential purchase of land had
driven the residential investment sales to $14.688 bn. Although this got curtailed after
the cooling measure got effective. In the second half, the residential sales volumes have
plunged to $3.553 bn that is by 75.8% (CBRE, 2019).
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Site analysis
For building and planning a residential complex is not a small matter. It is an important
matter of concern for a property portfolio manager. Cascade Road in Singapore is a
well-known place to build up the residential complex. Before fixing up with construction
the foremost is the budget. Without proper evaluation of budget, a successful project
will not be carried out. Apart from that proper arrangement of the trade people and
builder is crucial. Hiring such people for the project will also help to assume how much
material is needed (Building, 2018). Along with that how much cost is required for the
accomplishment of such plans. However, builders shortlist should be detailed first so,
that at the end customized could be done. One of the beneficial factors that transport of
goods could be very easily carried as the site is directly connected to the main road
(Quora, 2016). Other than that the area is covered up with various other important
centers like medical, hotels and restaurants. At the time of onsite work it the labors and
all the members should be careful so that work should be carried out safely. The most
important thing is to choose the right design professional for the building project.
Professional will help to create the plan (Higuera, 2019). It should be kept in mind
building of residential complex in Cuscadan Road should be carried out differently. This
could be done by hiring good and well-experienced architecture. This will help investors
to invest in this residential complex.
Building a residential complex takes a lot of capital. The SWOT analysis is essential for
the investors before carrying out the investment in the residential site. The process will
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help to identify the weakness, strengths, threats, and opportunities of the residential
site. This will also help to decide whether the project is viable or not. A SWOT analysis
will help to make the project successful (Sammut-Bonnici & Galea, 2019).
Strength – Strength is considered to be internal factors. This helps the company to
sustain in the market for the long run. Strength of the company attracts potential
customers. While purchasing the land it is mandatory to judge the surrounding areas. It
is essential to focus on the communication system from that area. Convenient
communication gives extra facility to the flat purchaser. The "Cuscaden Road "is a good
and hot- spot as it facilitates, medical centers, station, hotels, etc (lisc, 2019).
Weakness- Weakness is also an internal factor. It is very essential to know the weak
aspects of the company. Although the location serves all the benefits that a land
purchaser wants. The property portfolio manager should know every detail of the
project. This will help to deal with all the quarries of the purchaser. Unsatisfactory and
improper communication can be one of the greatest weaknesses. Before this, there are
many residencies already been made, so there is a huge competition among them
(Thepassionateseeker, 2019).
Opportunity – opportunity is considered to be external factors. It is very essential to
make a good connection with the sub-contractors, investors and the vendors. The
parking place should be good and convenient. If the site has separate areas for parking
it will create an opportunity.
Threat- Excellent and experienced project manager of a different project can be a
possible threat. An excellent model of the infrastructure and design, the location of
another site can be a major threat. These aspects can be the treatment for this site.
Market research
The market demand for the Cuscaden site is very high in Singapore. The place is
considered as a premium location for numbers of customers. This site is desirable for
every individual. The main reason behind this is that the site is situated at the core of
orchard road. The site is also identified as the shopping district of Singapore. The
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apartments which would be offered to the customers will mainly include the facilities of
the clubhouse, swimming pool, kids playing ground, indoor games and tennis court. The
estimated amount at which the land would be sold has been identified as $103.8 million.
The residential apartments of Cuscaden would also be near to several international
schools. There is also several restaurants, shopping centers, and malls near the project
site. These are some of the essential factors which lead to the enhancement of market
demand. As a result of this, it is also believed that the acquisition of this site would also
include bidding processes. In this bidding process, the value of this site is said to
increase at a greater rate. As the demand for the site will go on elevate it is believed
that the projected sales volume would be also increased (Cbre, 2019). Therefore the
graphical representation of the demand for this site and the sales volume of the site
have been portrayed in the diagram below.
Source: https://sbr.com.sg/residential-property/in-focus/luxury-home-sales-take-off-in-q1
In the below graph the supply of the land has been portrayed. The area of land which is
identified to be sold has been increased significantly throughout the years. Therefore it
can be said that the supply of land can meet the growing demand for land.
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Source: https://numberoneproperty.com/3-cuscaden-condo/
The anticipated sales forecasting of the site has been presented in the below table.
