Jurong – the second CBD?

The central business district (CBD) may always retain its title as the  financial hub of the nation. But regional hubs are gradually becoming popular with businesses who are drawn by the cheaper rents and increasing flexibility of the suburbs.

The east has Marine Parade and the seaside, then there is Punggol and its new waterways, now Jurong will have its own lake and residents will soon be able to have waterfront living, working for a multi-national company just a couple of mrt stops away, and shop on the way home at the shopping malls. Connectivity and accessibility will soon no longer be a major consideration.

LakevilleThe building and expansion of infrastructure in Jurong has been going on for over a decade now and with a new Jurong Lake Gardens, the Science centre, MRT stations and bus interchanges, shopping malls and other commercial facilities choc-a-block in the district, the outlook for the once industrial estates is set for a big change. Not forgetting, the area will also have its own Ng Teng Foong hospital next year.

Sales and rental prices of HDB flats in the area are expected to rise by up to 20 per cent once the facilities are completed. Property analysts are likening it to some of the more popular HDB estates such as Bishan, where proximity to facilities and accessibility boosted home prices over the years.

Private properties in the Lakeside district also looks set to rise in price as it becomes an almost “exclusively private residential” district. Condominiums here fetch up to $1, 000 psf for new units and at the most recent launch of the Lakeville condominium, prices went up to $1, 300 psf.

The icing on the cake – The rail terminal which will connect Singapore and Kuala Lumpur. The future looks exciting for Jurong.

HDB flat rentals stay low

The play between supply and demand never gets old. And the tug-and-push continues as rental demand for HDB flats remains lacklustre possibly for the rest of the year.

Immigration policies seem to be the main factor at play, keeping foreign workforce numbers low and thus affecting the demand for rental properties. According to the Singapore Real Estate Exchange (SRX) figures, the HDB rental index has fallen 2.3 per cent.

But is this the deepest pit of the slowdown or will it continue? Industry experts are predicting this as only the beginning of the rental drop. Sales prices of HDB resale flats have already begun on their downhill journey and though the drop is not drastic, it is rather significant for the year. Most property analysts are expecting a 4 – 7 per cent drop by the end of 2014.

Woodlands HDBNaturally, areas which are further away from transport nodes such as bus stops, main expressways or MRT stations are most affected. HDB flats near MRT stations will continue to hold their prices, whether in sales or rent. Some of the flats fetching the highest rent are in the Central, Bukit Merah and Queenstown estates. Prices range between $2250 for a 3-room flat to $2, 900 for a 4-room flat.

Although Woodlands seems far to many, the area is favoured by many tenants, perhaps due to its proximity to the causeway. Rental prices of flats in the area is lower, between $1,700 to $2, 000 for a 3- or 4-room HDB flat, but demand is higher and the ease of finding will benefit flat owners in the area.

Another reason for the falling rental rates might be the increase in the number of properties available for rent across the board. With some private suburban condominiums reaching completion and some in popular HDB estates, the competition will definitely heat up. 2014 seems pretty set its way for now, but there is always 2015 to look forward to.

Toa Payoh’s facelift

As one of the oldest mature HDB estates in Singapore and HDB’s second satellite town, Toa Payoh has a past which evolved with the growth of the nation. As more new towns such as Punngol, Sengkang and even newer ones in the future such as Bidadari come up, older estates are welcoming timely upgrades.

And it is now Toa Payoh‘s turn as the popular estate saw an overwhelming response to the BTO HDB flats launch a couple of weeks ago. With it’s central location, full-fledge sets of amenities, MRT stations, bus interchange and established schools in its midst, it’s an estate which will stand its own for a long time to come.

TreVista in Toa Payoh Made up of mostly HDB flats, there has hardly been any new private homes launched in the district for almost three years now. However, a plot of land near  the MRT station has been put aside for development, and should a private property be launched in the spot, it will be sure to bring in the buyers and fetch high prices.

In the current market, resale flats sales have dipped from 25 to 15 per quarter, but rental prices and value appreciation of private properties in Toa Payoh has remained stable. Average prices stand between $1, 121 psf to $1, 460 psf with monthly rents currently between $3,60 to $4,10 psf. The private apartments in the area now are Trellis Towers, Oleander Towers and Trevista.

The years ahead hold great promise for the estate and its continued growth seems imminent.

Property market slump continues

Resale home sales and rental prices have continued to soften as we reach the middle of Q3. July proved to be rather quiet for the resale private home market as prices reached a 21-month low, according to the Singapore Real Estate Exchange (SRX) figures.

LakevilleAs more new private properties reached their completion dates and entered the rental market, the number of units for rent increased, which caused the rental market to become more competitive. And as immigration rules tightened, the supply and demand scale tipped in favor of tenants. Rental prices were at a 38-month low last month. And the blow is felt not only in the private property market but also the HDB resale market with prices dropping to a 30-month low in July.

The areas with the largest price decline is the city center, with prices dropping 4 per cent. This is followed by the city fringe areas with a 1.1 per cent dip and the suburban districts with a 0.6 per cent drop. Property experts say that the drop in rental prices could be one of the reasons contributing to the slipping resale prices.

With property prices so closely linked to immigration policies in this small nation, how will the authorities balance the issues of housing and population?

Pinnacle @ Duxton almost ready for resale market

50-storeys high with sky gardens and sitting at the top of an excellent location, the Pinnacle @ Duxton will soon be ready to enter the resale market as the five-year minimum occupation period (MOP) comes to an end in December this year. Will the peak of resale HDB flats prices be found in this exclusive public housing development? And how many of the flat owners will be looking to sell? In the current market lull, will more be looking to rent out their units instead?

