Issue 204

Copyright 2011-2014 www.Propwise.sg. All Rights Reserved.

CONTENTS
p2

FROM THE

EDITOR

The Permanent Portfolio and

Welcome to the 204th edition of the

Singapore Property Weekly.

Property Investing

Hope you like it!

p9

Singapore Property News This Week

p12

Resale Property Transactions

Mr. Propwise

(April 1 April 7 )

Contribute

Advertise

Do you have articles and insights and articles that youd like to share
with thousands of readers interested in the Singapore property
market? Send them to us at info@propwise.sg, and if theyre good
enough, well publish them here, on our blog and even on Yahoo!
News.

Want to get your brand, product, service or property listing out to

thousands of Singapore property investors at a very reasonable
cost? Head over to www.propwise.sg/advertise/ to find out more.

SINGAPORE PROPERTY WEEKLY Issue 204

The Permanent Portfolio and Property Investing

By Mr. Propwise
In this article I interview Alvin Chow, author of
the recently published title, The Singapore
Permanent Portfolio. We delve into the details
of the Permanent Portfolio framework, a
tested and simple way to invest with lower
volatility, and how property investing fits into
it.
What is the basic idea of the Permanent
Portfolio?
There are four economic cycles and different
asset classes perform well in some and
poorly in the rest. Hence, Harry Browne
devised a portfolio that is equally exposed to
these economic conditions.
Back to Contents

Page | 2

SINGAPORE PROPERTY WEEKLY Issue 204

For example, stocks tend to do well during
periods of economic growth, commodities
(including properties) during inflation, bonds
during deflation, and cash during a tightmoney recession.
Instead of guessing which cycle the economy
would move into, which most people do not
get right, the portfolio is divided equally
among stocks, commodities, bonds and cash,
at a 25% weightage each.
As the economic cycle changes and each
asset class performs different, the proportion
will move away from this equal 25%
weightage. So for example the weight of
stocks may increase to 35% if stocks go up
and that of bonds falls to 15%.
This would be an opportune time to sell some
stocks, which had gone up in price, and buy
some bonds, which had gone down in price.
Back to Contents

Over a period of time, the Permanent

Portfolio investor brings each asset class to a
25% weight again. In doing so, the investor
locks in the profit and redistributes the risk
evenly by not over exposing the portfolio to a
particular economic cycle.
Tell us about yourself Alvin, and what
motivated you to write this book
I am passionate about investments and have
been researching many strategies and
approaches about how I can invest and grow
my money. I tested many strategies with my
own money and I found that each strategy
has its strengths and weaknesses. What
mattered was to sticking to an approach that
suited my personality and objectives. Over
the years, I have documented my investment
journey on BigFatPurse.com and in 2014, I
started educating the public about investing.
Page | 3

SINGAPORE PROPERTY WEEKLY Issue 204

Through my encounters with different
strategies, I have not found something as
unique as the Permanent Portfolio. It is the
only strategy that focuses on limiting the
downside. Weve all heard of the clich: "take
care of the downside and the upside will take
care of itself." In reality, I doubt most
investors think about the potential losses
during a fast rising stock or property market.
Blinded by greed, they invest at high prices
and because they never expect to lose
money, any significant drop in their portfolio
would result them in panic selling.
I believe most investors are unable to
overcome the greed and fear in investing and
having a strategy that has a low volatility will
allow them to sleep well at night and not
make foolish investment decisions. However,
not many people are aware about the
Permanent Portfolio and no salesmen will
Back to Contents

promote it because there is negligible money

to be made from it. Hence, I decided to share
about it in public talks and write a book to
increase the awareness.
What are the most common mistakes
people make when they invest?
Most investment mistakes are behavioral in
nature. Besides the herding instinct of buying
high and selling low mentioned previously, I
think one of the major issues is
overconfidence.
Overconfident investors believe they can do
better than the professionals and hence they
manage their own money. There is nothing
wrong with that line of thought but it requires
honesty to determine where one really stands
in the competitive financial markets. Who are
you competing with? Do you have an edge
over the others?
Page | 4

SINGAPORE PROPERTY WEEKLY Issue 204

How well are you doing investing by yourself?
Most investors do not track their investment
performance and they continue to invest in
denial, even though they may be losing
money in the long run.
The behavioral explanation is that they are
actually seeking pleasure from the investment
markets and they can afford to lose.
What sort of investor is the Permanent
Portfolio suitable for?
Investors who have a low tolerance for large
paper losses yet want to invest their money
by themselves.

