Investment Recommendation Report: Analysis of Dundee Road Properties

This report presents an investment recommendation for a residential property in Dundee Road, Singapore. It begins with an introduction to the purpose of investment recommendations and the importance of market research, particularly within the context of the Dundee Road residential market. The report then delves into site analysis, considering market efficiency and various risk factors associated with residential investments. It includes a detailed market research section, examining market demand and supply dynamics, as well as comparable properties. The analysis extends to the estimation of the gross development value (GDV) and land value, supported by relevant data and calculations. The report concludes with a final investment recommendation, suggesting a bid based on the comprehensive analysis and market conditions. Government policies impacting the residential market are also discussed throughout the report. The report aims to provide a solid basis for investment decisions in the Dundee Road residential market.

Running Head: INVESTMENT RECOMMENDATION 1
INVESTMENT RECOMMENDATION
Student name
University of affiliation

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Table of Contents
1.0 Introduction...........................................................................................................................................3
1.1 Purpose of investment recommendation..............................................................................................3
1.2 Residential market research..................................................................................................................4
1.3 Government policies..............................................................................................................................4
2.0 Site analysis...........................................................................................................................................5
3.0Market research.....................................................................................................................................6
3.1 Market demand and supply...................................................................................................................6
3.2 Market Comparable...............................................................................................................................8
3.2.1 Cost of demolition..............................................................................................................................8
3.2.2 Size and shape....................................................................................................................................8
4.0 Estimation of gross development value...............................................................................................10
4.1 Land estimation...................................................................................................................................10
5.0 Final recommendation.........................................................................................................................11
5.1Conclusion............................................................................................................................................11
6.0 REFRENCE.........................................................................................................................................12

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1.0 Introduction
Edmund's Tiew Property Pte Ltd portfolio property management is the process of asset selection
and allocation as guided by an expert in asset maintenance and development. The process usually
takes place after the portfolio has been chosen. Just like diversification in the traditional capital
market, diversification is of great importance in residential investments. Thriving investors
create collections in diverse categories of property and various residential markets. The main
reason as to why private investors would never want all their features in a dangerous, prone area,
at least not without extensive coverage of insurance. Individuals a times purchase residential as
an investment property. Residential property can be bought, or esold for a gain.
1.1 Purpose of investment recommendation
Investment reports offer a wide variety of purpose in investment recommendation. Investment
reports are future-oriented. They provide support and create property base in which the amenity
will be delivered to the client in the forthcoming. It also incorporates endorsement, information,
responsibility, and measurement of performance documents all in one report. Secondly,
investment reports provide information that is consistent, reliable, concise, timely and precise on
particular property context, and on a variety of preferences facing real property outlet for
requirements on asset uprightness and meeting client. Being an information manuscript, it is read
by diverse parties involved in management, implementation, planning and having roles on
property branch. Thirdly, investment reports confirm and crystalize organizational
accountabilities. Through signature of inventing specialists, the reports indicate an agreement of
different team members who are to implement the project as well as confirm the responsibility of
the specific person for the quality of information provided .Lastly, investment reports measure
the performance of task done .It is used during audit trail to check whether different cost centers

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are achieving the desired results. Investment reports provide a perilous reference fact during
evaluations of program performance once project completion.
1.2 Residential market research
In 2016, Dundee road residential market received a boost. There was a 34 percent year over year
increase in investment volume. According to Regina Lim, the residential market in Dundee road
is set for recovery in 2017.Inflation and GDP progression are projected to pick up in 2017; this
will result in higher demand for residential market (Asia, 2017).
With lion city being regarded as a nontoxic harbor for investment in property, it is confident that
there will be an increase in investment size as new resource come into the market. An increase in
gross domestic product is expected from 1.8 percent to 2.3 percent in 2017.With the growing
tourist arrival figures and higher economic growth, this is supposed to boost the residential
market. Retails mall is expected to transact. The residential market that is of good quality and
positioned strategically bring more attraction to core investors yields which are still on the higher
end than office assets. Also, tenancies have always been hardy even in downturns ("The outlook
for Dundee road’s real estate market in 2017 | The Investor", 2017)
1.3 Government policies
There have been some government policies that have a gross impact on the residential market. In
January 2011, there was an increment of four years placed on the seller stamp duty holding
period. Stamp duty underwent increment to 16%, 125, 8% and 4% for an asset procured in the
first four years of obtaining. On January 2013, there was a raised imposed on additional buyer
stamp. Citizens of Dundee road purchasing there second asset under residential category paid 7%
while those buying their third spent 10 %.Permanent residents of Dundee road purchasing
residential for the first time paid 5% while those purchasing for subsequent paid 10 %.In August