It seems the resale market can ready themselves for some high prices. Ahead of time, one seller who has received special permission to sell the unit has had more than 50 viewings and offers of up to $830,000 for the 90 sq m four-room HDB flat.

Pinnacle @ Duxton was awarded the 2011 Urban Land Institute (ULI) Global Awards for Excellence. Image by HDB.

Pinnacle @ Duxton was awarded the 2011 Urban Land Institute (ULI) Global Awards for Excellence. Image by HDB.

With a total of 1, 848 units in the massive 7-block development, there will no doubt be competition, though most of the units being put up for sale now are four- and five-room flats. Prices nearing the million dollar mark will be expected. Even the Minister of National Development, Mr. Khaw Boon Wan, has said that when units at the Pinnacle are ready to hit the market, “there will be many millionaires there”.

Those who are ready to sell may be those who are hoping to move into the private property market as the amount they might earn from the sales could be double, if not triple the amount they originally paid for the units. When they were sold in 2004, five-room flats were priced only at $345, 100 to $439,400 while the four-bedders cost $289,000 to $380,900. Considering the prime location of it being near MRT stations, new businesses, a hip area of cafes, restaurants and pubs, the bustling Chinatown stretch and the Central Business District, it’s not surprising that public housing in the area has continually received high-priced offers. Most five-room flats in the Tanjong Pagar and Cantonment Close area have fetched above $800,000.

The only thing that might stop buyers from coming would be the mortgage limits. But as the market awaits the day the regulations are relaxed or policies changed, flat owners may continue to hold on to their asking prices, at least at this iconic building.

Up and coming district – Jalan Besar

As properties in the city centre become increasingly out of reach for the average investor hoping to gain a footing in the property industry, more are turning to the city fringe areas such as Marine Parade, Kampong Glam and Novena. Now, the Jalan Besar and King George’s Avenue districts could also be attracting buyers.

CitronThough the private homes market in the area has softened in the past year due to mortgage limits, its proximity and increasing popularity with the young and hip crowd and potential connectivity with future MRT lines in its midst, has renewed interest from investors. An area in King George’s Avenue has also been gazetted for future HDB blocks. One completed condominium apartment block in its vicinity is the City Square Residences, which during its launch drew huge crowds looking to purchase smaller units for rental purposes. Other private residential properties include Parc Somme and Kerrisdale.

Buyers waiting for new options can keep an eye out for private residential properties such as The Citron Residences on Marne road. Property experts are positive about the potential rental yields of smaller apartment units in the area as the district continues to bring in a variety of new businesses. Currently rents for smaller apartments in the area go for as much as 4 per cent more.

ECs not so easy for buyers

Executive Condominiums (ECs) were first launched at the turn of the century, and these hybrid property types had legs in both the public housing and private property sectors. This scheme was launched by the Housing Development Board (HDB) thus buyers can apply for various government grants and loans. After an ownership period of 10 years, they will become private properties and their investment value more often than not, increases, some rather significantly too.

Their main purpose was to help HDB owners move into the private property market, especially the “sandwiched” class who are unable to afford private properties but yet do not qualify for HDB flats, and ECs quickly gained momentum in the first decade of the 21st Century as buyers found the space they received, the governmental benefits and the potential long-term gains a boon. In 2010, the revival of this sector created a huge rise in quantity and prices of ECs.

Sea Horizon Executive Condominium.

Sea Horizon Executive Condominium.

Even though executive condos are still popular to date, the tighter loan curbs mean those who are unable to receive HDB grants and have to take private loans are now only able to receive up to 80 per cent of the price of the property and have their loans capped at 30 per cent of their gross monthly income. With prices of ECs coming up to the $1 million mark and beyond, this has largely reduced the number of eligible buyers, not forgetting that there is a $12, 000 monthly household income ceiling for EC buyers.

Upcoming EC launches in Woodlands and Sengkang will be a good gauge of market response and affordability of units. Should the price points be right, there may not be a lack of buyers. Currently, there are still remaining unsold units at ECs such as Skypark residences, Waterwoods, Forestville, Twin Fountains, Sea Horizon, Ecopolitan and The Tampines Trilliant.

Smaller apartments gaining popularity once again

Just a couple of years ago, there were debates about whether homes were becoming too small for comfort as the 500 sq ft studio apartments or shoebox units took the market by storm. Some shunned small units, preferring instead to go for larger ones with a lower psf price.

But now as loan limits are truly showing their might, buyers are favoring smaller apartments once again due to their lower quantum prices and the ease of rental. Though not all are flocking to shoebox units, after all, young families do need a reasonable amount of space, the average home size has dropped to 947 sq ft from June last year. And for HDB upgraders, their chances to move onto the private property market might have become slimmer, especially if size is a major consideration. The average 4-room HDB flat is around 969 sq ft.

CIty GateOne- and two-bedders have increasingly become more popular with buyers as they are usually within their budget and investors find them easier to rent out. URA figures in fact also showed that new residential properties have also featured smaller units, with the average size being 753 sq ft. But this hardly comes as a surprise as home size has been shrinking since 2009.

The other popular property  type is the dual-key apartment which provides the atmosphere of having two separate living spaces within the same home. Some of these units share the same entrance but separate facilities such as kitchens and toilets, while others share the same facilities but have separate entrances, providing privacy for bigger families and offering more rental options.

As we progress into the second half of the year and the market evolves in reaction to buyers demand and supply of land, will developers be quick to re-strategize and cater to the majority?