Midtown Modern Real Estate Investing Review

Introduction

A review on whether or not Midtown Modern is suitable for families, real estate investors or both. This review is done by researching with URA’s Master Plan 2019 for this particular district and location as well as using real estate investing formulas. Find out if this new launch is right for you

Name:Midtown Modern
District7
Tenure99-Year Leasehold
Expected TOP2025 (Estimated)
Address (Multiple)Tan Quee Lan Street
Number of Units558
Bedroom(s) Type1 – 4 Bedrooms and Penthouses Available
Best forFamily or Investment
Worst Case Scenario Pricing (PSF)
See Calculation Below
$2,715.36 PSF
Average Case Scenario PricingContact Me
URA Masterplan 2019 for District 7 and Midtown ModernDowntown

Mini Conclusion

Always remember the market value of property is highly dependant on the rent you can ask for. If you are in a property where people are willing to pay a higher rent for as compared to another similar property in the vicinity, even if you are not renting out, your property value will naturally be higher.

Also, We will be using Duo Residences, another leasehold condominium that TOPed in 2017. This development will be used as a comparison for the calculations.

Are there any points to take note of that might affect the valuation of Midtown Modern? Here are a few

  • The 2 bedroom unit for Duo Residences is 1012 sqft while the Midtown Modern unit I will be comparing would be 721 sqft.
  • The number of units between Duo Residences (660 Units) and Midtown Modern (558 Units) are quite similar.
  • Not much information for Midtown Modern has been released from the developer yet. Once I’ve received them, you will be the first to know once I receive them. Send me a WhatsApp text or contact form so I can keep you updated.

The next section will be on the calculations using Real Estate investing formulas. If you are interested to know more about Midtown Modern and more specifically on your preferred unit type, feel free to contact me here. A free report will be sent to you once we meet up to discuss your needs, wants and requirements.

If you are interested to see how the calculations are done for investing, you can read further below

Calculations

This is a quick overview on Midtown Modern and how you would apply real estate investing research, principles and calculations before buying a unit in Midtown Modern for real estate investment purposes.

The unit we will be analyzing will be for a 2 bedroom unit, high floor (17th floor) and also be comparing it with Duo Residences which is 400m 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.

Also, I will only be comparing only one unit from Duo Residences, which is not the usual practice. For clients interested in Midtown Modern Condo, I will usually compare 2 additional units or developments or based on which other development my clients want me to do the research on.

Developer Involved

A joint venture (Guocoland and subsidiaries of Hong Leong Holdings) bought over the 124,116.49 square feet site for SGD 800.19 million which works out to be around SGD 1,535 psf. The M at Middle Road was bought at a price of SGD 1,458 psf.

Guocoland

Listed in the Singapore Exchange Securities Trading Limited since 1978, Guocoland is one of the major Singaporean residential developers with properties in Singapore, China, Malaysia, and Vietnam. In 2017, they further expanded into the UK and Australian property markets.

Many of their properties have won awards and accolades since 1996. In 2020 alone, they have won over 14 awards. Do check out the list of awards on their homepage if you are interested to know more. But here are a few of the more notable ones

  • 10th Asia Property Awards (Singapore) 2020 for Best Developer and Best Mixed-use Developer
  • 15th Asia Property Awards 2020 for Best Developer (Asia)
  • 4th EdgeProp Excellence Awards 2020
  • FIABCI World Prix D’Excellence Awards 2020
  • International Property Awards 2020

Also note that Guocoland is a spin off from Hong Leong Group.

Hong Leong Holdings

Hong Leong Holdings was established earlier in 1968 and was one of the pioneers in the residential real estate scene in Singapore.

Not much further information on their website. But their other notable projects are Avenir, Midwood, Penrose, The Jovell, Sage and the Tate Residences.

Developers InvolvedGuocolandHong Leong Holdings
No of Residential Developments in Singapore (Uncompleted)46
No of Previous Residential Developments in Singapore (Completed)3130
No of Overseas Developments118

Comparison between Midtown Modern and Duo Residences

DevelopmentDuo ResidencesMidtown Modern
Tenure99 Leasehold99 Leasehold
Number of Units660558
TOP20172025

Calculation of Growth Rate (For Duo Residences and Central Region)

My research shows the transaction record for the following 2 bedrooms unit at 1 Fraser Street #17-XX, 1012 sqft at Duo Residences was as follows

Transacted at 10 December 2013 – 1,736 psf
Transacted at 24 September 2019 – 2,078 psf
Time Period: 83 Months (To be rounded down for calculation purposes)

The annual growth rate for Duo Residences would be estimated to be around 2.60%. Naturally, the more units you use, the more data you have and the more accurate you will get and. And as mentioned, I usually use 2 other units 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 the central region based on SRX Property Index from January 2011 to January 2021 is 3.29%

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. Midtown Modern will only be completed in 2025 and will be 8 years newer than Duo Residences by then. See more in the conclusion section.

