*Update September 11 2020*
- Added Virtual Tours
- Added Indicative Prices
- Added Newspaper Articles
- Added More Artist Impressions
This is a preview on what to expect for Penrose when it eventually opens to the public. My calculations are usually done when I have more information on the floor size and the asking price of the various available units for the said development.
See the review of Parc Clematis for an example of how the calculations are done.
As we do not have these information yet, we have to make do with what other information we are currently given and based on that, we will know how much the asking price should be and then decide accordingly.
If you just want to know the answer now. It’s 1754.25 psf.
So with a standard 5 percent margin of error at 95% confidence level, simply because no one can predict the future, an appropriate price range of the psf would be between $1666.54 psf to $1841.96 psf
Depending on your risk tolerance and at this price range, you will be buying a development that should be at a good value investment-wise because we are working on the worst case scenario.
If you are interested to know how I come out with this number and the range, please read on.
What we know
Here’s a list of what we already know about Penrose (June 2020).
Penrose will be 99 year leasehold. Same with the Sims Urban Oasis. Calculations-wise, we will be comparing a leasehold development with another leasehold development.
Penrose will be built right next to the Sims Urban Oasis at Sims Drive. And similar to the above point, this would be the best comparison to do, the Gross Rent Multiplier number should be roughly the same.
It is a joint venture with subsidiaries of CDL and Hong Leong.
Land Price PSF
Hong Leong and CDL Developers bought the land at 732 psf.
Here are the assumptions I’ve made regarding Penrose. This will be corrected once we have the full information from the developer and reflected on the upcoming review of Penrose.
I am assuming the floor plan and sizes are the same. If the numbers change when the information are out, I will adjust accordingly in the upcoming review for Penrose.
Type of Buildings and Units Available
It is expected to consist of 17 or 18 floor buildings with 566 available units.
Comparison with The Sims Urban Oasis
Due to the close proximity of Sims Urban Oasis and the multiple similar features between the 2 developments, the Gross Rent Multiplier and Income Capitalisation Method should be as close as it can get.
Transacted Record of the Sims Urban Oasis
Sims Urban Oasis just received their TOP status in 2020. The latest sales record is shown for Sims Urban Oasis
|15 March 2015||1-Bedroom #09-XX||409 sq ft||583,433|
|17 March 2020||1-Bedroom (Same Unit)||409 sq ft||647,000|
In 5 years, it has achieved a gross capital gain of $63,567 with an annual growth rate of 2.07%.
The annual growth rate of the east region is at 2.85%.
We will use the annual growth rate of 2.07% as we are working on the worst case scenario.
The transacted rental records (lowest and highest) for similar units are as follows
|1st April 2020||1,800|
|1st March 2020||2,300|
We shall use the lowest rent receivable at 1,800 SGD per month for the worst case scenario
GRM of the surrounding area
The Gross Rent Multiplier (GRM) for Sims Urban Oasis is calculated as
GRM = Sales Price / (Annual Rent of Unit)
= 647,000 /(1,800 x 12)
= 29.9537 (Rounded to 4 decimal space)
With the following assumptions taken
Sales Price of 647,000 SGD taken for the unit #09-XX 1 bedroom which was sold on 17 March 2020
Assumption of Annual Rent of 1,800 SGD taken for the lowest rent transacted on 1st April 2020
Income Capitalisation Rate
The Income Capitalisation Rate formula is 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
= (21,600 – 2160 – 120 – (300 * 12) – (2 * 1800)) / 647,000
Assuming the following
- Expected Maintenance and Repair is 0
- Maintenance Fee for the Sims Urban Oasis is assumed to be 300 SGD
Calculation for Penrose using Gross Rent Multiplier and Income Capitalisation Rate
As we are assuming the same numbers for Penrose, we can calculate the future value of Penrose by using the worst case scenario growth rate of 2.07% with the knowledge that it is expected to TOP in 2025.
The future Value of Penrose in 2025 with a 2.07% growth rate is
Dividing by the 409 sqft size of the unit, we get the price psf of
With a 5 percent margin of error at a 95% confidence level, we get a price range of
$1666.54 psf to $1841.96 psf
My thoughts on the Market Value of Penrose
Let me stress that one transaction record does not determine the GRM and ICR of the development. I try to work on 9 other transactional records from 3 different developments for a more accurate number.
And also that we do not know the floor size, price and floor level of the upcoming Penrose. All of this, which will play a factor in the real estate investing calculations.
The upcoming review of Penrose, when we have more information from the developer, will further determine if it’s a good investment for your next home.
Available Photos for Penrose
Available Videos for Penrose
Virtual Showflat Tours
Congratulations! If you’ve read to this point, you are probably really looking at checking out the show flat for Penrose and knowing more about this upcoming development at Sims Drive.
This is just a brief thought process on how I would go through with clients who are interested in buying a unit in Penrose
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.
- Free Real estate investing report with calculations on your preferred unit will be done for you upon meet-up. Not only will you have all the necessary information, I will also pass you all the floor plans, the images, the pricing and launch price discounts (if any).
- If you are looking to buy a unit for investment, I will research the best unit type this condo has to offer to provide you with the maximum returns from your investment money. If you are looking to buy for home living, I will research and let you know the best floor level and direction facing to get to maximise your sales price. Basically, I will study these units and provide you with the highest chance of increasing the future capital appreciation potential of your unit
- 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 Penrose. 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 preferred unit
Buying a condominium (especially a new launch) 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.
If you like this article and wish to be informed of the latest updates via Facebook on Penrose Condominium on things like when the showflat launches, the available starbuy units, early bird discounts, floor plans and floor sizes, please like my Facebook page. I will send out the information there once I have them from the developers
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If you prefer me to send you the information personally with the real estate investing calculations once I have the numbers. Please fill up the form below so that you will get first-hand information on whether or not Penrose Condominium will be an asset for your real estate journey.
Looking forward to serve you soon!
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