17 Apr

Revival in Paya Lebar – Katong Regency

Another mixed-used development hits the market, this time in Paya Lebar. Katong Regency will sit where the old Lion City Hotel used to be. Located in a prime east side location, near good schools, modes of transport, not to mention other amenities such as shopping malls and public libraries, will the buyers come fishing for a good catch?

A mixed-use freehold project to be launched in Paya Lebar on Thursday is expected to get a good response despite a hefty price tag, property consultants said. Residential units at Katong Regency, which sits on the former Lion City Hotel and Hollywood Theatre sites, will cost an average of $1,500 to $1,600 per sq ft (psf), a price experts said is ‘on the high side’. Still, the take-up rate for the 244-unit UOL Group project could be ‘quite good’, said Mr Nicholas Mak, head of research at SLP International Property Consultancy. ‘The area is fairly middle-class… there will be a catchment of residents here who have the means to buy this project.’

Katong Regency will be linked to the new shopping mall - One KM.

More than half of the residences at Katong Regency are one-bedroom and one-plus-study units. Prices for a 550 sq ft one-bedroom unit start at about $950,000 and go up to over $2.5 million for a 1,970 sq ft three-bedroom penthouse. A major selling point could be the upcoming rejuvenation of the Paya Lebar area, consultants said. R’ST Research director Ong Kah Seng said: ‘The area is considered promising… and will be a major business hub in years to come.’ He estimated that monthly rental for one-bedroom units could reach $3,000, especially if there are ‘visible signs of the spillover effect from the rejuvenation of Paya Lebar’ by the time the project is completed in 2014.

Katong Regency boasts one to four-bedder apartments in a good east-side location.

UOL Group could be banking on similar interest to that shown for the recently launched Sky Habitat, believed to be the priciest suburban condo in the market. The 99-year Bishan project has average prices ranging from $1,747 psf for a one-bedder to $1,642 psf for a four-bedder. Still, over 70 per cent of units that were released were sold in the first weekend of its launch. Mr Mak said: ‘I won’t surprised if people would be willing to pay (for Katong Regency). It’s a bit on the high side but… this one is freehold, and there’s a mall.’ A new mall, One KM, will be built on the lower levels below the flats. Mr Kam Tin Seah, senior general manager of UOL Group, said yesterday that the mall, with a net lettable area of 210,000 sq ft, will follow a similar concept seen in United Square, but will focus more on performing arts education.

United Square, known for its myriad of enrichment centres and lifestyle retailers, is also developed by UOL. One KM, which has signed Cold Storage as an anchor tenant, will have over 150 tenants. UOL said ‘serious retailers’ have shown interest for about half of the available units.

The Straits Times © Singapore Press Holdings Ltd. Reprinted with permission.

Editor’s Commentary:
District 14, in particular Geylang and Paya Lebar, have been seeing a lot of activity recently. With new property launches and a vibrant home purchasing scene, will more properties be launched in these two areas and how will the culture and nostalgia of the area be kept in tact amidst all the revival?

16 Apr

Sky Habitat condo sales climbing to great heights

Buying property for investment. It seems many buyers of the new Sky Habitat condominium in Bishan are snapping up units in view of the possibility of high returns. Is there any sign of property becoming less of a commodity? Apparently not, as home buyers now come with increasing purchasing power.

It may be Singapore’s most expensive suburban condo, but more than 100 units of CapitaLand’s Moshe Safdie-designed Sky Habitat in Bishan were snapped up on the first weekend of its launch. Out of the 180 units released for sale, 125 units were sold by 6pm yesterday. Eighty-three per cent of the buyers were Singaporeans who intend to live in the units, said chief executive of CapitaLand Residential Singapore Wong Heang Fine. Average prices range from $1,747 per sq ft (psf) for a one-bedder to $1,642 psf for a four-bedder. This works out to $1.11 million for a 635 sq ft one-bedroom unit.

Sky Habitat condominium in Bishan.

