Here’s a quick overview on Ola Executive Condominium and how you would apply real estate investing research, principles and calculations before buying a unit in Ola Executive Condominium. Executive condominiums like Ola are mainly used for home living only because there are several factors that prevent it from being a unit to invest in.
You have to be qualified to be able to purchase a unit in Ola and you have to wait close to 13 years (3 years construction phase + 5 years minimum occupational period + 5 years to be converted to private property) before you can actually cash in on your investment. Of course, you can sell at MOP but any sane agent will not tell you to do that. In the same time frame, you can go through 4 condo new launches and have the potential to earn more than what you would earn than if you went through the EC route.
Having said that, it will be a perfect unit for people who have no experience in real estate investing and would like to start.
The unit we will be analysing will be a 3 Bedrooms, mid-floor (9 – 12th floor) and will also be comparing it with The Vales, another executive condominium located right across the street 200m away.
This is not a review to tell you how awesome this development is, I will be doing this on a separate page of my website, under the listing section, and I’m sure that by now there are many other websites that are covering it and also not to mention the real estate agents that are stationed at Ola Executive Condominium’s show flat who will have that information readily available for you to look through.
Also, I will only be comparing only one unit from The Vales, which is not the usual practice. For clients interested in Ola Executive Condominium Condo, I will usually compare 2 more units, Treasure Crest (400m behind Ola) and Bellewaters Condo (500m away) or based on which unit my clients want me to do the research on. Interestingly, all 3 are Executive Condominiums which have not yet even passed their minimum occupational periods. So let’s see what the research will show.
So what we will do here is a quick overview of Ola Executive Condominium before proceeding with the financial calculations which will compare closely with other developments (only The Vales for this case study) and this will determine for you if it’s a worthwhile purchase that you should consider.
|Name:||Ola Executive Condominium|
|Expected TOP||14th December 2023|
|Address (Multiple)||70 Anchorvale Crescent|
|Number of Units||548|
|Bedroom(s) Type||2 – 5 Bedrooms Available|
Anchorvale Pte Ltd (A joint venture by Evia Real Estate and Gamuda Malaysia) bought the land at Anchorvale Crescent for SGD $318.89 million or S$576.2 per square foot. The developers for Ola Executive Condominium have a property development presence that spans over Singapore (9 Developments for Evia Real Estate and 19 Developments for Gamuda Malaysia. Feel free to check out their websites for further information as I don’t think they did a good job in setting up their website.
|Developers Involved||Evia Real Estate||Gamuda Malaysia|
|No of Residential Developments in Singapore (Current)||5 + 1 (Ola Executive Condominium)||1|
|No of Previous Residential Developments in Singapore||3||0|
|No of Overseas Residential Developments||0||18|
Comparison between Ola Executive Condominium and The Vales
|Development||The Vales||Ola Executive Condominium|
|Launch Sales Price (psf)||838||1100*|
|Present Transacted Price (psf)||939||1100*|
The Launch Sales Price of 1100 for Ola Executive Condominium is an estimated price. A more accurate price will be updated as soon as it’s available from the developer
Calculation of Growth Rate (For The Vales and General)
No similar units bought and sold can be found for the Vales as the unit is still under the M.O.P (Minimum Occupational Period). So I took the first new sales on 18th July 2015 (#11-XX) and the last new sales on 25th June 2018 (#09-XX) for a 915 sqft 3 bedroom as a gauge. Do take note that these are not from the same block.
My research shows that in 2015, The Vales was transacting for the following 3 Bedrooms unit at Anchorvale Crescent (#11-XX) and (#09-XX), 915 sq ft
Transacting on 18th July 2015 – 838 psf (#11-XX)
Transacting on 25th June 2018 – 939 psf (#09-XX)
Time Period: 35 Months 7 Days (To be rounded down for calculation purposes)
The annual growth rate for The Vales would be estimated to be around 3.91%. Naturally, the more units you use, the more data you have and the longer the timeline, the more accurate you will get and. And as mentioned, I usually use 3 units from 3 different developments surrounding the unit I’m planning to buy to have a better estimate of the growth rate in that area.
The annual growth rate for RCR Region based on stats from December 2009 to December 2019 is 4.30%
Let’s just take this at face value. There are many ways we can discuss if we meet why the growth rate should be higher or lower.
Real Estate Investing Formulas used
Before we begin, note that these formulas are usually used for properties which are already existing, similar in age and size. Ola Executive Condominium will only be completed in 2023 and will be 5 years newer than The Vales by then. See more in the conclusion section
Gross Rent Multiplier
The Gross Rent Multiplier Formula for The Vales for a 3 Bedrooms unit is as follows
GRM = Sales Price / (Annual Rent of Unit)
= 859,000 /(2300 x 12)
= 31.1232 (Rounded to 4 decimal space)
With the following assumptions taken
- Sales Price of 859,000 SGD taken for the unit #09-XX, 3 Bedrooms which was sold on 25 June 2018
- Assumption of Annual Rent of 2300 SGD taken as an average for the year 2019 and 2018 (No stats were given for the floor level. All 3 units were rented at the same price at 2300 SGD/ Month with 2 Units being rented on 1st March 2019 and 1st March 2018, and 1 unit rented on 1 November 2018).
