November 28, 2014

Singapore’s non-landed residential real estate market is currently in pieces and the numbers agree. Statistics by Urban Redevelopment Authority (URA) for the third quarter of 2014 showed that the number of new private residential units sold fell by a frightening 42.6% quarter-on-quarter, to 1,531 units from 2,666 in the second quarter.

Yet, if you look deeper, there are hotspots across the island. Savvy buyers are making calculated purchases, showing that the non-landed private real estate market is not a lost cause.

In the third quarter of 2014, major projects in the central area such as City Gate, Highline Residences and Seventy Saint Patrick’s have bucked the downtrend, achieving remarkable take-up rates of 75.3%, 88.8% and 78.6% respectively. This is in sharp contrast to the current general real estate climate.

The success of these properties is due to a combination of factors: proximity to the city centre, excellent neighbouring amenities, as well as pent-up demand due to a drought of new properties in those areas. Located in the hip Tiong Bahru estate, Highline Residences’ success was further fuelled by a lack of new estate launches in the area over the past seven years.

While Seventy St. Patrick has many desirable attributes, the upcoming Marine Terrace MRT in 2024 will be a further boon. The station located directly opposite the project may result in difficulties (noise, traffic, etc) during the construction phase, but investors should foresee added value in the long-run after its completion.

Outside the city proper, the Downtown MRT Line (DTL), which is expected to be completed in 2016/ 2017, will alleviate the severe traffic congestion in Bukit Timah region, and reduce commuters’ travel time by up to 30%. This has led to a swell in property value around the future stations.

For instance, residential properties located within five hundred metres of the future Hillview, Beauty World and King Albert Park stations, have seen their prices soar past the 20.5% average increase in the Outside Central Region (OCR) non-landed private residential index. The value and desirability of these properties are expected to rise further as the DTL approaches completion.

But discovering hidden real estate gems is more than just following train tracks; it is about staying abreast of upcoming developments that can potentially improve the desirability of an estate significantly. On the other end of the island, unnoticed by many, Pasir Ris and Tampines (District 18) have emerged as hot spots in the second quarter of 2014. Intriguingly, foreign homebuyers comprised a noteworthy 14.1% of the total homebuyers in this district, up from 6.6% in the first quarter of 2014. This was also the district with the largest number of foreign homebuyers in the second quarter this year.

District 18’s appeal is bolstered by the relocation of the popular Overseas Family School (OFS) along Pasir Ris Drive 3. This international school boasts 3,833 students from 73 countries and offers academic options from kindergarten to high school. Opening in April 2015, the OFS’s education system is a strong incentive for parents of current and potential students, to consider long-term relocation to District 18. Together with the East Campus of the United World College (UWC) of South East Asia locating to Tampines, District 18 is shaping up to be an international school hub.

District 18’s proximity to the air cargo hub can too be pivotal for those who wish to leverage on the burgeoning air logistics industry’s job prospects. Both Keppel Logistics’ and Singapore Post’s logistic hubs are expected to be completed at the Tampines LogisPark, in early 2015 and January 2016 respectively.

There are of course, districts that remain evergreen, such as the prime districts: 9, 10 and 11, which saw foreign buyers form 40.6%, 32.8% and 24.7% of total transactions respectively, highlighting the long-term resilience and desirability of these areas.

Unlike the heady days of 2007, when almost any property on the island could be flipped for a quick buck, a long-term view and more careful approach should be taken towards the property market these days. But there are diamonds in the rough, if you know where to look.