First Principles Thinking, Durians And Why New Sales Momentum Continues. Weekly Sales Data From 26th to 2nd May 2021

Welcome to our weekly update, where we share with you the latest happenings in the first-hand market. As usual, the reason why we do this is simple. The better you understand demand, the greater you are in picking out properties with higher capital appreciation.

However, do take note that the weekly update is a guide for your reference only. Do not be distracted by all the condos on the list. It is far more important to understand the why before looking at all the “what”. This decision-making process will ensure that you acquire a property that fit your requirements. And never live a day regretting your selection.

No Pictures Of The Best Selling Development This Week. Rather, I Will Talk About Durians And First Principle Thinking Instead.

1) WEST ZONE – 82 units

One North Eden – 3 units
Ki Residences – 6 units
Forett @ Bukit Timah – 4 units
Twin VEW – 3 units
Daintree Residence – 3 units
Midwood – 5 units
Parc Clematis – 8 units
Normanton Park – 21 units
Dairy Farm Residences – 4 units
Whistler Grand – 4 units
Mayfair Modern – 1 unit
Mayfair Gardens – 1 unit
Clavon – 11 units
Kent Ridge Hill Residences – 7 units
Verdale – 1 unit

2) CENTRAL ZONE – 48 units

Peak Residences – 1 unit
Kopar at Newton – 2 units
The M – 2 units
35 Gilstead – 1 unit
Avenue South Residences – 9 units
Fourth Avenue Residences – 6 units
Royal Green – 2 units
Juniper Hill – 1 unit
Fyve Derbyshire – 1 unit
Pullman Residences – 3 units
The Tre Ver – 1 unit (Bounced Out Unit)
Stirling Residences – 6 units
The Landmark – 6 units
One Pearl Bank – 3 units
Verticus – 1 unit
Uptown at Farrer – 1 unit

3) NORTH ZONE – 37 units

Jadescape – 5 units
Riverfront Residences – 8 units
Sengkang Grand Residences – 5 units
The Florence Residences – 9 units
Affinity at Serangoon – 7 units
Park Colonial – 1 unit
The Garden Residence – 2 units

4) EAST ZONE – 46 units

Treasure @ Tampines – 16 units
Amber Park – 12 units
The Antares – 4 units
Penrose – 3 units
Nyon at Amber – 2 units
Tedge – 1 unit
The Jovell – 2 units
One Meyer – 2 units
Coastline Residences – 2 units
Parc Komo – 2 units

5) EC CLUSTER – 24 units

Parc Central Residences – 8 units
Parc Canberra – 1 unit
OLA – 11 units
Piermont Grand – 4 units

6) LUX CLUSTER – 47 units

South Beach Residences – 7 units
Irwell Hill Residences – 8 units
The Avenir – 2 units
Riviere – 4 units
3 Orchard by the Park – 1 unit
Midtown Modern – 1 unit
Wallich Residences – 2 units
Leedon Green – 7 units
Meyer Mansion – 2 unit
Marina One Residences – 2 units
Martin Modern – 1 unit
The Reef at King’s Dock – 4 units
Boulevard 88 – 3 units

Sales Momentum Going Strong Without New Supply This Week

Although there were no new launches this week, the sales momentum for new homes remains strong, with 284 units sold. At first glance, you may think that there are still many condos available in the first-hand market. After all, the weekly list is not that short. However, some of them are fast approaching sell-out status. Currently, there are about 27 developments with less than 30 units left. If the sales momentum continues, we should see a significant number of sell-out developments this year.

Additionally, interest in the luxury segment has been growing. I have mentioned this in my first pandemic article, where I shared my thought process of where the property market will be heading. How I put forth this analysis back then is by adopting first principles thinking. In this thought process, I dissected what affected market demand and broke it down into parts. Suppose you had a clear understanding of how the various parts affect property prices; you would know where it will be heading. However, if your thought process relies on analogy, you would assume that the property market will collapse as we had back in 2003 due to SARS. After all, wasn’t 2020 one of the worst recessions in Singapore for the last 55 years?

We Have A Recession And Property Prices Are Creeping Up. Illogical Isn’t It? Well, That Is If You Are Using Analogy To Reason. Photo by Mike Enerio on Unsplash

What Is First Principle Thinking

To give you a better understanding of first principles thinking, I will use the example of the durian. Most of us love this thorny fruit in Singapore, and there are all kinds of varieties. From D24 to Mao Shan Wang and Black Gold, prices can range significantly. While many of us are focused on the fruit, we have little understanding of the durian tree. Do all these varieties grow well in the same soil? Does one need more water or care than the other? Will climate change affect the sugar level and hence the taste of the fruit? As such, we may have little understanding of the true reason why some varieties cost so much more than others. Hence, for a durian farmer to succeed, he must understand the correlation of all these facts. After all, it takes an average of about 9 to 12 years before the tree can bear fruit.

Thinking By Analogy

On the other hand, we can skip the understanding of this correlation and use thinking by analogy. However, there are serious flaws when you reference your analysis based upon previous assumptions. For example, your next-door neighbour is a very successful durian farmer all these years. He has been growing Mao Shan Wang and manages to increase his harvest year after year. Instead of planting soya beans, you then decided to follow in his footsteps by setting aside a portion of your farm to grow some trees. Since you are directly next door to him, the climate, soil and other conditions should be similar right? However, after the trees successful bear fruit, the quality of your durians are a far cry from what your neighbour has. So what exactly went wrong? Why can’t you get the same results as your neighbour?

If you have adopted first principles thinking, you would have realised from day one that the content of your soil is slightly different from your neighbours. Although history may repeat itself, the circumstances surrounding that history may be completely different. This is why some analysts and the mainstream media has been so puzzled over Singapore’s strong property demand. They cannot correlate what is happening today regarding what happened in the past. Yes, history does repeat itself, only provided all the influences remain the same.

The Durian Market Is No Different From Real Estate

The durian market is no different from the real estate market. Hence, it is important to adopt First Principles thinking when it comes to an understanding of where the market is heading. As the pandemic rages on, I only know that Singapore will continue to cement its position as the safest country to be in the entire world. Additionally, Joe Biden’s recent corporate tax policy may affect some companies. If you are a business owner in the US that caters to a worldwide market, it may not be necessary to remain in that country. There are plenty of choices around the world you can shift your operations. Of course, the best country would need to be safe, have good infrastructure, easy to do business and a highly trained workforce. And of course, a corporate tax rate that is not too high. Now, which country would you think of first?

Article contributed by Jerry Wong.

Jerry Wong is a realtor with Propnex Realty. He loves coffee, cookies and condos and has been in real estate for ten years. Most importantly, he loves connecting people to properties and gets enormous satisfaction when they acquire their dream home. Or making well-informed decisions that see their assets grow. Book a video call appointment, and Jerry will share with you the following.

  1. How certain factors affect real estate prices. Why some condos can make a million dollars while others can lose that same million.
  2. Why timing is not the most important thing. Because some people can buy the same condo at the same time, but one end up making $100k to $200k while the other suffers losses of the same amount!
  3. Understanding your requirements and craft a solution for your real estate needs. Be it in asset progression, tax planning, financial calculations, rentals, sales, etc.

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