Visitors at the showroom told The Straits Times they were attracted to the design and location, despite the pricing and it being a 99-year leasehold project. There was even a buyer, a sales executive who wanted to be known only as Danny, who toured the showflat only after he had bought two three-bedroom units – on the 33rd and 35th floors. ‘Location-wise, it’s very ideal. There’s huge potential (for property) in Bishan – it’s breaking records. Recently, there was a five-room (HDB) flat which was sold for $950,000.’ The 32-year-old, who intends to rent out both units, added he had ‘not 1 per cent of regret’ about his purchase after visiting the showroom.

Other relatively recent properties in Bishan include private condo, Clover by the park.

Public servant Patrick Bay, who bought a two-room plus study pool-facing unit, said he was drawn to the project’s unique design, especially its ‘iconic structure’. ‘The prices are steep, yes, but it’s comfortable with the incentives given,’ Mr Bay, 35, said, referring to the 3 per cent early bird promotion. He intends to live in the unit with his wife for ‘at least 10 years’, and is confident that the value will be higher if he eventually decides to sell it. Mr Ku Swee Yong, chief executive of International Property Advisor, said the sales figures were a ‘very good achievement’, given that the average valuation of other 99-year leasehold condominiums in Bishan is between $1,000 psf and $1,200 psf. But he had expected more robust sales given the initial hype. He suggested: ‘Perhaps there is some investor fatigue in chasing up the high psf prices in the outskirts of Singapore.’

The Straits Times © Singapore Press Holdings Ltd. Reprinted with permission.

Editor’s Commentary:
At $1,747psf for one-bedders, units at this new condominium are nothing to scoff at when it comes to pricing. Is it worth paying $1.11 million for a one-bedroom apartment? Why are buyers willing to fork out these amounts? Considering recent news that a few resale HDB flats in Bishan and Mei Ling Street had sold for close to a million dollars, is the continued rising cost of resale HDB flats the reason for these high prices?

16 Apr

Less foreign home buyers in the suburbs

Have restrictions on foreign buying of Singaporean properties really put a hold on home purchasing activity? Reports have shown that numbers are gradually decreasing, but is this dip significant?

The extra taxes recently imposed on home buyers here may have helped put a lid on the hot property market, but some areas continue to be popular and have even seen an increase in sales among Singaporeans and permanent residents (PRs). On the other hand, since the additional buyer’s stamp duty (ABSD) was rolled out, the preference of foreign buyers for homes in the city fringe areas has dropped. Instead, their demand for prime district 9 – which is traditionally popular with foreign buyers – has remained strong, said property expert Nicholas Mak. In his study, the head of research at SLP International Property Consultancy compared the popularity of the various districts in the four months leading to the implementation of the ABSD – August to November last year – and in the four months after, from December to the end of last month. Mr Mak also analysed the number of caveats lodged among the different home buyer segments in those two periods.

Idyllic Suites condominium in Geylang.

These details follow news reports yesterday that $110 million was collected from ABSD takings in the four months since it was rolled out on Dec 8 last year. From then, Singaporeans had to pay 3per cent ABSD for their third and subsequent properties, while PRs did the same on their second and subsequent properties. Foreigners and non-individuals, such as companies, have to pay 10 per cent ABSD on any residential property purchase. The Inland Revenue Authority of Singapore said that a good chunk – $66.2 million – of the ABSD takings came from foreigners who snapped up 369 private homes in the four-month period. In his analysis, Mr Mak said that districts 19, 18, 15 and 14 were the most popular areas among local, PR and foreign home buyers before the ABSD. In the four months after, these districts generally experienced no impact and remained top choices for Singaporean and PR buyers. ‘This could be because of the number of launches in district 19 (Hougang/Punggol), for example,’ Mr Mak said.

Minton private condominium apartments in Hougang.

