Here’s a quick overview on The M and how you would apply real estate investing research, principles and calculations before buying a unit in The M for home living and/or real estate investment purposes.
The unit we will be analysing will be a 1 bedroom + Study Unit, preferably lower floor (3rd – 5th floor) and also be comparing it with Duo Residence which is 700m 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 The M’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 Duo Residence, which is not the usual practice. For clients interested in the M Condo, I will usually compare 2 more units (Concourse Skyline (1.1km away) and South Beach Residences (500m away)) or based on which unit my clients want me to do the research on.
So what we will do here is a quick overview of The M before proceeding with the financial calculations which will compare closely with other developments (only Duo Residence for this case study) and this will determine for you if it’s a worthwhile purchase that you should consider.
|31st March 2024
|30 Middle Road
|Number of Units
|1 – 3 Bedrooms Available
WingTai Asia bought the land at Middle Road for SGD 492 Million which works out to be around SGD 1458 psf. The developer for The M is Wing Tai Holdings Limited which has a property development presence that spans over Singapore (3 Developments), Malaysia (6 Developments), Hong Kong (6 Developments) and China (1 Development). Apart from The M, its other residential developments include Le Nouvel Ardmore in Orchard, The Crest at Prince Charles Crescent and the Garden Residence at Serangoon.
|No of Residential Developments in Singapore (Current)
|No of Previous Residential Developments in Singapore (Future)
|1 (The M)
|No of Overseas Residential Developments
Comparison between The M and Duo Residence
|Launch Sales Price (psf)
|Present Transacted Price (psf)
The Launch Sales Price of 2400 for The M 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 Duo Residence and General)
My research shows that in 2013, Duo Residence was transacting for the following 1 Bedroom + Study unit at 1 Fraser Street (#03-XX), 689 sq ft
Transacting at 9 December 2013 – 1777 psf
Transacting at 21 May 2019 – 1955 psf
Time Period: 65 Months 13 Days (To be rounded down for calculation purposes)
The annual growth rate for Duo Residence would be estimated to be around 1.76%. 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 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 5.42%
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. The M will only be completed in 2024 and will be 7 years newer than Duo Residence by then. See more in the conclusion section
Gross Rent Multiplier
The Gross Rent Multiplier Formula for Duo Residence for a 1-bedroom + Study unit is as follows
GRM = Sales Price / (Annual Rent of Unit)
= 1,347,000 /(3450 x 12)
= 32.5362 (Rounded to 4 decimal space)
With the following assumptions taken
- Sales Price of 1,347,000 SGD taken for the unit #03-XX 1 Bedroom + Study which was sold on 21 May 2019
- Assumption of Annual Rent of 3450 SGD taken as an average for the year 2019 (No stats given for the floor level, lowest was 3400 SGD/ Month and highest was 3500 SGD/Month, both rented on the same date 1 December 2019).
Income Capitalisation Method (Modified)
Using the Income Capitalisation Method Formula, the Cap Rate for Duo Residence 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
= (41,400 – 4368 – 120 – (390 * 12) – (2 * 3450)) / 1,347,000
Assuming the following
- Expected Maintenance and Repair is 0
- Maintenance Fee for Duo Residence is assumed to be 390 SGD
Calculation for The M using Cap Rate and Gross Rent Multiplier
Using Gross Rent Multiplier for The M
For the assumption of rent for The M, there are 2 ways to go about it.
- The M 1 Bedroom plus Study unit is 527 sqft. Using 527/689 x 3450 = 2638.82 SGD
- Using Property Guru and finding out the average rent for a 1 Bedroom plus study with the following filters used
- Residential Type Condo
- Within 1km to Bugis MRT (EW12)
- Less than 750 sqft
- 1 Bedroom + 1 Bath (Study option not available)
We get an average of 2800 SGD
(2700 SGD/Month for Parc Sophia (474 sqft and 960m from Bugis MRT Station) and 2900 SGD/Month for Sophia Hills (450 sqft and 970m from Bugis MRT))
For the worst-case scenario, let’s use 2638.82 SGD/Month
Using the GRM of 32.5362 to find the sales price for The M
Sales Price = 32.5362 * (2638.82 * 12)
= 1,030,288 SGD (Rounded to whole number)
Using Income Capitalisation Method for The M
Market Value for The M = Net Operating Income / Cap Rate
= (31665.89 – (300*12) – 3199.90 – 120 – 5277.65) / 0.0188
= 1,035,436 SGD (Rounded to whole number)
Where the following assumptions are made
- Maintenance Fee is 300 SGD (To be updated once developer releases the information)
Using the Time Value of Money Formula
To show you how I use the Time Value of Money Formula to calculate the price per square feet we should be looking to pay for a 1 Bedroom + Study low floor unit in 2021, do contact me via Whatsapp or at the contact form below so I can share with you my findings or you can wait for the review to come out for a more accurate number.
You can see how I use the same real estate investing formulas to calculate for Queens and Queens Peak Condominium at Commonwealth. Using these formulas can show you whether or not the property or new launch sales price is justifiable.
Congratulations! If you’ve read to this point, you are probably really looking at buying The M for your future residential property for investment or for your homestay. If I’m right, I would like to be considered as your representative real estate agent to purchase your next home.
There are several advantages when I represent you in buying a residential property (Resale or New Launch)
- No commission required to be paid by you for Private Properties (Resale or New Launch). Probably the biggest advantage. If I represent you, either the developer or the owner pays me the commission, not you.
- A free real estate investing report with calculations on your preferred unit will be done for you upon meetup. For new launches, I will also pass you all the floor plans, e-brochures, 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 your 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. If the calculations are not favourable, at least you will know how much extra you will be paying for. Then you will know whether or not it is worth it to purchase.
My obligation is only to you and the real estate investing formulas I use are not some secret formulas that only I possess. These real estate investing formulas are widely available and used by real estate investors all over the world and are taught at the world’s top universities teaching real estate investing.
You can look for me for truthful and honest advice for anything real estate related, any time and any day. I don’t work for anyone else and have no obligation to sell this development for them and therefore, I have no need to pressure you to buy anything. 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 next home.
Buying a condominium (especially for a new launch) for anyone is most probably one of the biggest ticket purchases 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 me know how I can help you
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