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Research on how AMO Residence will perform as an investment property

Jun 17

Many have been anticipating AMO Residence since it was first taken by UOL Group, Singapore Land Group and Kheong Leong Company in May 2021 in a bid against 14 other bidders. It is possible that this is a play about the location of the site in Ang Mo Kio for Singaporeans. Spanish has the same meaning of "love". AMO Residences is an excellent choice for young couples as well as investors, because the developers believe they will love it.

Family Friendly Features

After looking through the location and the amenities surrounding AMO Residence, we have discovered some family-friendly features in AMO Residence. These include the proximity of primary schools, avenues to experience nature and the outdoors, and lifestyle options.

The first thing parents of young children will be watching for is the primary schools within the area. This is why it matters. Parents of young children must take their children to primary school after they turn six under the Compulsory Education Act. The entry point is determined by the country of the origin (Singaporean Citizens), and the distance between the residence (within 1km, then 2 to 1-2 km). Priority will be given to a Singaporean citizen whose child lives within 1 km from the school. This process is familiar for parents who have been through it previously. There is more information on the MOE website in case you're planning on having children in the near future, or in the case of children younger than six years old.

There three primary schools within one kilometer of AMO Residence. CHIJ St. Nicholas Girls' School, Ai Tong School, and Ang Mo Kio Primary School. Singaporeans know that, while all schools are great however, there are some that are more popular than others. Around AMO Residence, there is a substantial number of popular schools that parents might like to send their children to. AMO Residence is located within a distance of about 1-2km from Catholic High School, Anderson Primary School, and Teck Ghee Primary School. Mayflower Primary School is also within a short distance. Jing Shan Primary School is only a short distance away.

The options are numerous and the walking distance would make life easier for parents who are working. The proximity of a school to your home can take the pressure off of you and reduce your anxiety. This also means you spend that you spend less time in rush hour traffic while taking your child to school. Parents often think of their child's education as the most important factor.

There are numerous amenities close to the couple's preschool children. There is a child care center within walking distance and a close 5-star play area for children called Shangri-la Playground. Parents are becoming aware of the dangers of digital addiction. AMO Residence is close to Bishan-Ang-Mo Kio park, and also Lower Pierce Reservoir. These natural outlets can help parents and children get rid of the digital clutter on a regular basis. Fun fact: AMO can also refer to "fish-hook" (in Italian). (Fishing isn't allowed in Bishan-Ang Mo Kio park or Lower Pierce Reservoir)

These family friendly features are great for couples with or who are planning to have children. But what's it worth for parents? Can you travel to work via public transportation? AMO Residence will be located between the new Mayflower MRT station and the Bright Hill MRT Station (Thomson-East Coast Line). It's only a five-minute walk from your house and is far from the station. If there aren't any delays, AMO Residence should reach TOP by the time the Thomson-East Coast Line is completed. This would be an ideal place to make accessibility.

AMO Residence appears to bring the most value to the table for younger families. If your parents are living in the same community this could be an advantage. Investors could profit from the advantages of this property, which is appealing to young families. In this case it could be simpler to move on to larger homes. Families who want more space and comfort, while still having the option to increase their family size could be more interested in apartments that have four or five bedrooms. AMO Residence offers 45 units for 4-Bedders as well as 22 units for 5-Bedders. This is only one of the 372 units that are available in the project. Four and five bedders will represent 18% of the units.

The Singapore Census 2020 could also suggest smaller average family sizes. This could mean that condominiums of mid-sized sizes will become more popular in the future. If a smaller size family mean anything for the property world, it would be that 3-Bedders will be considered to be a more efficient option. All the variations of rooms with 3-Bedders (with and without study) comprise a total of 118 units, which represents around 32% of the all units in AMO Residence. This could be an entry point for those seeking an affordable alternative.

Relative Performance to Other OCR Options

After identifying the demographic that is most likely to take advantage of AMO Residence's great value We now examine AMO Residence's performance in comparison to other OCR alternatives. For starters, AMO Residence is located in D20 (OCR) and is priced at a cost of $1,118 psf per acre. This is technically higher than usual OCR land costs. However, it's geographically more close to the center of Singapore and has decent facilities nearby.

