Annualized returns found to beat CPF rate half the time across 20 years span while median holding periods rose to longest on record at 8.2 years.
UrbanZoom Publish Study Of Investment Returns From Every Condo Transaction In Singapore Over Past 2 Decades Annualized returns found to beat CPF rate half the time across 20 years span while median holding periods rose to longest on record at 8.2 years.
UrbanZoom, an AI-focused property analytics startup based in Singapore, has published a study on investment returns for condo property in Singapore. Based on more than 470k transactions filed as caveats since 1995, UrbanZoom found more than 160k pairs of buy-sell sequences across 110k individual condo units.
"Since we know the original purchase price, the subsequent sale price and the transaction timings, we can calculate the annualized returns for any given buy-sell transaction pairs. Coupled with our AI and data know-how, we believe this study represents one of the most complete analysis of both realized and unrealized returns from private property transactions in Singapore." explains Michael Cho, founder of UrbanZoom.
Caption: Distribution of annualized returns (based on capital gains alone) across 2 decades of buy-sell transaction pairs below and above 2.5% p.a. (ie. CPF OA Interest Rate)
Realized Returns Trending Downwards & Longest Holding Period On RecordCaption: Rising holding period and mediocre returns in recent years
The study found that the median holding period has been on the rise, registering its longest on record at 8.2 years in 2019 from a low of 3.6 years in 2009.
Median annualized returns have also drifted downwards in recent years, with only the 9-year period between 2007 and 2015 as well as 2018 managing to beat the minimum interest rate from CPF Ordinary Account (2.5% p.a.). Overall, 63% of home sellers achieve returns above 2.5% over the past 2 decades while 83% of them at least break-even on their original purchase.
For simplicity, this study does not factor in transaction-related costs such as taxes, legal fees, agents commissions, etc. Therefore, the returns calculation represents a best-case scenario.
Freehold & Leasehold Properties Provide Similar ReturnsCaption: Leasehold and freehold condo returns broadly in synch except 2005-2008 period
"We found that returns between freehold and leasehold condos are largely in synch throughout the 2-decades, except for a brief period during 2005-2008 where freehold outperforms leasehold, possibly magnified by a lower holding period of ~3 years versus leasehold's ~5 years." adds Michael Cho.
Enbloc Sellers Achieve Significant ReturnsCaption: Enbloc returns significantly outperforms returns from typical resale transactions
"For the lucky few whose projects are successfully enbloc, we noticed significant outperformance in returns, registering 5%-10% p.a. improvement compared to typical resale transactions. However, enbloc transactions still represent just a fraction of the overall market with some years with little or no enbloc activities at all." comments Michael Cho.
Rental Yield Uplift On Total ReturnsCaption: Total returns sees ~3% uplift in most years after factoring in rental contributions
By utilizing its AI prediction technologies, UrbanZoom is able to infer rental contributions (with median error rates of ~5%) for every condo unit, thereby creating a measure of annualized total returns by combining both capital gain returns and rental yield.
"For property investors who are able to rent out their condo units, they should see a roughly 3% uplift in their total returns, assuming they are able to lease out the property without any vacancy breaks during their holding period. This means that for such investors, their total returns would comfortably beat CPF rates in most years other than the 1999-2005 period." adds Michael Cho.
Majority Of Condo Owners Sitting On Capital Gains"It'd be fair to assume that there's an inherent upward selection bias in realized returns analysis since most home sellers will be reluctant to sell at a loss. As such, we thought it'd be interesting to investigate the unrealized returns all home owners stand to gain if they sell at current valuations." elaborates Michael Cho.
By leveraging on UrbanZoom's auto-valuation tool, ZoomValue (currently used by various banks and startups with a median error of less than 3%), UrbanZoom is able to generate current valuations across over 300k individual condo units with known prior transaction records. As such, unrealized gains/losses can be computed assuming the condo owners sell today at current valuations.
Caption: Distribution of ZoomValues across more than 300k condo units
"We found that while 82% of the condo owners are sitting on capital gains, only 44% of them will be expected to generate an annualized return greater than 2.5% p.a. or the CPF rate, with most of them having purchased their units before 2008." explains Michael Cho.