Year Transacted Price (SGD
million)
Price psf (SGD)
2020 410 1800 psf ppr
2021 450 2500 psf ppr
2022 500 1900 psf ppr
2023 521 1600 psf ppr
2024 906 2900 psf ppr
As per the above estimation of the land in Cuscaden, it can be said that the demand of
the land in the coming future is going to be higher at an increasing rate. this is due to
the increasing population all over the nation. The enhancement in the sales volume
would be attracting numbers of investors (Straitstimes, 2018).
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Figure: Details of nearest comparable condos
Figure: Availability of units
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Figure: Tender price index
Figure: Estimated construction cost
Figure: Details of similar types of projects in adjacent areas.
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Estimation of Gross Development Value (GDV)
It is most important to find out a very close estimation of the gross development value
(GDV) of a property as it helps in making a more efficient decision regarding a property.
It is an important valuation metric, which is widely used by investors and property
developers. The GDV metric supports in working out the financial estimation of the real
estate project. It helps in to find the closest or accurate figure of an investment project.
There are various methods of computation of GDV but the most important and efficient
Gross Development Value Method is the residual method (Investment Property
Partners, 2019).
The residual valuation approach is a technique, which is widely used to conveniently
measure the value of a property site or land. The land would have the potentiality for
development or redevelopment. The valuation technique is frequently used by the
property developer at the time of deciding on buying or bidding for a property site
(EnBloc, 2019).
The property developers in Singapore typically initiate with the residual procedure of
valuation to detect the price of the current market price of the particular property along
with the price they can give for a development site which will be developed or
redeveloped. This specific method applies very simple ideas as well as a computation
which support the property developers to determine the actual value for the particular
land which is planned to buy. The property developed to use the value as the base cost
for determining the other expenses. It helps the property developers in deciding on the
expenses like site creation, land remediation, professional fees, building cost plus other
costs, which they can spend to accomplish a profitable business. The simple form of the
equation for the residual valuation method is as follows:
Land = GDV – (Construction + Fees + profits)
This particular method in an efficient method for estimation of GDV of any particular
upcoming project and hence, support in calculating the GDV of the undertaken project.
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The fees and cost of the undertaken land are as follows:
Professional fees will be 8% of the total land price. The contingencies are 5% of the
total building cost. Interest on total contraction cost is 7%. The investor has to pay
stamp duty and legal cost for purchasing the land and the stamp duty and legal cost will
be 3% of the total land price. Besides this, the investor has to pay property tax, which is
10% of 5% of land value. Apart from this, the investor should spend 7% holding cost
on the total purchase price of the land (Tan, 2019).
The final bid price of the proposed land is $410 million by the final calculation. The
analysis of the comparable condo transactions is another aspect that the development
project should keep in mind while dealing. This is mainly comparing the other places
near Cuscaden road their sizes in square fit and transaction pricing.
Figure: Professional fees, financing cost
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Final recommendation
The price bid range of the residential site should be about of average $300 to $400.
This should be a bid price for the land parcel. The site area is found to be present in the
prevailing conditions. As per the residential site government regulations, the market
expectations are found to have surpassed. The demand for the land parcel is found to
be much more as per the market analysis is conducted (Khoo, 2018). Based on the
demand for the land parcel, it is seen that the selling of the new project should be in
between $300 to $400. But based on the forecast range, the bid price will attain the
flexibility, if it is kept to $300 to $400 psf. The land parcel is situated nearby freehold
luxury launches. The project will be enabling investors to gain attention. Apart from this,
it will be helping the investors to gain a huge amount of profit. By buying the land at this
reasonable price, it will be helping the investors to shot to the arm for the land sale
market (Sregantan, 2018). This site is much more profitable for the bidders and the
investors. As per this site, five major building will be retained and restored. The
development of the 40 story condo in the Clementi can be undertaken. This will be
providing benefit to the investors as per the analysis is being made.
Conclusion
On a concluding note, it can be said that the bid that is being showcased is enough
efficient for the investors to invest in the project. The paper discussed in detail about the
demographics of the site Cuscaden with the site analysis and market statistics. The
market research is being done on the wholesome GDP of the country and the area
basis. The estimation on the GDV has also helped to recommend the bid price for the
investors to invest and set up the residential project. The luxurious complex has to be
set in Cuscaden road so the bidding and project planning should be done accordingly.
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References
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