MOAT Analysis — Exit Audience

When buying a new home, a common advice you might hear is that you will need a good exit plan. It is always good to keep the end in mind. For most people, their first home is certainly not their last. Selling the first home for a decent profit would dramatically help your property ownership journey down the road.

The MOAT Analysis looks at 10 specific aspects of the property you have in mind. You can find out more about the Volume Effect, Region Disparity Effect, Rental Demand, Quantum Effect, Parents Attraction Effect, MRT Effect, Exit Audience, District Disparity Effect, Landsize Density Effect, and Bala’s Curve Effect in their respective links. 

Exit Audience is what we will be explaining today. A key part of a good exit strategy is knowing who your audience is. Are they HDB Upgraders? Or other Private Property Owners (PPOs)? This will be an important step in determining future buyers and the future value of your property.

As we always say, haste makes waste. If you are in a rush and make a hasty decision on buying or selling your property, mistakes can be made. And these are expensive mistakes at that, which may stick with you for more than just a few years.

In this article, we will be covering what Exit Audience means in PLB’s MOAT Analysis and why it matters to people who are looking for a new home in the Condominium and Apartment segment. We will also provide you with some examples and comparisons to see the MOAT Analysis in action.

 

What is Exit Audience in the MOAT Analysis?

To get the ball rolling, what exactly do we mean by Exit Audience in the MOAT Analysis? Conventionally, an exit audience is simply a coherent demographic to which you can potentially sell your property to. An example of this would be expats, young parents, or retirees. Knowing who you are selling to helps you position yourself and your expectations for success when you eventually sell your home a few years down the road.

An important point to keep in mind, is that Exit Audience is intrinsically tied to what is appealing about the property in mind. Is it the location? The amenities? The Price? Different demographics are attracted to different aspects of the property. This might overlap sometimes, but each demographic will have its own priorities. For instance, young parents might be a lot more concerned about schooling options nearby and of the reputation of nearby schools.

This is a key part of crafting an excellent exit strategy. The more appealing your property is to multiple demographics, the more likely it is to do well in the future.

So from a technical standpoint, the exit audience may differ from property to property. This depends on the neighbourhood of the said property, and what kind of demographics live in that area. It depends on the location.

In the case of PLB’s MOAT Analysis, we look specifically at HDB dwellings in the vicinity of the property you have in mind. The Exit Audience on the MOAT Analysis refers to the HDB Upgrader audience. The influence of the HDB Upgrader Audience can also be found through the public or private ownership history in the transaction details of caveats lodged. As to why this matters, we will explain that in the next section.

 

Why does Exit Audience Matter?

The HDB Upgrader demographic is the key Exit Audience we use in the MOAT Analysis. It matters because this is the primary audience that drives growth in the Condominium and Apartment segment. HDB residences account for approximately 78.3% of all housing in Singapore.

As you can see, this is a significant audience as purchasers of Condos. This demographic typically accounts for 75% of total purchases for most Condos in Singapore. Hence, the availability of such a target audience is an important factor for determining the presence of demand for the Condo in mind.

This matters because the typical route of home ownership for private property is the sale of a BTO or Resale HDB, eventually “upgrading” to a Condo as a form of climbing the ladder in the property ownership journey. This pool of potential buyers is huge, and is not to be underestimated when making decisions about the sale or purchase of a home.

Another important but unspoken aspect of having many HDB dwellings near the Condo in mind is the critical mass needed for public amenities. Often, some might have some classist complaints about looking out of your Condo only to see HDBs (meaning to say they feel like they are living in a HDB estate). Yet, private property owners still stand to gain from the availability of public amenities.

An advantage of having your future condo located in a dense HDB estate or having many HDB dwellings nearby, is that the chances of having public amenities available to you are higher. Be it malls, hawkers, parks, shophouses, gyms, or more, PPOs should see this as more of an advantage than a disadvantage.

 

A Look at the Numbers: Exit Audience in Action

Now let’s look at some examples to see how the Exit Audience in MOAT Analysis works. We will be using 1 Canberra, Penrose, and The Esta, just for comparative purposes. It is not a buy or sell recommendation. These condos were selected because of their different scores on the Exit Audience aspect and they can hopefully help you to understand this part of the MOAT Analysis better.

These three properties are located in different areas across Singapore and differ significantly in more than one way. Although there are many comparisons that we can make between these three projects, we will be focusing more on the Exit Audience score.

The Esta

First, we will look at The Esta. It is a freehold condominium located in District 15, Marine Parade. It was completed in 2008, with a total of 400 units. Most of the properties surrounding The Esta are other private condominiums. Mountbatten Suites, One Amber, OLA Residences, Amber Residences, The Shore Residences, and more condos are in the surrounding area.