In terms of specific condo projects, Treasure Crest, Wandervale, Inz Residence are among some of the sizable projects whose home owners are sitting on annualized capital gains of roughly 10%.
Caption: Expected annualized returns (vs year of original home purchase) if sold at current valuation
Full Report For Investment ProfessionalsA full version of this study will be made available subsequently for enterprise customers such as institutional investors, bank analysts and other real estate professionals.
"We hope our study demonstrates how a bottom-up, big-data approach can provide concrete data points and complement the traditional analysis paradigm which often lean more on macro factors." explains Michael Cho.
"Finally, while some may be disappointed by the returns numbers, it's important to remember that we've presented mostly "median" numbers here. If you were to look at say the top 10th percentile, these sellers still make a handsome return, even in difficult years. Clearly, smart timing, when guided by well-informed advice from top professionals, could still make the difference in beating the market." concludes Michael Cho.
]]>First-of-its-kind auto-valuation study of more than 1.6 million HDB, Condo & Landed properties in Singapore.
UrbanZoom's AI Puts Current Combined Value Of All Residential Property In Singapore At S$1.43 Trillion First-of-its-kind study based on ZoomValues (AI-based auto-valuations) of more than 1.6 million individual HDB, condo and landed properties
UrbanZoom, an AI-first property data analytics startup, has published a first-of-its-kind study on the entire residential property market with a bottom-up approach that accounts for every known residential address in Singapore, including 1.2m HDB units, 350k condo apartments and 80k landed properties.
"In 2018, we launched ZoomValue, a highly accurate auto-valuation tool, which has since been adopted in various capacities by banks such as DBS, OCBC as well as startups like MoneySmart, generating more than S$500 billion worth of auto-valuations in the process. Originally just targeting HDB and condo units with median error rates below 3%, we've made a recent breakthrough in our algorithm for landed properties, bringing its median error rate from double-digits to 7%." explains Michael Cho, founder of UrbanZoom.
"Meanwhile, we've also amassed, to our best efforts, a dataset from various public and private sources of every homes in Singapore, be it completed or under construction. Coupled with our ZoomValue AI, we now have the capability to calculate an estimate of the combined value of entire housing stock in Singapore, by running our algorithm unit by unit and adding them all up." adds Michael Cho.
Caption: A map showing the median ZoomValue (per square foot) of every residential postal codes in Singapore
Home Worth DistributionIn aggregate, UrbanZoom's AI values the entire housing stock in Singapore at S$1.43 trillion, spread across S$597 billion of condo apartments (41%), S$525 billion of HDB units (37%) and S$312 billion of landed properties (22%).
In terms of individual valuations, HDB (among 1.2m units) has a median value of S$390k, while condo (among 350k units) has a median value of S$1.3m and landed properties (among 80k units) has a median value of S$2.7m.
"We don't quite see the full 80/20 Rule or Pareto Law here, with the most expensive 20% homes accounting for just 57% (S$818 billion) of the entire housing stock. This is a testament to the success of the HDB program, which has provided a substantial asset base for the middle to lower-income households here." elaborates Michael Cho.
Caption: Distribution of ZoomValues across HDB, condo and landed properties
The study also found that S$57 billion of condo properties are under construction or announced for future sale, adding to the existing condo housing stock worth $539 billion. In contrast, only S$25 billion of HDB units are under construction in the BTO programs, adding to the existing HDB housing stock worth $500 billion.
"From a value perspective, the upcoming supply for condo units are significant, contributing more than 10% of new condo housing, while upcoming BTOs in HDB represents a more manageable 5% new stock coming online." adds Michael Cho.
Macro InterpretationsOne way to interpret the size of the national housing market is to compare against GDP figures. With Singapore's GDP standing at S$491 million in 2018, the S$1.43 trillion housing stock represents a 2.9x housing-to-GDP multiple. In contrast, the US market sees a relatively modest 1.6x housing-to-GDP multiple, according to data from Zillow, a prominent property listing and data portal in US.