Permanent Portfolio investors must also be

patient because this is a long term strategy
and not expect to see returns within days,
weeks or months. As a rule of thumb, they
should commit to the Permanent Portfolio for
at least 10 years.
Back to Contents

Investors should also understand that it is the

overall portfolio returns and volatility that
matter. They should not focus on one asset
class and get affected by its volatility. I had a
few readers who sounded their concerns
when gold price came crashing down in 2013
despite their Permanent Portfolio having less
than 10% paper losses. Investors should
learn to look at the forest and not the trees.

What percentage of assets should an

investor devote to the Permanent
Portfolio?
This is dependent on individuals. Harry
Browne, the creator of the Permanent
Portfolio, suggested to keep one's retirement
nest egg in it and whatever excess can be put
to more speculative investments. Since this is
a long term investment strategy, it makes
sense to use it for the purpose of retirement
planning.
Page | 5

SINGAPORE PROPERTY WEEKLY Issue 204

Each Singaporean would already have his or
her CPF contributing some retirement income
and one doesn't need to build a nest egg from
scratch. One should determine the amount of
income that is needed during the retirement
years and work out how much more to top up
over and above what CPF can provide. And
using a 4% drawdown of the Permanent
Portfolio per year during retirement, how
much capital does one need to set up the
Permanent Portfolio now, projecting a slightly
conservative return of 5 to 6 percent per year
during the investment lifetime.
As there are a few variables we have to deal
with, it is a different situation for each
individual.
How difficult is it to set up and maintain
the Permanent Portfolio?
Permanent Portfolio beginners would need to
pick up some knowledge about Exchange
Back to Contents

Traded Funds (ETF) and the characteristics

of each asset class. For Singapore investors,
my book The Singapore Permanent Portfolio
would come in handy. In addition, one of the
instruments of the Permanent Portfolio is the
Gold ETF and investors need to pass the
Customer Knowledge Assessment before he
orhcan invest in it.
Trade execution is very simple. An individual
would be able to set up his Permanent
Portfolio with just one stock brokerage
account that facilitates the access to the SGX
counters.
How does property investing fit into the
Permanent Portfolio concept given it is
not one of the four asset classes? Does it
discourage investing in property?
Property is taken out of the Permanent
Portfolio due to two reasons, in my opinion
it is important to state that these are
Page | 6

SINGAPORE PROPERTY WEEKLY Issue 204

not Harry Browne's thinking. First, the
quantum of a property is large and it is almost
impossible to sell part of a house to rebalance
the portfolio. Second, gold is valuable in small
quantities and is portable. This means that
wealth can be carried more easily than any
other types of assets. If a country becomes
chaotic due to severe internal problems or
even war; properties, together with stocks
and bonds, would be very poor investments,
while gold would be a very precious and
sound asset to have in those times.
Despite singing the praises of the Permanent
Portfolio, I do not discourage property
investing.

Back to Contents

How would you compare the relative

attractiveness of investing in the
Permanent Portfolio versus investing in
property?
Even though the historical return of Singapore
property has averaged about 6% per year,
the advantage of property investing is the
ability to borrow large sums of money at
relatively low interest rates which can boost
the returns.
A five times leverage would increase the
average returns as high as 30% per year. But
there is no free lunch. Properties have cycles
and one may need to hold it for many years
at depressed prices before the economic
cycle favors properties again.

Page | 7

SINGAPORE PROPERTY WEEKLY Issue 204

I am not sure if most investors have that
patience and the tolerance to do so.
Otherwise, forgoing higher gains for
something more stable like Permanent
Portfolio would make sense for some
investors.
Special offer for readers of Propwise.sg
enter the discount code propwise when you
checkout to get a 15% discount on either the
e-book or paperback version of The
Singapore Permanent Portfolio.
By Mr. Propwise, the founder of Singapore
property blog www.propwise.sg, which aims
to help people make better real estate buying,
selling, renting and investing decisions.

