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Wising Up In Property Investment
Education | 02 October 2009
By: jason.liew
Articles (66) Profile

Blame it on the anti-speculative measures introduced by the government in mid September, the resurging Singapore property market has suddenly hit the wall since taking off from its nadir in March this year. Not unexpectedly, the FTSE ST Real Estate Holding & Development has since fallen 3.7% while the STI only retreated 1.9%.

In this issue, we are delighted to have invited Eric Cheng, a renowned local property investment guru, to help us answer some of the burning questions that may have readers scratching their heads recently. Here are the excerpts:

Q: Hi Eric, your property commentaries are well-known and often sought after by the local media. For the interest of our readers, do you feel there are still buying opportunities in the current Singapore property market now that the government has stepped in? And what kind of properties would you recommend investors buy then?

A: The sentiment in today’s market is rather strong. After the introduction of anti-speculation measures, the market has somewhat weakened but I believe the market will eventually ride up. Investor demand will escalate as vacancy rate is 5.9% and Integrated Resorts (IR) are coming up. I would recommend locals to purchase landed properties as the numbers for them have not picked up yet compared to the condominiums.

Q: In your opinion, do you think we are likely going to see the old record sales of 14,811 units made in 2007 being broken?

A: We are likely to see the old record broken as market sentiment and economic fundamentals have shown improvements in recent months. The trend whereby an owner has more than one property is picking up. Previously, locals are more conservative in property investment but at present, it is common for owners to invest in two or more properties.

Q: With regards to the imminent openings of the two IRs early 2009 which are set to give property prices in the Central Area a major boost, do you think the lifting effect on property prices will spill over to wider parts of the Island such as the Central Region and the East Region which is presumably closer to the heartlanders?

A: Wider parts of the Island will definitely be affected. As Core Region prices have increased by 40%, such boost of property prices will naturally have an effect on the outskirts region.

Q: Your company, the ECG Group of Companies (ECG), owns 11 apartments in central areas available for short-term leases ranging from 3-6 months. In this regard, has your business for temporary leases been affected since the outbreak of the global financial crisis in October last year? Or is it getting better instead due to the flexibility associated with short-term lease?

A: There are limited new service apartments in Singapore and hotel rates have increased over the years. These in turn have improved ECG’s short term leases and drove revenue up by 20%. Our properties are mainly located in the Core district area and we allow flexibility in our leases.

Q: In your book ‘Get Rich Through Property Investment’, one of the investment strategies that you teach is ‘Buy to Rent Investment’ which essentially means buying a property and lease it out for a steady stream of fixed income. And in comparison to buying REITs in the stock market, both strike a common similarity in relying on rental income to earn investment returns. Hence, which method do you prefer and why?

A: I prefer investing in properties as I have more control over my assets and there are more flexibility factors such as capital gain, rental yield, en-bloc etc., which see more forces of appreciation.

Q: You also mentioned in the book that ‘en-bloc sales are where people made their millions’. What are some of the strategies that you apply in identifying potential en-bloc targets?

A: Seeing that land is scarce in Singapore, the possibility of a property encountering en-bloc offer one day is not a surprise, especially for old apartments in good locations. Things to take note when searching for potential en-bloc targets are – physical conditions of the property development, plot ratio, ownership etc. All these factors do not make an easy calculation for a layman thus my advice to him or her is look out for location which plays a significant role in deciding en-bloc sales.

Q: On the stock market now, do you personally invest in property stocks given your expertise in the field? If you do, what may be some of the things that you look out in identifying a good property stock?

A: I do not invest in property stocks as I believe in property investment and I have seen friends getting burnt in the stock market. I believe that it is unwise to invest in both because in a downturn, one might get caught in between both.
I focus on property investment to which I have been known as Property Guru in my circle.

Q: What advice would you give to people who are new and interested in property investment?

A: Property investment is not as straightforward as it seems as there are hidden strategies. For newcomers, I suggest they attend my course – Get Rich Through Property Investment. In this course, I will teach them on how to be a prudent property investor and be successful in property investment.

Q: Last but not least before we end, what are some of the common mistakes that you have seen new investors made?

A: New investors are mostly blinded by greed and emotions. They need to learn how to unlock value of property and the long term gain which most are unaware of.

Eric Cheng is a self-made millionaire and self-taught property investor. Through his years of experience in real estate, he has mentored and coached many millionaires as well as successful business owners. He frequently conducts trainings, seminars and is known as a real estate guru.

Being no stranger to the local media, Eric is often invited to appear on TV and Radio stations as well as magazines for his property commentaries. Eric now runs his own company, the ECG Group of Companies which has diversified businesses spanning from real estate investment, property development, lifestyle, events management, automobile, finance to information technology etc.

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