But he noted that foreigners, who had increasingly bought homes outside the prime districts, have pared back their purchases. For instance, District 14 – which encompasses Geylang and Paya Lebar – was top among foreign buyers before the ABSD was implemented. Post-ABSD, the district does not figure in the top three list of these buyers. The number of caveats lodged by Singaporeans and PRs islandwide has also increased, while those by foreigners and companies have dipped across the board for the various lease types, said Mr Mak. This data supports earlier reports that the tough cooling measures have served the purpose of edging out foreigner-demand for properties. ‘The absence of foreigners gives more opportunities to Singaporeans to buy,’ Mr Mak said.

And such a trend is likely to continue, said Propnex chief executive Mohamed Ismail. ‘I don’t think foreigners will get used to throwing an extra 10 per cent over time… the resistance will continue,’ he said. ‘Those who are still buying are those who have got a discount from the seller, or those who have a long-term perspective and feel that the ABSD will be justified with a higher capital appreciation in the long term.’

The Straits Times © Singapore Press Holdings Ltd. Reprinted with permission.

Editor’s Commentary:
Should Singapore’s real estate sector be left on its own to manage the supply and demand chain plus home pricing? Do locals now have a higher chance of purchasing a property? Or is there a possibility that the ABSD may be more effective in earning revenue through taxes instead of balancing the property market proper?

12 Apr

Malaysian properties will soon cost more

Singaporeans and expatriates in South East Asia have been big buyers of properties across the border in Malaysia for their lower prices and favourable currency exchange rates. The government has tried to cool the market, but without significant effect. The minimum price soon may be raised to RM 1 million. How much does it now cost to own a house in Malaysia?

Singaporeans looking to buy properties in Malaysia may see the bar raised. Malaysia is mulling a two-fold increase to the floor price of residential properties purchased by foreigners in a bid to prevent prices from spiralling too rapidly. The possibility of a revision to existing guidelines to raise the minimum price to RM1 million (S$417,000) from RM500,000 was flagged by The Star.

Kingsley Hills residential project in Selangor

In a report yesterday, the local daily cited unnamed sources as saying that the measure was ‘in the pipeline’, with a forthcoming announcement to be made by Nor Mohamed Yakcop, minister in the Prime Minister’s department heading the Economic Planning Unit. It did not say when it would be implemented. One of the sources told The Star that selected growth corridors such as Iskandar Malaysia might be less affected by the proposal, in that a lesser minimum threshold might be applied – RM800,000 for example – to assist with their development success.

The government has continued to come under pressure over affordability issues despite recent measures to cool the property market. Pushing the floor price up for foreign buyers – especially in landed properties – could be a welcome move in the eyes of young middle-class Malaysians frustrated with soaring real estate prices when starting salaries have advanced little in two decades.

Semi-detached house in Senibong Cove, Johor Bahru.

Many believe that foreigners have little difficulty stumping out RM500,000 for homes because their currencies tend to be much stronger. Property consultants say they were aware of the possibility of the new rules, but believe that the move is still at the proposal stage. ‘It’s a flyer to check public response. Not all states will agree,’ Malaysia Property Inc chief executive Kumar Tharmalingam told BT.

Foreign buyers of Malaysian property come mainly from China, Singapore, Japan and South Korea, the newspaper said. Even so, foreigners only account for an estimated 2 per cent of the residential market which saw robust growth last year. The volume and value of properties sold last year was the highest in the past five years, according to the Property Market Report 2011 by the Finance Ministry’s Valuation and Property Services Department, rising by 19 and 22 per cent respectively from a year ago. Landed property remain popular. They recorded the biggest jump in prices last year, with link houses in Kuala Lumpur registering gains of 8-13 per cent, according to the 2011 property report.

If you're looking to buy property in Malaysia, it might be a good idea to see what options are available at the International Property Expo at Marina Bay Sands.

Following a revision in lending guidelines this year that benchmark an applicant’s criteria to meet his loan obligations against his net rather than gross income, bankers and property players have reported slower loan applications and a softer market, with the rejection rate estimated at 20 per cent. Some reckon that the central bank ought to have tightened lending criteria a year or two ago as ample liquidity and easy credit terms encouraged speculators to buy with a view to flipping the properties before the payments were due. Owing to high take-up rates, developers continued to build and to raise prices. But going by the assortment of auction notices found around the suburbs, many borrowers appear to have defaulted on their loans, especially those taken for apartments.

