Driven by the recent hype over the launch of Gem Residences, I decided to visit the sales gallery last Sunday.
It would be interesting to find out from the horse’s mouth the stories of the project. For examples,
1. 1,449 cheques were collected before the launch but only 360 buyers showed up on the launch day, with 51 percent of the 578 units (i.e. 295 units) sold.
2. The plan to give away cheques of S$7,500 or S$10,000 to offset the 5 percent booking fee was scrapped last minute and replaced with branded kitchen appliances.
3. The triple-key units with a kitchen in each of the 3 sub-units were not approved by the authority. They are now called the “Trios” (instead of Tri-key) with separate entrances but only one kitchen.
Disclaimer: I am not from the developer, marketing agent or any stakeholder of the project. As a fellow buyer or investor, I can be in a neutral position to share honestly what I see in this project from my own experience.
Where are the buyers?
It was just passed ten in the morning but the open carpark in front of the sales gallery was already full.
However, when I stepped inside the showflat, I could only see property agents from PropNex and ERA. Team leaders were conducting briefings for groups of agents in front of the project model. Most of the property agents were chitchatting at the discussion tables or hanging around at the sales gallery.
During my 1 ½-hour stay there, I could only see a handful of buyers. The ratio of buyers versus agents was about 1:15. Maybe interested buyers were still in bed on a Sunday morning.
A property agent was assigned to me. She said the project was more than 50 percent sold a week after the launch.
A gem in Toa Payoh?
The sales gallery and the actual site are at two different locations. The former is at 31 Lor 5 Toa Payoh Block 31 while the latter is at 2 Lor 6 Toa Payoh.
The project is positioned as a long-awaited rare new project in Toa Payoh. The Google map shows that the actual site of Gem Residences is at Braddell which is quite far from Toa Payoh Central. If you check with Google directions, the condo is 7 minutes’ walk from the Braddell MRT station.
If you try to locate Gem Residences in Streetdirectory.com, the actual site is near to a Chinese temple called Toa Payoh Seu Teck Sean Tong (大芭窑修德善堂).
The property agent claimed that this is a ‘quiet’ temple. But a check on its website proves the opposite. The temple offers free consultations and medication for the poor, conducts regular ritual ceremonies, houses ancestral tablets, and places ashes of the deceased in a columbarium.
On the other side of the Gem Residences is the Police Security Command which is the elite unit of handpicked police officers to protect the President, Ministers and VIP guests.
I have covered in my How to Buy Good Quality Properties Workshop the negative implications of staying too close to a religious place and a police station according to fengshui. Buyers should think about whether their family, potential tenants and future buyers will feel comfortable staying near these places.
Where is the wow factor?
The brochure of Gem residences is a ½-inch-thick book with 191 pages. It starts with valuable old photos of the Toa Payoh town and interviews with long-time residents. It is followed by another chapter about life in Toa Payoh – the transportation, school network, eateries and recreations – interwined with interviews and quotes from owners of hawkers, café owners and sports players. That leaves only less than half of the pages relevant to the project.
There are three developers behind Gem Residences: Gamuda Land, Evia Real Estate and Greatearth. Malaysian developer Gamuda Land has the experience of building country clubs. It is trying to infuse the concept of a privileged club to a condominium.
Facilities that are new to Singapore condominiums include EZ-Link enabled Resident’s Pass, pet pool, edible garden and parcel locker system.
For the first year after obtaining TOP, the developer will throw in the following extra perks for free for all the owners:
– Concierge, taxi and limo booking services;
– On-demand housekeeping, laundry, shopping, private chef and event planning;
– Travel booking, restaurant reservation, grocery shopping and food delivery services (with a service fee);
– Taxi booking and rental car services at $9 per hour;
– Weekly cooking, bakery, yoga, Aqua Zumba, swimming for children (only first month free) classes;
– Regular GP visits (with licensed doctors) and consultations at the condo; and
– 1-year membership of Horizon Hills Golf and Country Club (in Johor Bahru).
It is a brilliant idea to introduce the clubhouse and housekeeper concept in a condominium. However, owners have to take note of the following:
1. It is human nature to want to try new things, especially when they are free (or have been factored into the purchase price). If residents from half of the 578 units all book the same service at the same time, will the special service still be a gem or just a jam?
2. After the first year, the Resident Committee has to decide which services will continue because all of them will come with a price from now on.
3. The maintenance of every facility and employment of every club service come with a price. The costs are borne by the owners and landlords of all the units taken from the management fee and sinking fund, regardless whether they are actually using them or not.
How to pick the gems in Gem Residences?