"Singapore's high gross savings rate, at 48% vs US's 17%, and high ownership, at 91% vs US's 65%, coupled with the local population's affinity to property, likely contributed to the high multiple of the nation's household wealth being accrued to and manifesting in the form of residential real estate assets." explains Michael Cho.
Another way to make sense of this data is to compare the current value of the entire housing stock against outstanding housing loans. According to the latest figures from MAS and HDB, the combined utilized housing loans from banks and HDB add up to S$245 billion. This represents a very healthy look-through loan-to-value ratio of merely 17%, or a net equity position of S$1.19 trillion.
Neighborhood Intelligence Report & ZoomValue Rank CalculatorIn conjunction with the release of this whole market study, UrbanZoom is launching an enterprise-level Neighborhood Intelligence Report, which takes advantage of the underlying data insights.
"A home valuation can be interpreted as a close proxy to the earning power of the household staying at that property. Given our knowledge of the distribution of nearly every homes in Singapore, we can generate a comprehensive breakdown of the demographics of any given area. Combined with other geo-tagged data such as transport and footfall patterns, we believe our Neighborhood Intelligence Report could help big retailers, landlords, urban planners, etc make more informed decisions." explains Michael Cho.
The general public may also find out how their own home's ZoomValue rank amongst all other 1.6m homes in Singapore from the UrbanZoom.com website.
"Our hope is that new insights can be gained from these new data points, aided by advancement in machine learning and data analytics. Hopefully, stakeholders from big enterprises to individual home owners will benefit as they make more informed decisions with these data, not just in Singapore, but hopefully for other markets in Southeast Asia in the future too as we expand our research to other cities." concludes Michael Cho.
]]>Powered by proprietary algorithms, data and AI analytics, UrbanMatch will provide best recommendations to match genuine home-sellers to home-buyers with authentic, verified and potentially off-market properties, to smoothen the experience for both parties.
First-of-its-kind PropTech “Matchmaking” Service in Singapore – UrbanMatch, launched in Partnership with ERA Realty Network Powered by proprietary algorithms, data and AI analytics, UrbanMatch will provide best recommendations to match genuine home-sellers to home-buyers with authentic, verified and potentially off-market properties, to smoothen the experience for both parties.
UrbanZoom, an AI-driven proptech startup based in Singapore, announced the launch of UrbanMatch today, a first-of-its kind digital “matchmaking” service to provide personalized, recommended homes-for-sale that best fit the criteria of genuine home buyers. A curated, private list of properties posted by verified home sellers and exclusive listing agents, will be sent in the format of automated messages via WhatsApp to home buyers. This screening process driven by smart algorithms – like those used in dating apps – and UrbanZoom’s concierge team, differentiates UrbanMatch from existing property listing portals, where users must manually search for listings and have no practical way of ascertaining whether the listings are genuine. UrbanMatch uses a set of criteria to verify the list of properties on-sale by direct home owners or exclusive listing agents, as well as the home- buying intent of potential buyers.
“Home sellers are often frustrated with ‘window shoppers’ with no genuine interests, while home buyers are put off by duplicate or even fake listings on public portals. This lack of trust leads to time and energy-consuming search periods – very much like poor dating matches,” explained Michael Cho, founder of UrbanZoom.
“UrbanMatch wants to reinvent this process by first verifying the authenticity and intent of both parties, while leveraging on machine learning algorithms like those used in popular dating apps, where we prioritize matches based on an understanding of the individual users' preferences that we collate over time, alongside personal screening by our concierge team. The net effect we hope to achieve is a high signal-to-noise ratio in the matches we make, and ultimately a faster route towards actual transactions,” he added.
Sizeable inventory of verified and exclusive homes-for-saleUrbanMatch has also partnered with ERA Realty Network Pte Ltd (ERA), one of the largest property agencies in Singapore, to supply exclusive properties managed by ERA’s agents. This will provide a sizeable and verified inventory consisting of more than a thousand HDB flats, condominiums and landed homes-for-sale at launch, starting from today.
Mr. Jack Chua, Chief Executive Officer of ERA, commented: “We’re excited about this partnership as it enables us to expand the channels for lead generation by allowing our agents to be connected with genuine buyers. UrbanMatch is unique in creating a safe and trusted community for qualified sellers, buyers and agents who have already been vetted by the portal."