The Straits Times © Singapore Press Holdings Ltd. Reprinted with permission.

Editor’s Commentary:

Considering the ready availability of land, high buying volume from foreigners of Malaysia properties may not yet be putting a dent in the local property buying market. But in Singapore where land is many times more limited, how will the same sales volume affect the real estate market here? How effective have the cooling measures been and will more be needed?

11 Apr

New properties. New trends.

New properties are entering the market, fast and furious. What of this recent trend and how are developers coping with the head-on rush? How will the home buyers react and how long will the current high last?

The race is on as developers try and ride the wave of robust demand for primary sales by churning out projects as quickly as possible. Ku Swee Yong, chief executive of International Property Adviser (IPA) said: ‘Developers know this trend cannot be sustained, especially when you have HDB launching (so many units).’ Some of the projects released in March alone include the 193-unit Natura at Hillview Terrace, 679-unit Ripple Bay condo, 276-unit Seletar Park Residence, and 429-unit Palm Isles condo at Flora Drive.

One of the latest new properties offered - Natura condominium at Hillview Terrace.

The large number of new homes on the market this year can be attributed in part to the government’s effort to push out more land for residential development, say market watchers. In 2011, enough state land was put on sale to build 17,510 homes, up from the record 13,945 homes in 2010, according to government estimates. The number could be higher still given the recent trend for more smaller flats to be built. Added Mr Ku: ‘Developers are now trying to reduce their risks by shortening the cycle between the day they win the bid and the day they launch the property to sell.’ Turnaround time has been crunched back from 12 to 18 months to around 9 to 12 months, he said. The time frame is tight because of lead time needed after winning the bid to appoint the architect, seek various approvals, design showflats and undertake marketing. ‘It’s doable, but everybody has to run parallel,’ he said.

The recent popularity of shoebox units – which are up to 500 sq ft in size and tend to cost under $1 million – is also potentially problematic. Industry watchers worry that tenants will be hard to come by once these units are released. That small apartments in the suburban regions are increasingly claiming a larger share of the market is a ‘source for concern’, says Nicholas Mak, executive director of research and consultancy, SLP International. ‘It means that some retail investors are buying into units in unproven markets,’ said Mr Mak. ‘(While) there may be some rental demand for small apartments in suburban areas, it won’t be excessive. If developers continue trying to maximise sales by building small units even if the location is far away from the city centre, then I’m concerned: What will happen to these developments after they receive the TOP (Temporary Occupation Permit)? Will there really be people who will rent it?’

Ripple Bay Condominium new Pasir Ris Beach with many small apartments available.

Analysis by R’ST Research says that buyers snapped up a record of 2,037 new shoebox units last year. Including resales and subsales, the figure grows to 2,400 – also a record. This level of sales is more than seven times the numbers recorded in 2008, and 20 per cent more than in 2010. ‘We will feel the impact, especially when a big supply of high cost-psf small-sized units start to come onstream, rentals don’t match up, and people feel disgruntled,’ said IPA’s Mr Ku. Still, Lee Sze Teck, senior manager of research and consultancy at Dennis Wee Group suggested that developers are becoming more discerning about their site choices. ‘Developers are being selective (and) we don’t see the same kind of interest generated for every GLS site rolled out,’ he said. That being said, some consultants argue that the bids received at GLS tenders are indicative of developer optimism.

Credo Real Estate executive director, Ong Teck Hui, said: ‘Recent bids reflect fair optimism on the part of developers and this is reflected in tender participation as well as bid levels.’ Added Chia Siew Chuin, director of research and advisory, Colliers International: ‘It is telling that developers are encouraged by the land supply available and are still on the look-out for development sites . . . Additionally, those seeking a representation in the local residential market have also been aggressive in their quest for sites.’ Figures released by the Urban Redevelopment Authority on the number of transactions in February further fanned talk of more cooling measures.