Back to Contents

Page | 8

SINGAPORE PROPERTY WEEKLY Issue 204

Singapore Property This Week

Residential
March condo resale volume increases by
31% month-on-month
According to flash figures by SRX, the resale
volume of non-landed private residential
properties in March increased by 31 percent
from February. About 440 condominium units
changed hands in March, up from the 336
sold in the previous month. In March 2014,
only 371 units changed hands. This means
that there was an 18.6 percent jump year-onyear in terms of the resale volume. However,
resale prices for these condos have fallen by
0.2 percent month-on-month in March.
Particularly, resale prices in the city centre

Back to Contents

and the suburban regions have fallen by 0.3

percent and 0.4 percent respectively. Yet,
resale prices in the city fringe have increased
by 0.4 percent. According to Wong Xian Yang
from OrangeTee, resale prices in the city
fringes have increased as transaction
volumes are low. Meanwhile, in March this
year, the resale prices have fallen by 3.9
percent year-on-year from the previous year.
Eugene Lim from ERA Realty believes that
private home resale prices will continue to fall
by 5 to 8 percent for the whole of 2015. He
predicts that a total of 5,000 to 6,000 resale
units will be transacted this year.
(Source: Business Times)

Page | 9

SINGAPORE PROPERTY WEEKLY Issue 204

Market experts optimistic about private
home sales in April
Market experts believe that the number of
private homes sold in April will increase
compared to previous months. In March, a
total of 613 private homes were sold by
developers. This was 57 percent more than
the 390 units sold by developers in February.
Market experts believe that as sales are
picking up at the North Park Residences in
Yishun and Botanique at Bartley, developers
sale in April should also be good. Ong Teck
Hui from JLL said that the pick-up in sales
may be sustained if new launches are
attractively priced. Ong Choon Fah from DTZ
added that in the secondary market, sales is
also picking up. This is because the leasing
market has been weak and with more new
home completions, owners are increasingly
motivated to sell instead of renting their
Back to Contents

properties. According to data by URA,

developers sold 79 executive condo units in
March, which is an increase from the 65 units
sold in February. Ismail Gafoor from PropNex
predicts that developers will sell about 9,000
private homes in 2015.
(Source: Business Times)
March condo rents fall by 0.4% month-onmonth
In March, the rentals of private condominiums
and apartments fell by 0.4 percent month-onmonth from February. Particularly, rentals in
the city centre and the city fringe fell by 0.5
percent and 0.9 percent respectively while
rentals in the suburbs increased by 0.8
percent, according to the SRX Property Price
Index for non-landed private rentals. While
rental volumes have increased, rents in
March were 6.3 percent lower than in
Page | 10

SINGAPORE PROPERTY WEEKLY Issue 204

March 2014. Data from SRX showed that in
March, 3,948 non-landed private homes were
rented. This is about 37 percent more than
the 2,880 units that were rented out in
February this year. Eugene Lim added that
landlords may feel the urgency to rent out
their properties as they are no longer allowed
to apply for vacancy refunds on their property
taxes. As such, landlords may be more willing
to lease at a lower rental price. On the other
hand, HDB rental volumes have also
increased. About 1,838 HDB flats were
leased in March this year, up from the 1,420
units rented in February.

Commercial

have been sold in the first phase of its sale.

The average selling price for the strata office
units is between $2,850 and $3,500 psf,
according to the Business Times. Formerly
known as Equity Plaza, the GSH Plaza has a
total of 259 strata office units in its 28 storeys.
It has two floors of retail space, which
consists of 8 shops and 13 food and
beverage outlets. Other recent launches that
have taken off include North Park Residences
at Yishun and Botanique at Bartley. 70
percent of the condominium project at Yishun
has been sold. On the other hand, Botanique
at Bartley has sold more than 50 units in its
second weekend of sales. According to
market experts, the sales numbers at all three
launches are promising.

60 out of 100 units at GSH Plaza sold

(Source: Business Times)

(Source: Business Times)

At least 60 out of the 100 units at GSH Plaza

Back to Contents

Page | 11

SINGAPORE PROPERTY WEEKLY Issue 204

Non-Landed Residential Resale Property Transactions for the Week of Apr 1 Apr 7

Postal
District
1
1
1
3
4
5
5
5
7
7
8
8
9
9
9
9
9
9
10
10
10

Project Name
MARINA BAY SUITES
THE SAIL @ MARINA BAY
THE SAIL @ MARINA BAY
RIVER PLACE
TERESA VILLE
THE SPECTRUM
NORMANTON PARK
BANYAN CONDOMINIUM
SOUTHBANK
SUNSHINE PLAZA
CITYLIGHTS
CITY SQUARE RESIDENCES
111 EMERALD HILL
THE COSMOPOLITAN
BELLE VUE RESIDENCES
8 @ MOUNT SOPHIA
WATERMARK ROBERTSON QUAY
LEONIE GARDENS
JUNIPER AT ARDMORE
ST REGIS RESIDENCES SINGAPORE
SOMMERVILLE PARK