In the end this is a reasonable cost for the area despite being priced on the higher side. When you take into account the costs of construction, logistics and profit margins accounted for buyers can expect AMO Residence to come on the market at an approximate cost of $1,800 to 2,000. Prices are not yet set and could not reflect actual prices that developers will set. PropertyGuru has listed the possibility of a quantum range of $795,000 to $3,084,900 and a psf range of $1,327 - $2,200.

A different OCR new launch that buyers may be interested in is North Gaia that is in D27 (OCR). It is available in a quantum range from $1,140,000 all the way to $1.999,000. It has a quantum range between $1,140,000 and $1,999,000. 170 of the 446 units have been sold. North Gaia is now at 27.6 percent. Comparatively with AMO Residence, the psf and quantum range is lower but at the same time it is farther from central Singapore. The prices are reasonable for North Gaia given that their property cost was about $576 per sq ft / per. This is almost 50% of the AMO Residence's land cost.

Let's take a look at the performance for the new sales of apartments and condominiums in D20, D27. This will be compared to the OCR average of the performance of sales made by new buyers.

D20 sales are more expensive due to the fact that it is located further away from the center of the city. It also had the highest growth rate among the categories we're comparing. OCR new sales averages have increased at a faster rate, particularly after the year 2019. However, D27 has only recently experienced a huge bump in cost after 2021. The price trends show that OCR prices for new sales have been increasing. This could be due to rising costs that push up the prices of property all over the island. Between D20 and D27, D27 has more potential for appreciation, but it could take a longer time to realise the potential. Northern corridors have been slower on the growth side for a considerable period of time. They'll need to adjust the market before they can ever be able to command a premium in comparison to other areas.

Let's now examine the results of reselling for D20, D27, and OCR averages. This is in order to examine the performance of private properties on exit thereafter.

D20 remains the top-performing product when it comes to growth rate, having achieved an impressive 45% increase in the last seven years. Incredibly, the rate of growth for resales of D27 is greater than the OCR average. The value effect might be the reason behind this. D27 sales are more likely to be able to see gains in the resale market because they are sold at a an lower cost than the OCR average. But, D20 appreciation is gaining momentum and the value effect is even more significant. This shouldn't come as a surprise. Different areas may not appreciate at the same rate. District 20 has seen an increase in growth that was accelerated due to the central location and the development of amenities.

 

Calculations for AMO Residences

We will now run quick affordability calculations for people who are looking to determine if they can afford the house at a glance. We will estimate the 3-Bedder + Study (1044) sqft, 4-Bedders (1292qft) and 5Bedders (175 sqft). We will take a loan-to-value of 75%, with the loan term of 30 years, and an interest rate of 2.45%. CPF OA can only provide 20 percent of the 25 percent cash downpayment

Since the price ranges have not been made public, we'll base our calculations on a psf range of $1,800-$2,000. If the monthly income is not more than 30%, we will assume that the mortgage and maintenance fees should not exceed 30 percent. We will take the average monthly maintenance fee of $300. After paying the down payment we'll assume that you require a minimum emergency cash reserve of three months of your income

While this table could appear scary, it's an estimate of the amount you'll need in order to be able to pay for the house and also keep your hands tidy during the downturn in the economy and recession. If you decide to purchase properties below this amount, your lifestyle expenses may be affected. To stay solvent, you will need to control your money well.

For a quick summary, for a 3-Bedder + Study, a comfortable income for a couple should be a combined income of approximately $20,000 with cash/CPF savings totalling $550,000. If you add a bedroom you would need to earn an additional $4,000 as a couple and save around $150,000 to feel satisfied with the purchase.

 

Closing Thoughts

Although this is not an exhaustive review of AMO Residence we hope it will help you determine whether you're the best buyer for the property. You will also need to decide if the property fits within your financial budget. AMO Residence is most attractive to young couples or expecting families

AMO Residence is situated in an area of rapid growth and offers many facilities that are safe for children. We would also like to provide cautionary advice for those planning to enter the real estate market this year. Rising interest rates and recessionary fears are causing property prices to increase and could make the market slow down.

If you choose to enter the market to stay on your own or for to invest, go in with your eyes wide open. You must have a high-standard thorough analysis of the market as well as your shortlisted properties.