Gross Rent Multiplier

The Gross Rent Multiplier Formula for Duo Residences for a 2 bedrooms unit is as follows

GRM = Sales Price / (Annual Rent of Unit)
= 2,103,000 /(4,500 x 12)
= 38.9444 (Rounded to 4 decimal space)

With the following assumptions taken

  • Sales Price of 2,103,000 SGD taken for the unit #17-XX 2 bedrooms unit which was sold on 26th November 2020
  • Assumption of the monthly rent of 4,500 SGD based on the worst-case scenario (No stats are given for the floor level, lowest was 4,500 SGD/ Month and highest was 6,200 SGD/Month. Both transacted on 1 September 2020).

Income Capitalisation Method (Modified)

Using the Income Capitalisation Method Formula, the Cap Rate for Duo Residences 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
= (54,000 – 6060 – 120 – (400 * 12) – (2 * 4,500)) / 2,103,000
=0.0162

Assuming the following

  • Expected Maintenance and Repair is 0
  • Maintenance Fee for Duo Residences is assumed to be 400 SGD

Calculation for Midtown Modern using Cap Rate and Gross Rent Multiplier

Using Gross Rent Multiplier for Midtown Modern

For the assumption of rent for Midtown Modern, we assume to be SGD 3,206.03 as the 2 bedroom units for Midtown Modern are at 721 sqft.

Using the GRM of 38.9444 to find the sales price for Midtown Modern

Sales Price = 38.9444 * (3,206.03 * 12)
= 1,585,887 SGD (Rounded to whole number)

Using Income Capitalisation Method for Midtown Modern

Market Value for Midtown Modern = Net Operating Income / Cap Rate
= (Rent Income – Property Tax – Property Insurance – Annual Maintenance Fees – expected Maintenance and Repair – Vacancies Loss)

= (45,739.33 – 4603.51 – 120 – (400 * 12) – (2 * 3,206.03)) / 0.0162
= 1,595,068 SGD (Rounded to whole number)

Where the following assumptions are made

  • Maintenance Fee is 400 SGD (Assumed)
  • Expected Maintenance and Repair to be 0

Using the Time Value of Money Formula

Using the Time Value of Money Formula and using the worst-case scenario growth rate percentage of 2.60% and the 8-year difference between Midtown Modern and Duo Residences, the price per square feet we should be looking to pay for a 2 bedrooms 721 sqft high floor unit would be $2,637.69 PSF

Conclusion

Do note that the formulas we are using are originally used for existing properties that are similar in age and with rental prices already available. We know that this is not the case as Midtown Modern will only be ready in 2025.

In addition, we need to also consider the following points

  • Calculations for the expected PSF to pay for the 2 bedrooms units may differ from their other bedroom types, layouts and even floor level. Note that not all unit bedroom types are favourable for investment even if they are the exact same new launch. I’ve done calculations where the one and two bedrooms made losses or barely broke even while their 3 and 4 bedrooms were doing exceedingly well (for a new launch in the west region) or their 1 bedroom, three and four all made money while their 2 bedrooms capital appreciation never moved (for a new launch in the East region)
  • Midtown Modern will be 8 years newer (2025 – 2017) than Duo Residences.
  • The estimated rent we are using is of the worst-case scenario at 4,500 SGD. What do you estimate the rent will be in 2025 for this area with the knowledge of the URA Master Plan 2019?
  • Duo Residences average rent is already transacting at an average of 5,350 SGD in 2020.
  • Midtown Modern will be using smart home technology 8 years newer than Duo Residences
  • Buying a unit at Duo Residences instead would require renovation cost which can cost upwards of 30,000 SGD to 80,000 SGD and equipment/ appliance cost of 10,000 SGD to 15,000 SGD. If you will be taking the lower end of the renovation cost and equipment cost of buying a unit at Duo Residences, this is easily an additional 40K SGD worth of renovation cost you will be saving if you buy a unit from Midtown Modern.

Congratulations! If you’ve read to this point, you are probably really looking at buying a unit at Midtown Modern.

This is just a brief thought process on how I would go through with clients who are interested in buying a unit in Midtown Modern.

If you are looking at buying a 2 bedrooms 721 sqft high floor unit in Midtown Modern, I’ve already done for you 33% of the work. You can find out and do the same calculations for 2 other developments or units which are close to Midtown Modern with similar facilities to get a more accurate Gross Rent Multiplier and Cap Rate for Midtown Modern.

If you are looking at buying 1, 2 bedrooms (other layouts or other sizes), 3 bedrooms, 4 bedrooms or the Penthouses in Midtown Modern, 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.
  • Free Real estate investing report with calculations on your preferred unit will be done for you upon meetup. 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 own stay, I will research and let you know the best floor level and direction facing and layout type within your budget to maximise your future sales price.

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 Midtown Modern. 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 for 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.

What are you waiting for? Let’s start!

Disclaimer

The information provided on this Datacrunch Real Estate website has been compiled for your convenience. All information (including but not limited to the property area, floor size, price, address and general property description) on the Datacrunch Real Estate website is provided as a convenience to you.

This disclaimer informs readers that the views, thoughts, and opinions expressed in the text belong solely to the author, and not necessarily to the author’s employer, organization, committee or other group or individual.

Datacrunch Real Estate does not accept liability for any investment decision made on the basis of this information. This website does not constitute financial advice and should not be taken as such.

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