Punggol may be touted as Singapore’s hottest new estate after the Housing and Development Board (HDB) unveiled new plans for the area, but analysts said condominium prices and rentals may be tepid in the next two to three years.
In the past year, private housing developments in Punggol have been selling like hot cakes, as the government has consistently released land for home developments.
So far, three executive condominiums and five private developments have been launched.
There are currently some 6,400 private units in Punggol, and all are uncompleted.
However, by 2016 when they are completed, the proportion of private homes will make up 13 per cent of homes in Punggol.
Still, the numbers have not tipped to oversupply.
Analysts said homebuyers are attracted to high quality finishes at prices less than S$1,000 per square foot.
Singapore’s population – inching towards six million – is also fuelling demand.
Nicholas Mak, research head, SLP International, said: “On an annual basis, if the government sells anywhere between two and four EC or condominium sites in Punggol, that is about sufficient. Anything that is more than that number could lead to slower sales because the competition is fairly great.”
The HDB’s next phase of development for Punggol announced on Tuesday should also maintain buyer interest.
However, experts said buyers should be wary about picking up shoebox apartments in the area.
Ku Swee Yong, CEO, IPA, said: “Those are (the) units that would be in large part purchased by investors. Once they are completed, who would they be renting out to? HDB rental prices in that location could be as low as S$2,500 per month for a five-room flat.”
Going forward, experts said suburbs like Punggol may see fewer offerings of shoebox units by developers, after authorities capped the total number of units that can be built on a site for non-residential developments outside the city.
Investment returns of Punggol properties may rise when more amenities like schools and public transport become available.
Source : Channel NewsAsia – 18 Oct 2012