Monday, November 15, 2010

A Visit To Esparina Residences

I was driving near Sengkang and decide to pop by the new EC, Esparina Residences. The prices were extremely competitive!

As more than 90% were sold, only 2 bedroom units were left. This is a peculiar phenomenon as usually 2 bedroom units were the 1st the be snapped up in any new launches. As this development is an EC, the main barrier is $10,000 household income. I was interested in a 3rd floor 2 bedroom unit.

The prices were really reasonable. A 2 bedroom 829 sq ft unit, morning sun with blocked afternoon sun and facing a garden, it costs $617k before CPF grant of $30k.

TOP is expected to be in 1st quarter 2014. PSF price works out to be $744.

I believe this is a good buy, stay invest unit for a couple of reasons.

1) 5 mins to Buangkok MRT

2) Low financing rates

Based on 20% downpayment (5% cash 15% CPF), loan amount required is $493,600

Monthly installment before TOP is in the range of $157-$659.

Interest rates are assumed to be 1.05%, 80% financing and 40 years loan tenure.

Upon TOP, monthly installment of $1023; after one year certified statutory completion (CSC), $1259

3) Good Investment potential

If one would want to take the chance to rent out the unit upon TOP (illegally), the expected rental is $2k (minimum) after taking into account the $180 monthly maintenance.

That works out to be a 4% yield based on purchase price. The leverage of 5x will mean yield to be 20% based on 20% downpayment.

Even if one stays for 5 years and sell in 2019, the expected price based on The Quartz selling price now is projected roughly to fetch about $750k-$800k, conservatively.

One can earn at least $130k in 10 years time, or an annually compounded return of more than 10% based on my downpayment!

4) Walking distance to 24 hours fair price and Kopitiam. All amenities has been set up, critical mass attained. More amenities will be available.

5) Land parcel near Esparina Residences is up for tender to private development. This would further support its price in the medium term.

Alas! If only I am eligible....


cavalry610 said...


I had just bought Micasa located in CCK last year (p.s.f $670 for a 13th flr unit). Not sure to sell it now or stay in it and rent out my 5 room flat. Reason : Potential crash in US market (probably in 2011 or 2012) which may bring down property price, US may curb inflation rate by increasing interest rate. Any advice?

Sgbluechip said...

Good price, can hold!

Musicwhiz said...

1.08% and 40 years financing? Sorry but this is NOT cheap at all! How long will interest rates stay at this kind of low? What will happen then if rates double or even triple? Your installment will go up to $2,400 or $3,600 per month.

Also, a loan tenure of 40 years is simply too long! Gosh, even 25 years is probably too long, but 40 years is literally paying till you are old....

My recommendation: Stay away from such high-priced apartments. 800+ sq feet at $620K is very expensive IMHO.


Sgbluechip said...

Hi MW, when I say its cheap, I meant it relative to future expected growth in prices and relative price of The Quartz selling prices.

Considering many resale HDB selling above 700k now, new HDB in better locations are selling for 600k and above without grant.

I made the remark cheap, base on the above facts and opinions.

That said, it may be cheap relatively, but still not affordable for some couples.

The rationale of extending the loan tenure to 40 years is to take advantage of low interest rates now and try to beat that low interest rates through investments.

Even if one just leave the money in CPF to grow at 2.5%, one should maximise the loan tenure to earn the interest difference.

Only when interest rates creep up above CPF rates, then should one consider to repay or shorten loan tenure.

By then, their investments and savings would have grown substantially to cover the a good portion of outstanding principal and lower the interest payments.

JW said...


I'm eligible for the Esparina. In fact, it's right behind my parents' HDB. So I probably know that area very very well.

We cannot compare Esparina with resale HDBs, because Esparina is a new launch, and is under HDB rules.

The reasons why I do not want to go with Esparina is

1) Price. A 5-rm HDB costing $326k at Fernvale is much cheaper, yet near 24 hrs NTUC and Koufu. While it is not near any MRT, it is just beside Fernvale LRT, which connects to SengKang MRT. Not only is it cheaper, it is also bigger. The price per square foot is lower.

2) Location. The Fernvale HDB I paid an option fee for is also walking distance to Jalan Kayu. A bus stop distance away is the Greenwich mall that is being built. For drivers, the place is just beside TPE, very near to CTE and SLE.

3) HDB restrictions. Buying an EC entails the usual HDB restrictions. All restrictions are gone only after 10 years. With this consideration, I would think a HDB is more worth it.

4) Anchorvale swimming pool and gym are just beside this HDB too.

cavalry610 said...

I do have the intention to hold too.
Just worry if market crash (drop in property value) couple with hyper inflation (increase in interest rate) could result in : Not able to sell property as you would make a lost, and got a hard time sustaining the monthly loan due to the high interest rate.

Lizardo said...

Believe there are other encumberances for rental:

1. Rental income is taxable. But, there are other deductibles. There will be revenue leakage to tax as a result. If you choose to rent illegally and not pay tax, you're going to get into trouble with at least 2 authorities.

2. How about the property tax involved? The rates are different between a residence and a non-primary residence. 4% vs 10%.

3. The monthly maintenance of $180will likely increase after the 1st year when all the warranties start running out.

4. Get ready for monthly contributions to sinking fund too.

40 year loan is probably not a good idea. The bulk of the monthly instalment payments end up going towards interests rather than paying down the principal.

There are the twin risks of (a) interest rate increases (very real given that current rates are at historic lows), and (b) devaluation of property value given that it is at historic highs? [In the worst case, the equity falls below loan value which will trigger the bank to call in an immediate capital top up to make up the difference?]