Prices of high-end condominiums in the downtown Marina Bay area have soared beyond the reach of most Singaporeans, as buyers snapped up multi-million-dollar units in recent launches of such properties in a frenzied bid to own a stake of the area with the upcoming integrated resort (IR).
With prices averaging $2,000 per square foot – and skyrocketing to record highs of $3,400 psf for the penthouses – only uber-rich Singaporeans and foreigners can afford these condos.
In the plans drawn up for the new downtown site, the area was envisioned as an exciting place to live, work and play.
But with the extremely high cost of homes there, will it merely be an exclusive enclave for the super rich?
And who will be residing in these units when they are completed – the owners themselves or wealthy foreign tenants who will come and go?
Rich Singaporeans who have bought the Marina Bay homes are likely to be already living in freehold houses that are many times larger in other parts of Singapore.
Will they move from their roomier homes to the much smaller condo units, even if these units are located downtown?
It’s more likely they will choose to lease the units out instead.
Simple calculations show that with a rental yield of 4 per cent, a medium-sized unit in the downtown area costing between $3 million and $4 million – the cost of a dozen HDB five-room flats, if you haven’t realised – would have to be rented out at around $160,000 a year, or $13,000 a month. Similarly, a penthouse costing $15 million to $20 million would have to be rented out at around $800,000 a year, or $67,000 a month – which works out to $2,200 a day.
Just who are the people who will pay such high rental fees to stay in a downtown apartment?
Long-term tenants who can afford these fees would also have the choice of much bigger and more luxurious houses elsewhere, or bigger apartments not far from downtown at a fraction of that amount.
Unlike other major cities such as London and New York, almost any part of Singapore, with its efficient and smooth-flowing network of expressways, is within half an hour’s drive from the downtown and Marina Bay area.
In fact, it only takes about 20 minutes to drive to Marina Bay from Changi Airport. Considering that the IR is not really at the doorstep of downtown condos and with heavy traffic in the downtown area, a person staying at a downtown condo may take an even longer time to reach the IR than one who stays in the east coast!
For short-to-medium-term stayers who can afford similar high rental for accommodation, wouldn’t it be a better, and perhaps less costly option, to stay in a 5-star hotel – a more luxurious option with full room service, daily housekeeping, fine dining, recreational facilities and entertainment under one roof, as well as a free hotel shuttle service to and from the IR?
Which brings me to my question: Just who will be staying in the new downtown Marina Bay area?
Letter from Huang Pengxie
Source: TODAY, 8 January 2007