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2013, permanent Dundee road residents who are new had to wait for the previous three years,
they could be qualified to procure the resale residential property. The new tenancy refinancing
facilities and housing loans were granted by financial institution were reduced to 30 years from
35 years for the buying of flats. In December 2013, the government came up with a policy that
required the second timer applicants to pay a resale levy for the purchase of condominium units.
The service ratio on the mortgage for mortgages was approved by the monetary institution for
the directly purchased asset from originators was capped at 30% on monthly income gross of
borrowers.
2.0 Site analysis
In present portfolio model, the capital markets are presumed to be competent this is because it
consists of an enormous number of profit-seeking, rational and risk-averting investors'. They
race with each other in approximating the individual market and asset future value. The capital
market is termed as useful since it quickly integrates any event affecting asset value and new
changes. Markets are assumed to be efficient in that: First, many profit maximizing members are
concerned with the valuation of asset and analysis, and these members function independently.
Secondly, any new information about the property that comes into the market is independent.
Thirdly, the majority of investors do price adjustment as fast as the original data regarding asset
hits the market. However the prices might not always be perfect, they are not biased. Lastly,
property price that exists in the market should be a fair reflection of all new risk and available
information. Hence returns implicit cost reflects the expected return and risk involved. With
these suppositions, any asset is efficiently reflected if no other property offers expected
performance that is higher baring same risk that is lower.

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Investing in a residential market is expanded within a region can be measured a passive
investment strategy. Demand and supply forces in big capital markets can make such approach a
reasonable selection for the majority of investors hence developing a clear risk management
policy. Investors decide where they want to be within the practical limit regarding their attitude
towards risk and efficacy function. They would the handpicked portfolio grounded on risk
preference. Investors usually penalize returns expected on the risky portfolio to account for risk,
the higher the penalization, the more significant the risk. Possible risk can be classified into
different categories. First, the known-known, this is a condition where its origin can be
recognized, and a precise likelihood and aftermath in the case of incidence can be premeditated.
Secondly, there is unknown-known; this is the state of ambiguity where sources of risk cannot be
identified, hence making any possibilities for its probability calculation ("Forbes Welcome", 2017).
Lastly Investors face the risk of appropriate assessment when investing in condominiums. With
the investment, the private association will require money to do a renovation of the units such as
windows and doors, or other modification. This cost majorly cost a few dollars per unit. This is a
catastrophe for the investors majorly those who do not stay in the condominiums. This
renovation cost will impact on the income of the investor (DeFazio, DeFazio & DeFazio, 2017).
3.0Market research
3.1 Market demand and supply
The fresh apartment house influx in the marketplace has brought about a significant drop in the
price of reserved accommodation. The analyst expects executives’ condominium units and the
condo which are new and individual of approximate 26467 this year. The shift in trend on
locations, where expatriates who preferred renting houses are now focusing on apartment
instead. With narrow of rental prices between older private properties and apartments making

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condominiums more affordable for new expatriates. The changing aspects of supply and demand
have grossly affected the marketplace, and its effect can be seen (Propertyguru.com.sg,
2017).Having a quick glance at the forthcoming channel of projects in residential marketplace,
there is an expectancy of 182506 units from 2015 to 2018(Kumar, 2017).The condominium units
supply is kept a steady pace of 25000 units per year. Recently the take-up on condominium unit
rate is still very high, and demand may increase from August 2016.However, the indicators on
Dundee road population development rate seems to be fewer than healthy (Kumar,2017)
chart1 (source: mndDundee road.wordpress.com)

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3.2 Market Comparable
Based on the search made along the Dundee road. The comparable Queens shown are regarded
the most suitable in the vicinity of condominium investment.
Based on the chart above, there is an overall increasing trend in properties prices transacted. On
April 2014 was the tender subject date. Alexis and B were negotiated two years before. Hence
the two comparable Queen shave been exposed to an upward price adjustment.
3.2.1 Cost of demolition
Suppose Alexis is incompletely developed. That shows that buyers would have to bear some
form of loss like demolition cost before regeneration. Due to this factor, buyers can be dejected
from purchasing this land portion. Hence Alexis is considered inferior compared to comparable
Queens Hence Alexis is exposed to a rising price change.
3.2.2 Size and shape
Adjustment for size differences is often made on the condominiums that the buyer can pay less
per sq meter for a larger than for a smaller site. The number of bidder’s decreases as the price of
purchasing land becomes expensive. Hence there will be less competition. Since the