All licensed property agents from various estate agencies are welcomed to post properties-for-sale on UrbanMatch, with the key criteria being: they must be the exclusive listing agent, or in other words, no open listings. This is to prioritise quality over quantity and remove any potential duplicates. Any agents found to have posted fake properties-for-sale in a phishing attempt will immediately be dispelled from the platform.
Higher quality matches between genuine home buyers and sellersHome sellers who value privacy or who are in the early stages of their home-selling journey will also appreciate UrbanMatch as there is no search function for public-facing listings. This allows them to “soft sound” the market privately as their homes are only being sent to a select group of qualified buyers. UrbanMatch also offers home sellers a free ‘UrbanZoom Home Report’ that is generated based on latest available market data and AI analytics to help them determine the value of their property (see Annex for sample of report).
UrbanMatch will check all registered home sellers against the Singapore Land Authority’s Land Titles Registry, to provide buyers with assurance that the property is put up for sale by the legitimate home owners. In fact, UrbanMatch takes a serious approach to prevent scamming, and has committed to pay S$50 to the home buyer if a fake home-for-sale has been reported and proven.
Unique concierge service provides greater convenience for home buyersHome buyers who register with the portal will have a list of curated property options conveniently sent to them at intervals through WhatsApp by an UrbanMatch concierge, who will suggest those that fit the buyer’s criteria. Such immediate text alerts save the buyer time from trawling through multiple sites. The concierge may also include suitable properties from major listing portals at the users’ request.
Home buyers can register their interest on the portal by opting for either option: Pay a deposit that ranges between $100 to $300 depending on their budget –fully refundable anytime upon request, or arrange for a private phone consultation with UrbanMatch’s concierge assistant who will survey the buyer’s requirements and budget.
Home buyers and sellers who require further expert advice may opt to engage a licensed agent via UrbanAgents. Users who prefer to manage the entire process on their own, can also opt for services such as basic documentation, legal conveyancing and home inspection, through UrbanMatch’s partners.
"Public-facing property portals will still play the major role of surfacing listings, but UrbanMatch can be a great complementary tool to use alongside them. While these portals focus on search functionalities and quantity of listings, we choose to focus on quality of each curated match, and with that the benefits of time-saving and privacy. We think users don’t have to pick one or the other, they should try both public portals and UrbanMatch to increase their chances of getting a good match,” said Cho.
For more information on UrbanMatch’s services, please visit www.UrbanMatch.com.sg.
]]>Home sellers can now opt for performance-based commissions
UrbanAgents Raises S$2M to Connect Home Sellers to Top Agents With Commissions Set By AI Home sellers can now opt for performance-based commissions
UrbanAgents.com, a referral platform that connects home sellers to a curated list of agents from various real estate agencies, has raised a S$2M seed round from FarSight Capital, APAC Realty and angel investors.
With this funding, the startup hopes to use AI to set commission guide for home sellers connecting to top agents in Singapore. In general, UrbanAgents only enroll licensed agents deemed to be within top 5% cohort based on past transaction and listing history data.
"Home sellers want one thing - sell their homes at a good price. However, in the traditional model, agents taking a fixed commission rate have little incentive to 'go the distance' in order to achieve a higher price for the home seller." explains Michael Cho, CEO & Founder of UrbanZoom and UrbanAgents.
"Meanwhile, our machine learning team at UrbanZoom have built a highly accurate auto valuation called Zoom Value, which is now being used in various capacities by banks such as OCBC, DBS, as well as other startups like MoneySmart, Ohmyhome, SoReal, etc. We thought why don't we leverage on this and tie it to agents' commissions somehow?"
In this service, currently available for HDB and Condo home owners, the "Target Price" will be pegged to the home's Zoom Value, which is calculated based on an AI model with inputs such as recent transactions, relevant listings and features specific to the unit as provided by the home seller.
"The idea here is that we peg the agent's fees to his performance. If he only managed to sell at a price significantly below the target price, he'll receive only a nominal commission of $1,888. Conversely, if he can help the client achieve a price significantly higher than the target price, he should receive higher commissions for his efforts, up to a maximum of 2.5%." adds Michael Cho.