Seletar Park Residence released in March this year.

Excluding executive condominiums (ECs), 2,413 private homes were sold in the month of February, a 29 per cent month-on-month jump; this figure is more than double the number of units sold in the same period last year. If ECs are added to the mix, the number of units sold is 3,138 – up 51 per cent from January’s 2,077 units. Another push factor lies in a series of proposals put up by the Urban Redevelopment Authority, in consultation with the Real Estate Developers Association of Singapore (Redas) and other stakeholders, in a bid to help purchasers make more informed decisions. Some of the proposals include: developers may have to publish prices early and more frequently; build accurate showflats; provide drawn-to-scale plans for a project’s location; site and units; share track records; and abide by controls for online advertisements. URA is finalising the proposed guidelines which will come into effect later this year.

The Straits Times © Singapore Press Holdings Ltd. Reprinted with permission.

Editor’s Commentary:
No doubt the bumper crop of new BTO HDB flats may shake the property market a little. But what effect will they really have on the private property market? How soon will these new properties be ready for occupation, and what will the rental market be like then? Will competition drive prices down? Get all the advice you need from the International Property expo held on 20 – 22 April at Marina Bay Sands.

10 Apr

Hillsta condominium – New star in Choa Chu Kang

Sales of the Japanese-designed condominium and townhouse units at the Hillsta have been brisk since its release last week. With promises of Japanese rice terrace-inspired greens and a natural, nature-friendly lifestyle, locals favouring these units with 90 per cent of the buyers being Singaporeans. What other property pickings are available these coming weeks?  

Far East Organization has sold 109 units at its Hillsta project at Choa Chu Kang Road/Phoenix Road which was released last week. The property giant, which is developing the 99-year leasehold project with Sekisui House and China Construction, provided average per square foot (psf) prices according to various unit types in the 416-unit development. The project has condominium apartments, Soho- style apartments (with a higher-than-usual floor-to- ceiling height of 3.6 metres) and 20 strata townhouses. The average price of three-bedder, two-bedder and one-bedder condo units are $918 psf, $984 psf and $1,042 psf respectively. As for the Soho-style apartments, average psf prices are $1,093, $1,106 and $1,198 respectively for three, two and one-bedroom units. Townhouses cost $907 psf on average. Absolute prices start from $600,000 for a 570 sq ft, one-bedroom condo unit. All prices are net of incentives and discounts.

Hillsta condominium in Choa Chu Kang consists of townhouses, Soho-style apartments and one to three-bedroom condominium units.

Far East said yesterday that about 90 per cent of Hillsta’s buyers are Singaporeans, with the majority already living in the Choa Chu Kang-Bukit Panjang district. Property hunters can look forward to several other projects in the coming weeks – including Far East’s Seahill at West Coast Link near West Coast Park and the sea. The 99-year project – which will have Soho-style apartments, condo units and townhouses – is integrated with a serviced residence tower so Seahill residents can use professional concierge and housekeeping services. CapitaLand’s Sky Habitat in Bishan goes on the market this week. The pricing has yet to be finalised but the earlier indication given to agents is that the average price could be around $1,700-$1,800 psf.

Seahill condominium in West Coast Link by Far East Organization will soon be launched.

In its release yesterday on Hillsta, Far East said the project’s site, with its naturally hilly gradient, provides the ‘perfect backdrop for Sekisui House to recreate the Japanese satoyama – the tranquil terrain of the mountain foothills’. Satoyama is a Japanese concept describing the harmonious synergy between nature and people who live at the foot of a mountain. The undulating Hillsta site will be transformed into green terraces inspired by Japan’s rice terraces, or tanada, to bring a nature-friendly lifestyle to the residents. Traditional bamboo lattices and natural stones add finishing touches to the garden.

The Straits Times © Singapore Press Holdings Ltd. Reprinted with permission.

Editor’s Commentary:
The Choa Chu Kang-Bukit Panjang area is seeing a good deal of building and construction activity, what with the MRT downtown line rapidly being built and many new condominium launches on their way. Is this the area to watch? 

