| by Kenneth Chase | 1 comment

Ep #40 What Will Happen To Properties After Stock Prices Crash

Hi welcome to Property Soul podcast long time no see originally I have decided to go for six
months break from this youtube channel but because last night the stock market
crashed so a lot of people email me and ask me what will happen to properties so
I decided to make this video to answer all your questions at one go last night
S&P 500 and Dow Jones plunged almost 10% this is the worst day since 1987 so
what will happen to properties then if you are conservative people like me and
then you’ve been following my blog you won’t be rushing to the new launch and
buy new units and you would be stocking up on things I mean not rice or
toilet paper or instant noodles but stock up on your cash safe haven like
gold or buy some inverse ETF so you and I are doing fine a lot of people are
saying that I’ve been pessimist I have been talking about a possible market crash or a bear market but that’s not true for retail investors like us
honestly anything that happen to market is not under our control so what
we want to do is we don’t care about the developers the agents or the banks we want to cut our loss to the minimum after years of discipline saving and
prudent investment whenever there is anything happen the most important thing is to
protect our capital if you tell me that I cannot even protect my capital no
matter how attractive is the return I’m not interested in it as they say
everybody will suffer in a market crash but there’s a level of difference the
degree of difference just like you may be asked to retrench the staff in your
department but you don’t want to be the one to be retrenched if you cannot do
anything if the value of your home decline but you don’t want to be the one
that the bank asks you to sell your unit when stock prices plunged investors sell
whatever they can to cover losses and margin calls what will happen to the
property market then among the property sectors commercial properties will
suffer the most especially the industrial properties in Singapore manufacturing
and export have been on the decline for quite some time
money printing has helped a booming economy and inflation of asset prices but
consumers don’t benefit from it they are not spending that’s why there is over
production with coronavirus the manufacturing sector will suffer more
according to knight frank auction in 2019 the number of mortgagee sale industrial
properties increased thirty four point two percent and you will see this trend
continues in any auction you will see that there will be a majority of the
auction properties they are factories or industrial properties another reason is
since 2012 there are courses in the market teaching agents how to
market industrial or commercial properties and there are amateur buyers in the market buying
factories and commercial properties they know nothing much about so you will see
more and more industrial properties under mortgagee sale what happen to the
retail sector under budget 2020 the government announced said that
15 percent tax rebate for the retail sector but it is up to the
landlords when how and whether they refund the 15 percent rent rebate to the tenants it depends on their eligibility under coronavirus the
shopping malls in tourist areas will suffer the most
and then with this stock market crash people don’t have the mood to spend and
dine so the retail shops will suffer more
so you’ll see you see a lot of strata title retail shops in the auctions and
there will be a lot of fire sales what about the office sector the grade A
offices are not doing well after M+S sold off their DUO Tower last July and
with market uncertainties the companies they are not hiring
they are restructuring and they are downsizing they don’t need that much office space they will be moving to a smaller office and they’ll be moving out of the
CBD if you are looking for good buys in the commercial sectors do take note of
the high vacancy rate and the supply in the pipelines in the coming years
there is still lots of supply in the market and you may have difficulty finding
a tenant unless you are a manufacturing company that’s looking for factories to
rent or you have your own business to run in a retail shop or you can occupy
some office space do take note of the difficulty in finding a tenant and
higher vacancy rate and the plenty of supply in the coming future the
last thing we look at is the residential market would there be a lot
of undervalued properties and fire sales in the residential properties
I mean there are two markets over here the first one is the homeowners who are selling their own homes and the second one is the property investors market for home
owners it is quite unlikely they’ll let go of their own home at a big loss because
it’s the last thing that anyone will do is to sell their own house unless they
really lose their job or unless that their business fail and they need
the cash or they cannot pay the bank and thanks to TDSR
introduced in 2013 there are less people who overleveraged on their
properties unless they really buy before 2013 before introduction of TDSR the
second one is the property investors market and these people if they’re over
committed they may want to cut loss before it is too late and especially
about the uncompleted projects the banks may be tightening the loans again for those
approved loans for uncompleted properties like what they have done in
2009 if these people are unable to top up they
may have to let go their properties then there may be good buys in the
subsale market for uncmpleted projects you may be able to find a very
undervalued property in the market but after the caveat is lodged people
will see your transaction as the benchmark price for the whole project and
then they may be able to buy lower than yours so do take note that after you buy
a very good undervalued property the prices may still continue to drop so the good question over here is whether residential market would be like in 1999
when there’s a deep V-shape for the downturn or whether it will be a very
prolonged deep U-shape like what we have seen in 2002 to 2006
so do prepare both whatever that you are buying in this market make sure
that it is affordable to you and you have holding power because we might have
to endure the downturn for quite a long time that’s what I have to say today I
hope you enjoy this video and please give me a like and subscribe to my youtube channel
I hope to see you again soon

1 Comment


Mar 3, 2020, 1:20 pm Reply

awesome content

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