Compared with other large-scale condo projects, Gem Residences is no doubt superior in design of its site in the following areas:
1. Instead of many blocks crowded in a small site area overlooking each other with not much privacy, there are only two blocks with comfortable distance in between.
2. All units are north-south facing in Sunstone Tower and Moonstone Tower.
3. The development promises lush greenery with different floral zoning growing 26 different types of flowers and plants.
4. The project is the tallest building in the area with 39 storeys. Higher floor units can have panoramic view of the city.
5. The units provide more usable space with full length windows (or what the developer called ‘curtain walls ‘) with no bay windows.
Gem Residences is surrounded by the main roads and the HDB blocks. The latter may not be a concern of many buyers given 73 percent of them have HDB addresses. But for privacy and tranquility, it is best to choose units facing inside.
The best units are 12, 13 and 14, followed by 1, 2 and 3 (expect some noise from the pool and playground). For unit 12 and 13, choose 8th floor and above to avoid blockage by the 6-storey carpark.
What about layout and pricing?
Although Gem Residences have allocated ample space for many facilities, the units are all very tiny.
1. 1-bedroom units are best-sellers but are obviously shoebox units under 500 sq ft. Even 2-bedroom units are only 570 sq ft in size.
2. The living hall of a 3-bedroom unit cannot fit in a dining set. The showflat of the 3-bedroom unit uses the balcony as the dining room. Also, expect to dry wet laundry next to the dining table in the same balcony.
3. There is no space to move around after putting a king size bed in the master bedrooms. Only the master bathrooms are spacious. (The property agent kept reminding me to take photos of the spacious master bathroom.)
4. There is no maid’s room. Developer explained in the brochure that residents can enjoy on-demand housekeeping and laundry services instead.
The average price of 319 sales transactions works out to be $1,426 psf. It is only 7 percent higher than nearby Trevista ($1,333 psf) which obtained its TOP 4 years ago. Two older projects Trellis Tower ($1,304 psf) and Oleander Tower ($1,026 psf) are nearer to Toa Payoh Central and offer better value for money.
What is the final verdict?
For a fair evaluation of new launch projects, I have devised a PCS (Property Club Singapore) Rating System based on 7 important criteria. Below is the PCS ratings of Gem Residences.
Visit the Facebook page of Property Club Singapore for more pictures of the Gem Residences showflat. And don’t forget to Like us on Facebook!
Did you watch my video “2018 Singapore Property Market – what developers, agents, banks and analysts are hiding from you”? Watch it now!
Vina
Great job. Rentability : in the first year, rental is expected to be low. In Singapore, any projects of 500 units are considered big. 578 units will TOP at the same time. Given a percentage for investment property esp. 1 and 2 bedders, supply will offset demand for at least a year before the situation stablised.
Like your analysis. Well done. I hope I also can see things without the sugar coating. Not buying but more for analysis, do you have any analysis for kovan star as I just went to it show flat. Wish to have your point of view.thanks
Thanks Fred.
Singapore property agents usually bring prospective tenants to see new projects. The club services thrown in free by the developer in the first year can have “novelty” effect to attract tenants. After the first year, rentability depends on whether those club services will be continued – which I doubt so if the rental market is soft and landlords are still asked to pay high management fee.
A big portion of the units in Gem Residences are 2-bedders (total 221 units) that is going to face very fierce competition both for rental and resale after TOP. Their 1-bedroom shoebox units sold out fast but their rental return is actually very low.
Thanks. I don’t do analysis and report on every new launch, only those that are interesting to investors.
Wow a great analysis on Gem residence. But this one is out of my league aiming for a low end 2 bedroom condo. How about the facilities? Understand they have some facilities which brings me my concern of the maintenance fee. Although first year might be covered by the developer, but if subsequent year the majority of the shareholder wants to retain those facilities, it will be super expensive. If they didnt go for it, then there will be lots of waste space within the condo.
But overall it is a good place since the condo is near city area
At the end of the day, it is the “space” inside the unit that buyers can really own it. The facilities, services, etc. depend very much on the consensus of all the rest of the owners in the condominium (and that is why it is called “condominium”).
Enjoyed reading your thoughtful and insightful analysis. Developers will try to do anything to make a sale during hard times. Keep up the good work
I’m a regular follower of this website and am glad to read your unbiased analysis on Gem Residences! Would you be able to also share your views on The Poiz Residences which has also generated fair interests, as it is located just next to MRT station and is a mixed development? Thanks!
Thanks for your support. Just trying to share a neutral new launch report with fellow property buyers and investors amid all the property news, ads and agent websites that just mention the good things about a new project.