Back to Contents

Area
(sqft)
2,067
614
893
969
3,972
1,324
1,270
1,625
592
570
560
840
2,411
1,679
2,271
1,453
1,582
2,540
3,197
3,757
1,302

Transacted
Price ($)
5,050,000
1,250,000
1,468,800
1,360,000
3,600,000
1,370,000
1,110,000
1,350,000
995,000
820,000
924,000
1,350,000
4,950,000
2,950,000
3,800,000
2,325,000
2,280,000
3,450,000
6,700,000
7,700,000
1,930,000

Price
Tenure
($ psf)
2,444
99
2,037
99
1,644
99
1,404
99
906
FH
1,035
FH
874
99
831
FH
1,681
99
1,437
99
1,651
99
1,608
FH
2,053
FH
1,757
FH
1,673
FH
1,600 103
1,441
FH
1,358
99
2,096
FH
2,050 999
1,482
FH

Postal
District
11
11
12
13
13
14
14
15
15
15
15
15
15
15
15
15
15
16
17
18
18

Project Name
THOMSON EURO-ASIA
368 THOMSON
THE ABERDEEN
PARC MONDRIAN
EURO-ASIA PARK
WATERBANK AT DAKOTA
STARVILLE
THE SEA VIEW
THE SHORE RESIDENCES
THE SEAFRONT ON MEYER
GRAND DUCHESS AT ST PATRICK'S
PEBBLE BAY
HAIG COURT
PALM VISTA
THE VESTA
TANJONG RIA CONDOMINIUM
HERITAGE RESIDENCES
STRATFORD COURT
LOYANG VALLEY
WATERVIEW
CHANGI RISE CONDOMINIUM

Area
(sqft)
1,292
883
1,302
936
1,421
883
1,238
1,647
893
1,615
2,088
2,336
1,076
1,055
1,184
1,378
2,024
1,873
1,873
1,184
1,496

Transacted
Price ($)
2,300,000
1,365,000
1,350,000
1,200,000
1,430,000
1,350,000
1,145,000
2,600,000
1,380,000
2,430,000
2,850,000
2,880,000
1,200,000
1,160,000
1,295,000
1,465,000
1,618,000
1,500,000
1,200,000
1,168,000
1,300,000

Price
Tenure
($ psf)
1,781
FH
1,546
FH
1,037
FH
1,281
FH
1,006
FH
1,529
99
925
FH
1,579
FH
1,545 103
1,505
FH
1,365
FH
1,233
99
1,115
FH
1,100
FH
1,094
FH
1,063
99
800
FH
801
99
641
99
986
99
869
99

Page | 12

SINGAPORE PROPERTY WEEKLY Issue 204

Postal
District
19
19
19
20
21
22
23
23
23
23
23
23
26
27
28

Project Name
KOVAN MELODY
THE QUARTZ
CHUAN PARK
THE GARDENS AT BISHAN
THE CASCADIA
LAKESIDE TOWER
MERA WOODS
GLENDALE PARK
HILLBROOKS
HILLVIEW 128
HILLVIEW REGENCY
PALM GARDENS
MEADOWS @ PEIRCE
YISHUN SAPPHIRE
SUNRISE GARDENS

Area
(sqft)
1,227
1,066
1,496
1,572
1,679
1,970
2,002
1,206
1,238
1,044
1,195
1,206
2,583
1,033
1,442

Transacted
Price ($)
1,250,000
970,000
1,230,000
1,500,000
1,710,000
965,000
2,050,000
1,200,888
1,200,000
940,000
975,000
890,000
2,430,000
750,000
1,070,000

Price
Tenure
($ psf)
1,019
99
910
99
822
99
954
99
1,018
FH
490
99
1,024 999
996
FH
969
FH
900
999
816
99
738
99
941
FH
726
99
742
99

NOTE: This data only covers non-landed residential resale property

transactions with caveats lodged with the Singapore Land Authority.
Typically, caveats are lodged at least 2-3 weeks after a purchaser
signs an OTP, hence the lagged nature of the data.

Back to Contents

Page | 13