Income Capitalisation Method (Modified)
Using the Income Capitalisation Method Formula, the Cap Rate for The Vales is calculated as follows
Cap rate = Annual Net Operating Income / Market Value
= (Rent Income – Property Tax – Property Insurance – Annual Maintenance Fees – expected Maintenance and Repair – Vacancies Loss) / Market Value
= (27,600 – 1880 – 120 – (300 * 12) – (2 * 2300)) / 859,000
Assuming the following
- Expected Maintenance and Repair is 0
- Maintenance Fee for The Vales is assumed to be 300 SGD
- Vacancy Loss at 2 months
Calculation for Ola Executive Condominium using Cap Rate and Gross Rent Multiplier
Using Gross Rent Multiplier for Ola Executive Condominium
For the assumption of rent for Ola Executive Condominium, there are 2 ways to go about it.
- Ola Executive Condominium 3 Bedrooms is 926 sqft. Using 926/915 x 2300 = 2327.65 SGD
- Using Property Guru and finding out the average rent for a 3 Bedrooms with the following filters used
- Residential Type Condo
- Within 2km to Seng Kang MRT (NE16)
- Less than 1000 sqft
- 3 Bedrooms
We get an average of 2766.67 SGD/ Month
(2600 SGD/Month and 2900 SGD/Month for Kingsford Waterbay (850 sqft and 894sqft and 2 km Seng Kang MRT Station) and 2800 SGD/Month for Riverbank @ Fernvale (947 sqft and 1.7km from Seng Kang MRT)
For the worst-case scenario, let’s use 2327.65 SGD/Month
Using the GRM of 31.1232 to find the sales price for Ola Executive Condominium
Sales Price = 31.1232 * (2327.65 * 12)
= 869,327 SGD (Rounded to whole number)
Using Income Capitalisation Method for Ola Executive Condominium
Market Value for Ola Executive Condominium = Net Operating Income / Cap Rate
= (27931.8 – (300*12) – 1880 – 120 – 4655.30) / 0.0202
= 875,124 SGD (Rounded to whole number)
Where the following assumptions are made
- Maintenance Fee is 300 SGD (To be updated once developer releases the information)
So judging from the calculations above, what would be an acceptable and fair price for Ola Executive Condominium to be sold at? Always remember, the formulas we are using are originally used for existing properties which are similar in age and with rental prices already available. We know this is not the case as Ola Executive Condominium will only be ready in 2023.
In addition, we need to also consider the following points
- Ola Executive Condominium will be 5 years newer (2023 – 2018) than The Vales.
- Ola Executive Condominium will be using smart home technology 5 years newer than The Vales.
- Ola would be a branded residence with Lladro and Eva Armisen (both well known creative artists) contributing works of art to this executive condominium. Also, the Real Madrid Football School will be partnering with Ola to provide soccer and other activities lessons for children to take part.
- Buying a unit at The Vales instead would require renovation cost which can cost upwards of 25,000 SGD to 50,000 SGD and equipment/ appliance cost of 10,000 SGD to 20,000 SGD. If you will be taking the upper end of the renovation cost and equipment cost of buying a unit at The Vales, this is easily an additional 70K worth of renovation cost you are saving if you buy a unit from Ola Executive Condominium.
- The estimated rent we are using is of the worst-case scenario at 2327.65 SGD. What do you estimate the rent will be in 2023 for this area at a location which is close to Cheng Lim LRT station and with the knowledge of the URA Master Plan 2019 which was recently released in December of 2019?
Congratulations! If you’ve read to this point, you are probably really looking at buying a unit at Ola Executive Condominium.
This is just a brief thought process on how I would go through with clients who are interested in buying a unit in Ola Executive Condominium.
If you are looking at buying a 3 Bedrooms unit, I’ve already done for you 33% of the work. You can find out and do the same calculations for 2 other developments which are close to Ola Executive Condominium with similar facilities to get a more accurate Gross Rent Multiplier and Cap Rate for Ola Executive Condominium.
If you are looking at buying a 2-Bedrooms, 3-Bedrooms (Other Layout), 4-Bedrooms or 5-Bedrooms unit, why not send me a WhatsApp message or a quick email via the contact form below and let me represent you in buying a unit
There are several advantages when I represent you in buying a new launch
- NO COMMISSION REQUIRED. Probably the biggest advantage. If I sell this development, the developer pays me the commission, not you.
- You get the second part of my real estate investing calculations for you. Things like how much rent can you expect when this unit gains MOP status. Even if you are not using this for investment purposes, the ability of how much rent you are able to charge when the unit has completed its MOP will determine the sales price and market value of the unit. Not only will you have all these necessary and important information through careful research, and I will also pass you all the floor plans, the images, the pricing and launch price discounts (if any).
- The calculations I’ve done for this post are based on the worst-case scenario. I will also show you further calculations which will be more realistic based on the current market conditions. For example, a more accurate growth rate and cap rate based on a minimum of 3 condominiums surrounding the Seng Kang MRT, a brief summary of what the URA Master Plan 2019 has in store for Seng Kang district and what will be a good price to purchase because real estate investing is making sure we are not overpaying for something the market will not be able to sustain.
- My obligation is only to you. You can look for me for advice for anything real estate related, any time and any day. I don’t work for the developers of Ola Executive Condominium. I have no obligation to sell this development for them and therefore, I have no need to pressure you to buy this unit. If you want to buy, buy, otherwise, we move on and will look out for another unit that is more suited for your needs.
- I am part of a team that is very strong in financial calculations. If you are really looking to buy, my team will find different ways and different means to make sure you will be able to afford it. Throw us questions and problems you are currently facing and which your previous agents are unable to answer, let us impress you with what we can do to get you your unit.
Buying a condominium or EC for this matter for anyone is most probably one of the biggest ticket purchase in their lifetime
Think of me as your friendly and knowledgeable real estate investor friend who’s doing you a favour to make sure the purchase of your new condo is really something worthwhile to purchase or at the very least, something that won’t lose you money in the future.
What are you waiting for? Let’s start!
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