Would love to do write more about new launch but have to be very selective on the ones who have something special from the rest of them. There are simply too many of them these days – and there are little differences among them, especially the mass market condos.
Hi,
thanks for sharing, I learnt something good about the negative FS implications of living near a religious place.
Initially I only looked at it from a health prospective – that the incense smoke could be a health hazard. Now I understand better. Thumbs up.
Thanks. Some readers may be living near religious places or police stations (or just bought a unit at Gem Residences!). So I’ve better don’t write explicitly the fengshui implications. The former is more for relationship and character so better avoid it if you can.
What prospective rental yield are we looking at when the project is completed?
No one can tell what the market is like in a few years’ time. You can only estimate based on the current and worst scenario.
The nearby Trevista 463 sq ft units are renting out at $2,000 (or $4.3 psf) per month now. The average selling price of a 452 sq ft unit at Gem is $650,000. The gross rental return is 3.7 percent.
But a 80% loan at lowest 1.15% means at least $1,700 for monthly mortgage. That left only $300 to pay for monthly management fee and property tax. And that hasn’t taken into account the initial payment on stamp duties, legal fee, renovation, furnishing and agent commission.
Hi Vina,
Another great article! Didn’t know Gem Residences is located right beside the temple! Good analysis and let me know if you wish to promote your upcoming course!
Regards,
SG Wealth Builder
http://www.sgwealthbuilder.com
Thanks for the offer. Will keep you posted.
Great article! I see a danger that removing the perks may not be straight forward as 90% resolution has to be passed and you simply can’t do it unless a EAGM is called. Purchases will start to worry when MF is raised to keep these services.
When there’s a will, there’s a way. When landlords are feeling the pinch of diminishing return and fed up with “subsidizing” their tenants, they will do everything to lower the operating costs.
I have not been watching TV programs and just saw this advert on Channel 8. I wonder if the consultation cost for such an exclusive service would be much higher than a normal GP in the same housing estate. https://www.youtube.com/watch?v=pqh-Fv9OqBM
GPs only work outside the clinics when they are called for “house calls” which are charged a few times more expensive than the normal consultation fee at their clinics.
What the condo can do is to arrange for locums (GPs not working full time and choose to work freelance for GPs who are on leave) to come and pay them by hourly market rate.
Buyers should be aware of marketing made by Evia Real Estate but will not be done. As an owner of LakeLife also built by them, it is disgusting seeing Evia using fake marketing to con buyers again.
They will claim that whatever they planned is not approved and thus becomes empty sales talk.
Buyers are always advised to do their homework and research before making any purchase decision. Whatever promised by agents verbally and not in the signed contract is difficult to confront them afterwards.
Fast forward to end 2018, property prices are at sky high. Shunfu is selling at 1,700 psf, woodleigh at 1,900 to 2,000 psf. GEM was selling only at 1,400 psf, meaning all buyers had made paper gains.
According to one of the comments, buying a 1br at 650,000 and renting at 2,000 per month may not make sense. However, for projects listed in nearby areas above, 1br is selling now at 850,000 to 950,000 and rental is only 2,000 and still declining. Are these buyers dumb or idiots then???
No matter what “future prices” the developers are selling, there will still be buyers in the market who don’t mind buying higher than nearby projects, who don’t care about net return of their rental properties. We can’t expect all buyers to be rational; otherwise, where to find “fire sale” during the bad times?
If gem buyers are considered dumb, todays buyers of new launch (1700 psf for out of place condo) and 2,000 plus psf for city fringe are dumber and dumbest??
On hindsight, gem buyers are pretty intelligent buyers as they would have gained.
New launch prices are set by developers any way. After you commit on a property that is still under construction, you are taking the risk from the developer until TOP. In between whether there is price drop, interest rate hike, market oversupply, or financial crisis, you still have to buy the property at the price as agreed. You are still subjected to ABSD and Seller Stamp Duty. There is nothing to gain for the buyer, except the government and the developer.
Hi Vina, I am glad I did not follow your advise regarding Gem Residences. I recently flipped my shoebox at Gem Residences for 100K profit! The other posts on your blog are mostly insightful and accurate, though.
Good for you. But I wouldn’t use the F word if I were you. IRAS is very efficient in following up with transactions for property gain tax. If your net profit is less than $100k after all the expenses, it may not be justified to hire a real estate tax consultant to defend your case.
Thanks Vina. The property obviously need not be under my own name.
GEM shut off all facilities including tennis courts which plays 2 to 4 pax !!