"Our analysis also shows that the top 5% agents in Singapore alone represent more than half of all home seller clients, at least in the HDB market. Therefore we use that as a criteria for agents who wish to join our program, and in turn, this gives end consumers assurance that they're dealing with an experienced professional."
This service has been soft-launched for a few months, with a number of homes already sold. In fact, current clients have overwhelmingly picked the performance-based option over conventional fixed rate structure.
Wong Toon King, well-known internet entrepreneur and managing director of FarSight Capital, elaborates "Here's an AI-first startup that is using machine learning to drive instant valuation, search and connect best proven agents, and set commission guide for the transaction. Ultimately, we think this data-driven approach drives transparency and better alignment of interest by changing the way agents are being paid and motivated."
Jack Chua, CEO of APAC Realty adds "At APAC Realty, we hope to create a win-win situation – homeowners are assured of great outcomes while our agents can receive a healthy pipeline of clients to offer our professional consultancy services to. In that sense, we see a lot of synergy with what the UrbanAgents team is trying to build."
Note:
Property agents from any licensed agencies interested in joining the UrbanAgents programme may reach out to us via our email: support @ urbanagents.com
For media enquiries, please reach out to us via our email: support @ urbanagents.com
]]>Companies can now augment their own services through API access to UrbanZoom’s proprietary Zoom Value.
UrbanZoom Launches API Access to its AI-enabled Property Auto-Valuation Tool Companies can now augment their services with API access to its proprietary Zoom Value.
UrbanZoom, Singapore’s leading AI-enabled research portal for HDB and condominiums, has announced that it has enabled API access to its proprietary auto-valuation tool, Zoom Value.
Zoom Value is able to predict HDB and condominium valuations with a median error of less than 3% and includes a confidence rating on its accuracy for every prediction, all in real-time. By opening up API access, UrbanZoom hopes businesses can easily tap into UrbanZoom's AI-enabled insights to enrich their services. Since its launch in March 2018, UrbanZoom boasts about S$100 billion worth of Zoom Value searches.
"After we launched, we were pleasantly surprised by the level of interest from businesses who're interested to tap on our technology. There were proptech, fintech startups, financial institutions, etc; each with their own unique use cases of Zoom Value." explains founder Michael Cho. "While our team is proud of the tech we've built, which is outperforming even the best-in-class auto-valuation tools in markets like US & China in terms of accuracy, a good piece of tech is still useless unless people use it. So we'd rather open up Zoom Value to allow more people to access it, be it through partners who use our API or our own website."
To-date, startups and companies across industries like insurance and finance are testing the Zoom Value API. Government agencies like MAS and URA have also started using UrbanZoom’s technology. SoReal Prop and Ohmyhome are two property companies who have already incorporated UrbanZoom’s API and have deployed it in their current product offerings.
“UrbanZoom is fast, convenient and has the lowest margin of error, providing a much more efficient way for valuation,” comments Rhonda Wong, CEO of Ohmyhome.
Jeremiah Ng, CTO of SoReal says “Working together with UrbanZoom allows SoReal to stay on track with the current market indicative valuation and as a guide for our users. We are planning a further collaboration between our two companies to increase the accuracy of the valuation for everyone."
As a further showcase, UrbanZoom also recently released a voice app on Google Home (“OK Google, Talk To UrbanZoom”) and launched a phone hotline, 31388416, where users can now dial in to check on their home's Zoom Value, all built in a matter of weeks using the Zoom Value API.
“While we’re a team of geeks, we don’t forget who we’re serving. We get feedback like ‘Why is your website font so small!’” laughs Michael. “Some of our users aren’t used to computer screens and prefer a number to call. This is why we built the voice app and hotline; it’s a direct response to our users’ feedback ”
Ultimately, we’re here to empower home owners. How can we leverage on our tech know-how to better inform the ‘moms and pops’ with useful insights without overwhelming them with a deluge of data? That is the challenge and our opportunity to make a real difference in this space.
Michael Cho, founder of UrbanZoom ]]>