Emerging prime areas challenge traditional districts 9, 10, 11

Singapore’s traditional prime districts 9, 10 and 11 are being challenged in their position as the upper echelons of the private housing market not only by new prime areas such as Marina Bay but also by what List Sotheby’s International Realty terms “emerging prime areas” such as Tanjong Pagar and Ophir-Rochor Beach Road area.

The firm’s analysis of transactions captured by the Urban Redevelopment Authority’s Realis system shows that units at Duo Residences in the Beach Road area and Wallich Residence At Tanjong Pagar Centre for instance have sold for S$2,076-2,721 per square foot and S$2,756-3,894 psf respectively in the first quarter of this year.

In the same period, apartments at Marina One Residences have fetched S$2,175-3,004 psf while units at Martin Modern in District 9 have transacted at S$2,551-2,842 psf.

All the above projects have 99-year leasehold tenure.

While these price comparisons do not factor in differences in unit sizes, floor levels, orientation and whether units have a roof terrace, private enclosed spaces and void spaces – they nonetheless point to the trend of home buyers and investors increasingly warming to private residential properties in new and emerging prime areas. This has helped to establish prices levels in these locations that are similar to the traditional prime districts, argued List Sotheby’s International Realty Singapore chief operating officer Leong Boon Hoe in a white paper released to The Business Times.

“Contrary to the common view that the traditional prime districts are the crown jewels of the Singapore private housing market, one can now consider the new and emerging prime areas as an alternative investment option,” he added.

Ong Choon Fah, chief executive of Edmund Tie & Co, noted that whereas private homes in the traditional prime districts tend to be mostly freehold, those in the new and emerging prime areas are predominantly 99-year leasehold. “Notwithstanding this, very attractive lifestyle propositions can still be created be they mixed-use integrated projects or waterfront housing.”

Commenting on the new and emerging prime areas, the List Sotheby’s International Realty paper noted that the realisation of the government’s plans for new districts (for example, Marina Bay) and infrastructure investments such as new MRT lines/stations – which have improved connectivity – have helped to increase the appeal of private homes in these locales.

As well, the trend of developing integrated mixed-use projects linked to MRT stations is resulting in residences within such projects commanding a premium.

“A case in point is Tanjong Pagar. Prior to the launch of Wallich Residence, the highest price for a residential unit in the area was S$3,085 psf for a unit at The Clift in 2012. However, units at Wallich Residence have crossed this level; the highest price achieved so far in the development is S$4,000 psf for a 958-sq ft unit on the 55th storey last November.” Wallich Residence is part of GuocoLand’s Tanjong Pagar Centre project, which also includes offices, a hotel, retail space and an urban park atop an MRT station.

Mr Leong said: “The next location to watch out for is Ophir-Rochor Beach Road.”

The government’s initiatives to rejuvenate the area as well as the roll-out of new developments have played a crucial role in propelling prices. The launch of Duo Residences, part of a mixed development that also includes hotel rooms, offices and retail space, has been pivotal in uplifting capital values in the area.

The launch of the completed South Beach Residences, part of City Developments and IOI Properties’ integrated project in Beach Road, this year, as well as the future project by GuocoLand on a nearby site are expected to serve as catalysts that will help to sustain price and rental growth in the area, said Mr Leong.

Besides Tanjong Pagar and the Ophir-Rochor Beach Road vicinity, the third emerging prime area List Sotheby’s identified is Keppel Bay.

To date, Keppel Group has developed three iconic residential projects – Caribbean At Keppel Bay, Reflections At Keppel Bay and Corals At Keppel Bay – totalling 2,464 apartments.

The two residential developments being planned – on Keppel Island and Harbourfront Avenue – are expected to contribute another 320 new homes to this precinct once developed; these new launches could create impetus for price growth in this precinct, noted List Sotheby’s International Realty associate director of research Han Huan Mei.

Another factor that could stimulate prices in the area is Circle Line (CCL) 6, comprising three stations – Keppel, Cantonment and Prince Edward. When completed in 2025, the extension will close the loop for the CCL by connecting Harbourfront Station to Marina Bay Station.

List Sotheby’s includes Sentosa in its “new prime area” category along with Marina Bay.

Sentosa Cove was envisioned as an upscale waterfront residential district targeting wealthy foreigners; this is the only place in Singapore where foreigners who are not permanent residents are allowed to buy a landed home. Initially the area generated much buzz, but once all the land parcels had been sold, marketing efforts to promote the area overseas stopped, recalls Mr Leong. This, combined with the prohibitive 15 per cent additional buyer’s stamp duty imposed on foreigners buying Singapore residential properties since early-2013, has resulted in reduced demand and more subdued prices in Sentosa Cove.

“However, given that there is no planned new supply in Cove, the scarcity will enable capital preservation and appreciation over time. Foreign investors will return when the timing is right,” said Ms Han.

Meanwhile, residential prices in Marina Bay stand to receive a fillip from the Thomson-East Coast Line (TEL), which will increase connectivity for those living in the area to the rest of the island, and the government’s plans for Marina South.

In Tanjong Pagar, the rejuvenation theme – and residential property price appreciation – is likely to continue, thanks to plans for the area including the Greater Southern Waterfront project. Following the relocation of the Keppel, Tanjong Pagar, Pulau Brani and Pasir Panjang port terminals to Tuas, about 1,000 hectares of waterfront land will be freed up for redevelopment; the proposed plans include housing options.

In the traditional prime districts, too, private home prices are poised to rise as developers launch new projects on collective-sale sites bought at high prices, say market watchers.

Said Mr Leong: “Each of these prime areas, traditional and new, offers different living options, investment characteristics and lifestyles. For buyers, this means more choices when it comes to investing in real estate in Singapore.”

List Sotheby‚Äôs also highlighted that the highest per square foot prices in Q1 2018 for the prime districts/areas are relatively lower than in the previous market cycle. “This suggests potential for prices to reach, or even surpass, previous levels as the market continues to strengthen.”

The propensity for growth presents a lucrative value proposition for the astute investor to tap into, as there remains a scope for price appreciation fuelled by future developments in the pipeline. “The steady rental income generated by the emerging prime areas will also be attractive for investors who are looking at yield play.”

Ms Ong of Edmund Tie & Co noted that the various prime locations cater to buyers seeking different lifestyles. “Districts 9, 10 and 11… may appeal to those who can afford to pay a premium for freehold tenure.

“Marina Bay may cater to younger adults who want the luxury of living near their workplace. It also appeals to senior execs who desire a home here as a base, while they travel on business in the region.

“There are many options, whether you are seeking a home in the traditional prime districts, or in an up-and-coming prime area. Buyers have to choose according to their preferences, lifestyles and budgets,” she added.

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