Chip Eng Seng

Yes, revenue and earnings for Junction 9 and 9 Residences will be booked based on POC: percentage of completion and there will be no big jump like Alexandra Central. Reason being that for resi-commercial projects, I think the practice is to use POC. For a purely commercial project, revenue and profit recognition is on TOP (just like ECs and overseas projects).

However, mismatches of revenue/cost are always possible. For eg, all marketing (including agt fees) costs for sold units may be charged early on, or a stamp duty paid to the government may be booked at one go (eg Fraser Centrepoint's results today, indicating that), leading to a slight lumpiness of costs and profits at the beginning or the end of a project.

Hi Summer,

Thanks for the clarification, however, may i ask where did you get the values to ascertain your construction cost for their developments ?

I remember a while ago, the management stated that their strategy for Fulcrum was to take a wait and see approach, hoping that the new MRT announcement will boost activity in the area.

transport.asiaone.com/news/general/story...luding-marine-parade

Well, the new Thomson-East Coast line was just announced. Notably, one of the station "Katong Park" seems to be within walking distance from Fulrcum. Once again, small things like these just goes to show how savvy the management is when selecting sites. I am confident that units of Fulcrum will move in future.

A closer look shows that there MIGHT be an MRT entrance right at the doorstep of Fulcrum ! (see picture in link)

postimg.org/image/q8ddkz5rj/

Hi Beginner 101,

Some figures you can refer to are:

1. this site: www.gia.org.sg/pdfs/Industry/Property/RL...onPrices_Dec2012.pdf

2. this article:

singaporepropertyhighlights.wordpress.co...ng-edge-over-condos/ - old report

3. Tuan Sing’s annual report (for commercial space) page 144. Mention of construction cost of $5,800 psm of GFA, but total cost devpt cost (exclude land) of $9,000 psm of GFA. Note that this is the cost psf of GFA, and not of NSA or NLA. So, for eg, if a site has a GFA of 10,000 sq m, but only 6,500 sq m of NSA (space that it can sell, ie, less all the space used for elevators, escalators, walkway, technical rooms, etc), then you have to calculate this way: supposed cost is $9,000 psm of GFA, then total cost is is $90m. Then take this to divide by NSA of 6,500 sq m, and we get a cost of $13,846 psm, or $1,286 psf.

4. You can regularly read reports on sites won and how much analysts expect the break-even to also have an idea of the estimated cost of construction and other costs. Based on my observation, figures range from about $350psf to $450psf.

The problem with the all the above observations is that it is not very clear what each of them include. There are many other costs which may or may not be included in each set of estimates, like piling costs, architect fees, appliances, landscaping, etc. There are other costs which I also like to include, like loan interest, agent fees and other marketing costs.

It’s through regularly reading all these reports that I then arrive at figures I am comfortable with, but which may differ from those someone else feels are better estimates. As a rough guide, and to be prudent, I usually use $350-$450 psf for construction and other costs for a condominium, and $1,500-$1,900 psf for a commercial project.

As to whether you use GFA or NSA, I usually use GFA if I have little information on a project. But once I get precise figures (ie, NSA) during a project’s launch (use the brochures to tabulate the total space that will be sold), I then adjust the figures accordingly, to reflect psf of NSA.

As always, Google is your friend, and I do most of my research by merely Googling. As a beginner (if that’s what your name indicates), you should use Google to the max, and I hope you will be able to unearth the good profits that lie beneath it.

Dear Sumer

Thank you so much for your detailed explanation and advise, it has been very helpful (:

CES made a convincing share buyback yesterday of 2 million shares at about 8.47ct. This is a vote of confidence and good for existing shareholders, as their share (in %) of the company goes up without a need to do anything.

I made a trip to the site of CES consortium's Fernvale land parcels and confirm that the elevation of the land is substantial. It's about the same level as Tanngam LRT station and this elevation makes the site unique and an attraction to future buyers of the projects.

You can use Google Earth to see the elevated land, or better still, go there to have a feel.