Residential property prices have been on an uptrend over the past two years, especially those of suburban condominiums and HDB resale flats. In mature estates, buying interest and prices have been strong due to established property fundamentals such as location, accessibility, town centre amenities and, in some cases, proximity to prominent educational institutions.
However, the recent years have also seen the rising popularity of several far-flung, untested property locations and “sub-towns”, raising concerns whether the homebuyers who paid high prices had been overly optimistic.
Sub-towns are located near the main town and are typically quieter. For example, in the west, Lakeside is a sub-town near Boon Lay, and in the north-east, Buangkok is a sub-town near Sengkang. The Shunfu area is increasingly preferred by prospective buyers following the completion of Marymount MRT Station and the full operation of the Circle Line. In fact, there are sub- or new locations for almost every major town.
Sub-towns have grown in popularity as the main towns become increasingly developed, leaving limited sites for further development. With the neighbouring major town a tried and tested location, properties in sub-towns that offer exclusive concepts and are more realistically priced are likely to be well received. New MRT stations have also helped such properties gain acceptance.
Although most sub-towns do not have comprehensive amenities such as a mall, they are still readily accepted, as prices of homes there are more affordable than those in main towns. Buyers who find that property prices in main towns have exceeded their affordability may consider such locations, notwithstanding the increase in commuting time.
While properties in sub-towns may have lower investment potential, some buyers may be indifferent to this, as such homes are usually newer with better, modern designs compared to some properties in main towns.
Quiet environment a draw
While homes in sub-towns have weaker locational and other property attributes, the environment is generally quieter with no town centre activities, attracting home buyers who treasure such tranquillity.
While sub-towns may not have a comprehensive mix of facilities, the supporting amenities are often self-sufficient. Some of these locations may have convenience stores, super marts and coffee places which operate 24/7, catering to the needs of immediate residents. The quieter hangouts also allow residents to better connect with each other, free from excessive noise and disruptions.
The popularity of homes off the beaten track reflects the changing and open mindset of homebuyers. While main towns will continue to be the primary choice of many, the value of homes in sub-towns cannot be underestimated. Developers need to understand the profile of such buyers to provide concepts that best fit the requirements of the target market, thus maximising the development value.
Although there is general acceptance for homes in sub-towns, it does not necessarily mean these are better value propositions. If buyers have to pay high prices similar to homes in the main town, then a reality check is needed. Some of the main towns, while ageing, may be revitalised through enhancements.
For the homeseeker who is indifferent to a home in a main town or sub-town, it may be useful to examine the specific property offerings and have a clear understanding of his or her property objectives and personal preferences.
Buyers of homes in sub-towns should also not be too optimistic about long-term returns but they can be happy in knowing that they have kept within their budget while enjoying the tranquil, new environment. Some buyers may also appreciate such residential quality when the homes are eventually put up for resale.
By Ong Kah Seng – director at R’ST Research, an independent property market research company in Singapore.
Source : Today – 22 Jun 2012