9 Apr

New but Pricey – 2 new condominium launches

Home buyers have been hunkering after new condominium launches in the first quarter of 2012. Now 2 more private residential projects set to launch in April may stir up more activity in this sector. Or will they? Especially since prices are set to reach $1,800 psf.

Residential projects to be launched in Bishan and Paya Lebar this month will test the market’s appetite for ever rising prices. UOL Group’s mixed-use Katong Regency in Tanjong Katong Road will be pushed out by the end of this month while buyers will be able to snap up units at CapitaLand’s 509-unit Sky Habitat in Bishan Street 14 from April 14. UOL Group president (property) Liam Wee Sin told The Straits Times that prices of the 244 units at Katong Regency on the former Lion City Hotel site will average $1,500 to $1,600 per sq ft (psf). Industry sources said that indicative prices for Sky Habitat range from $1,700 to $1,800 psf. Both projects are in suburban or city fringe areas but experts said their benchmark prices, which are on a par with some city centre developments’, are due to their good locations near MRT interchanges and the nature of the product.

Katong Regency - Mixed-used development on Tanjong Katong Road.

Mr Tan Kok Keong, OrangeTee’s research and consultancy head, said that despite these high prices, the market might just surprise. ‘While the take-up rate might not match some launches in outlying areas, it is likely to be decent,’ he added. More than half of the units at freehold Katong Regency are smaller one-bedders or one-plus-study units starting from 549 sq ft. These will be priced at about $1,800 psf, while larger units will list at about $1,400 psf. This means one-bedders at the project will go for about $1 million upwards, two-bedders at $1.3 million to $1.4 million while three-bedders will be sold at about $1.9 million. ‘To some extent, the smaller units will target investors and also young couples… The key value proposition of this development is its centrality, connectivity and the growth potential of Paya Lebar hub,’ Mr Liam said.

Katong Regency will be linked to the new shopping mall - One KM.

At a separate briefing yesterday at the Sky Habitat sales gallery that cost more than $6 million to build, CapitaLand said that almost 60 per cent of the units at the 99-year leasehold project will be three-bedders or larger. One selling point is that renowned Israeli architect Moshe Safdie, who drew up the Marina Bay Sands integrated resort, designed the Bishan project.

Sky Habitat condominium in Bishan.

Both developers also touched on the state of the market, and noted that with global sentiment improving with more clarity in Europe’s situation and with interest rates remaining low, the market is likely to remain ‘sustainable’.

UOL’s Mr Liam said he does not think further cooling measures are needed despite the strong sales of new homes. While volumes are up, the measures have had their intended effect with prices showing signs of slowing, he added. He expects suburban prices to be stable while high-end home values might dip by 5 per cent to 10 per cent this year. Private home prices took a breather after almost three years, dipping 0.1 per cent in the first quarter. The redevelopment of the mixed-use site UOL acquired in January last year will see Katong Regency built on top of a new mall, One KM. The mall, which has signed Cold Storage as an anchor tenant, will have up to 200 shops and be positioned as an edutainment centre.

The Straits Times © Singapore Press Holdings Ltd. Reprinted with permission.

Editor’s Commentary:
As more new condominiums enter Singapore’s property market, the fate of resale property, public or private, seems to be in limbo. It may also be interesting to see if suburban properties cross the price range into the high-end property market.

 

5 Apr

Count your investment dollars – Shoebox apartments

Whether for home owner-occupation or for investment returns through rental yields, shoebox apartments are certainly flying off the shelves. But what exactly are the returns on these units? Do the numbers really make sense?

‘The tenant is quite used to it,’ the property agent said airily, dismissing concerns that a shoebox apartment is going to be quite difficult for any reasonable-sized human to enjoy living in. I was at a showflat on the fringe of Paya Lebarrecently, which showcased an apartment of around 450 sq ft.

38 iSuites in Paya Lebar with small apartments available.