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condominium under construction has a more prominent plot as compared to the Alexis and
Rochester.
Uneven shaped land reduces the rigidity in construction design thus cost alterations the form of
utility is made. Rochester has an even shape, and its service would be made better comparable
Queensto the predictable way of the subject, and Alexis. Thus Rochester is exposed to a
descending alteration while Alexis is lay open to an increasing adjustment since it has a more
uneven shape as compared to the subject Queens.
Alexis Rochester Queens
Price per m² $9480.15 $10336.31 $10115
Date 15% 10% 10%
Demolition Cost 5% 5% 5%
Location 2% 5% 5%
Size -30% -3% -10
Shape 20% 10% 20
Adjustment price per m² $10618.00 $10026.00 $10205.0
There have been recent policies affecting values in Dundee road residential market. First, seller
stamp duty only applies to assets traded within three years of acquisitions as it reduced by 4%
each tier. Secondly, TDRS will not spread over to mortgage equity drawings loan with the loan
to loan value ratio equal or below 50%.Thirdly, the introduction of additional conveyance duties
for assets holding equity, plugs loophole which exempted companies from paying the additional
conveyance duties in the past. Fourthly, reduction of cancellation fees from 20% to 5 % for
executive houses. Lastly Resale levy for subsequent applicants. These valid to only fresh land

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sales which are sprang after December 2013("Dundee road Property Market Cooling Measures,"
2017).
4.0 Estimation of gross development value.
Gross development value is an important valuation metric that investors and asset developers
need to be well conversant with when constructing their venture and financial appraisal ("Gross
Development Value (GDV) - Property Developers Guide to Financial Appraisals," 2017)
Based on comparable Queens estimation the gross development value for constructing the
condominium will be,
GDV=10618.00*1200=$12741600
$12741600*645UNITS=
=$8218332000
Estimated GDV will be $821833200
4.1 Land estimation
Based on price adjustment table, the condominium construction should range from $10618.00per
m² to $10026.00.Rochester is more similar to the new project recommendation; the land value is
estimated at $ 10150 per m².
LAND VALUE ESTIMATION=51528.89*10150
=$523018233.5

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5.0 Final recommendation
The investor should bid should be 10% higher of the current market value of the
condominium .Keeping in mind all the factors and cost used for the condominium construction.
The investor should bid for tender at $523000000.00 for the comparable Queen which is the
recommended investment.
5.1Conclusion.
According to the research on residential market in Dundee road investment, it is essential for the
investor always to observe the following points. First, the market scenario for the basis for the
return of a variety of investment, hence it is advisable for the investor to always be on upfront of
all information updates on new policies and changes in conditions. Lastly, investors should have
some of their savings in cash for and the rest in investment. The amount set as cash can be used
during an emergency instead of liquidating investment on the long term.

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6.0 REFRENCE
Asia, R. (2017). The outlook for Dundee road's real estate market in 2017 | Retail News Asia.
RetailNews Asia. Retrieved 5 November 2017, from https://www.retailnews.asia/outlook-
Dundee roads-real-estate-market-2017/
Bogdanova, B., & Drehmann, M. (2017). Strong outlook with low inflation spurs risk-taking.
BIS Quarterly Review.
Cost to build a condominium - Estimates and Prices at Fixr. (2017). Fixr.com. Retrieved 4
November 2017, from https://www.fixr.com/costs/build-condominium
(2017).Blackwellpublishing.com.Retrieved4November2017,from
http://www.blackwellpublishing.com/content/BPL_Images/Content_store/
Sample_chapter/9781405130455/9781405130455_4_005.pdf
DeFazio, F., DeFazio, F., & DeFazio, F. (2017). Why Condos Aren’t Good Real Estate Investments. The
BiggerPocketsBlog.Retrieved8November2017,from
https://www.biggerpockets.com/renewsblog/2012/11/15/why-condos-arent-good-real-estate-
investments/
ForbesWelcome.(2017).Forbes.com.Retrieved8November2017, from
https://www.forbes.com/sites/moneybuilder/2012/06/15/four-risks-of-investing/
#62b36b0c38f9
Gross Development Value (GDV) - Property Developers Guide to Financial Appraisals. (2017).
Investment Property Partners. Retrieved 4 November 2017, from