Taking a big picture look at the area, it would seem that this part of Marine Parade is filled with private housing. The Esta is located near the upcoming Tanjong Katong MRT on the Thomson-East Coast Line, which is expected to be completed sometime in 2024.

The Esta has a total score of 54% on the MOAT Analysis. It does well in Bala’s Curve Effect due to its freehold status and Rental Demand. However, it scores a 1 in the Exit Audience trait. In some sense, the target audience for The Esta is not really HDB Upgraders per se. Based on the MOAT chart, it would seem that property investors might be more interested in this property. 

With the freehold and rental demand being strengths, this property might have a stronger focus on a rental yield strategy or for legacy purposes. Overall, the exit audience might be more niche as this option might not be as appealing to HDB upgraders when compared to a number of other alternatives on the market.

That is not to say that this property cannot be sold, it merely means that HDB upgraders might take less interest in the project. Identifying the appropriate target market and approaching them in the right way will be the key to determining the ease of exiting.

Penrose

The next project we will be looking at is Penrose. It was a new launch apartment in September 2020 and is currently under construction. This new launch managed to sell 60% of its units on the launch weekend, which was impressive given the state of uncertainty during the year of the pandemic. Penrose is a 99-year leasehold apartment with its lease starting in 2019. It is expected to be completed some time in 2025. There are 566 units in total for this development.

As you can see on the map above, Penrose is located near the PIE, northwest of Aljunied MRT. It is located near a small cluster of HDBs, commercial buildings, schools, and shophouses. It aptly scores a 3 on the Exit Audience in the MOAT. Overall, Penrose did well in the MOAT Analysis, scoring a total of 70%. The Rental Demand is at a low score of 1 point because of its status of being under construction.

That aside, Penrose looks to be a promising new launch. With an almost well-rounded position on the MOAT Analysis. While the number of HDB dwellings in this part of Aljunied is not as much as it could have been, the buying audience of this new launch was mostly HDB Upgraders (~88%). 

This is slightly above the average, but perhaps it is a perk of being launched during the pandemic year. Otherwise, the HDB Upgrader demographic seems to be moderately high for this particular project. Aljunied seems to be an attractive RCR option among younger homebuyers.

 

1 Canberra

The final property we will look at for this comparison exercise is 1 Canberra. This Executive Condominium has its 99-year lease starting in 2012. It was completed in 2015 with a total of 665 units. It is located in District 27, between Yishun and Canberra MRT.

Yishun is one of the mature HDB estates in Singapore, and 1 Canberra is located north of the Chong Pang HDB estate. With a large number of HDB dwellings being added in the Canberra estate (north of 1 Canberra), the HDB Upgrader audience in this neighbourhood is vast.

Canberra is also a relatively new town with many clusters of new BTOs that have just reached or are approaching their 5 years MOP mark. This is a major push factor for a lot of sellers because of the MOP effect (higher appreciation after MOP) as compared to older residential developments in the district. Owners who have benefited from the grants and subsidies that they received when buying their BTO might then capitalise on this to upgrade into a private property in the area.

Executive Condos (EC) are thought to be an affordable entry into the Condominium and Apartment segment. ECs are fully privatised after 10 years, and are virtually treated the same as private property on the open market. They can be thought of as a more natural and less intimidating first step into the Condo segment.

When it comes to price, ECs are undoubtedly priced lower than most Condos due to their status as a form of subsidised housing. This is especially true for homeowners who buy ECs directly from the developer.

Overall, 1 Canberra does well on the MOAT Analysis, with a total score of 68%. It scores 5 on Exit Audience and Quantum Effect. Quite clearly, we can see on the maps that there is a larger cluster of HDB dwellings north and south of 1 Canberra. There is no lack of HDB dwelling audience upon exit. 

When it comes to furthering the appeal to this demographic, the Quantum Effect score of 5 indicates the affordability of 1 Canberra. This affordability will be a key pull factor for HDB owners looking to upgrade their home and enter the Condo segment.

 

Closing Thoughts

Having an exit strategy is an important part of the property purchasing plan. You need to know what you are buying. More importantly, you will need to know what you will be selling a few years into the future. When it comes to the Exit Audience, will there be strong demand from HDB Upgraders for your property in the future? This will form an important part of the reason whether the property will appreciate further into the future. Not to say that if the current environment scores a certain development with a low Exit Audience score, it will remain as such perpetually. There may be future developments of new BTO clusters to increase the score of the same development.

The MOAT Analysis can help you tell at a glance, whether there is a sizable HDB Upgrader audience for the properties that you are interested in. On top of that, you will be able to compare multiple properties on the 10 different aspects of the MOAT Analysis.

If you want to speed up the home search process and make more effective searches and decisions, contact us here to find out how you can use the MOAT Analysis to help you in your property journey.