There were perhaps half a dozen others in the showflat as well and it did not seem crowded. Possibly this was because there was hardly any furniture. There were two small chairs and the kitchen sink, but no dining table, sofa, fridge, TV set or computer – surely features that a normal apartment should contain. In the bedroom, there was no bed either, but a carpet to represent where this narrow single bed clearly was going to be. Leading out from the bedroom was a balcony that ran along the living room as well. By the way, the washing point was on the balcony, so this means that the washing machine was going to be sited there.

Many at the showroom seemed caught up by the excitement of owning a piece of private property for less than $600,000 and, for some moments, I was as well. A back of the envelope calculation goes like this. Assuming the price is $650,000. Assuming I already have a property loan, I will have to fork out $260,000 in cash and take out a 60 per cent loan of $390,000. Taken over say 25 years, this comes up to a $1,560 monthly repayment at an interest rate of 1.5 per cent. Assuming rent of say, $3,500 a month, this makes for a return of around $1,940 per month after paying off the loan or $23,280 per year. One way of looking at the return is the total rent divided by the total investment ($42,000 divided by $650,000), which makes for a yield of 6.5 per cent. Another way is to look at the rent after deducting the loan repayment divided by the actual cash outlay. This comes to a gross yield on the investment of about 8.9 per cent ($23,280 divided by $260,000 of capital). These returns are far more attractive than any fixed deposit currently. Throw in the promise of capital gains and it sounds like an even better deal.

Ness at Geylang - where small apartments at 388 sq ft are put up for sale.

All well and good, but look at the assumptions behind this handsome return: Such a return assumes that interest rates will stay low and that there will not be periods when the apartment is vacant. All these are standard considerations when buying a property for investment but in particular, for a shoebox apartment, a very important factor is the tenant, and a tenant willing to pay $3,500 at that. My fear is that this tenant – slight of build, who hardly ever cooks, sleeps standing up perhaps, is seldom home and when he does come home, is out on the balcony – will turn out to be a pipe dream. After all, he is also supposed to be able to fork out $3,500 per month in rent, preferably be an upstanding professional who works in the central business district area, and most importantly, pays the rent on time. A tall order indeed. Better still if he never complains about faulty appliances and other minor problems. I exaggerate, I know, but this is the scenario that is often portrayed by many of the agents.

How realistic is that scenario? Looking at the negatives first, there is a tremendous amount of supply coming up in Geylang, for example, in the next few years – close to 1,900 units all told and fairly small units too. This means that one is looking at potential tenants who are single or at best couples. Even a small family or friends hoping to share an apartment will find it near impossible to squeeze into the unit I viewed. Another factor is that the rental market needs to be supported by the Housing Board (HDB) rental market. If the HDB rents are still buoyant, at say $2,000 or $2,500 for a flat, then perhaps there may be a group of people willing to pay over and above this amount to live in a private property with facilities.

Showflats are all buyers can go by for now. Until the units are completed, livability remains a question mark. Seen here is the showflat from SIlverscape condominium at Geylang.

On the macro front, Geylang is an area undergoing gentrification. It is a stone’s throw from the upcoming Paya Lebar commercial hub. It has good transport links and it is just a few bus stops away, along Nicoll Highway, from Suntec City. Dakota MRT station is perhaps a 10-minute walk away. And good food at all hours of the day is easily available. In a few years, the Sports Hub will also be up. As more business activities fan out from the city centre to the suburbs, there will be a need for housing, making a compelling case for investing in this characterful area. Still, I cannot help but feel that the proof is in the pudding to see if a shoebox apartment is indeed liveable. The bulk of them have yet to be completed so we will have to wait and see.

~ Lee Su Shyan

The Straits Times © Singapore Press Holdings Ltd. Reprinted with permission.

Editor’s Commentary:
In many other countries, it is not uncommon for parents to purchase small apartments for their children who are studying there, in hope of being able to then rent it out even after their children have completed their studies. Could this also be working out here? What expectations do expatriates have and as long as they are able to rent HDB flats, how many will go for shoebox apartments, especially those not in the city centre or fringe regions?

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