Leisure and work opportunities will attract developers
Developers are keen on the long-term potential of Tanjong Pagar’s inner-city living, analysts say, with sites in the area attracting record bids and transaction prices.
Guocoland’s bid last month for a white site above Tanjong Pagar MRT Station for $1.71 billion remains the highest on record for a Government land sale. The bid translates to $1,006 per sq ft per plot ratio for the 99-year leasehold site, 30 per cent of which could be developed into a residential property, according to Kim Eng Research.
In October, Keppel Land acquired GE Tower and Keppel Towers for residential development. The towers, opposite the Amara Shopping Centre, were bought for $573 million, or $1,189 psf. Kim Eng Research estimates that selling prices for the redeveloped GE and Keppel Towers will hit $2,600 psf.
Transacted prices in the vicinity have already gone above that level and were as high as $2,605 psf in Far East Organization’s Altez. Altez is a short walk away from Tanjong Pagar MRT Station, between the Icon and the coming Skysuites@Anson condominiums.
Most of Tanjong Pagar’s residential properties might continue to see transaction prices in the range of $1,800 to $2,000 psf, according to Kim Eng Research.
The numerous opportunities for leisure and work make Tanjong Pagar a very attractive area for developers, say analysts.
“The convenience and attractiveness of a downtown address remain highly sought after by young single expatriates and locals alike,” said Dr Chua Yang Liang, head of research for South-east Asia at Jones Lang LaSalle.
With the Urban Redevelopment Authority’s plans to turn Tanjong Pagar and Shenton Way into a “live, work, and play” precinct, “the attractiveness of this remaking story is hard to resist”, said Dr Chua.
In an upswing, properties in Tanjong Pagar can lead to high profits “due to their smaller unit sizes and high prices”, said the executive director of research at SLP International, Mr Nicholas Mak. For example, Altez sold an 861 sq ft unit for $2.2 million, or $2,605 psf, in August.
Tanjong Pagar will have 2,900 available units from existing and future projects by 2015. That has raised the spectre of oversupply but analysts say demand for housing in the area remains strong as Raffles Place or City Hall do not offer suitable sites for residential properties.
“The area is capable of producing more homes – smaller, stylish concepts in particular,” said Mr Donald Han, vice-chairman of Cushman & Wakefield.
“The residential component will bring about change in the retail and F&B concepts in the financial districts: Supermarkets and gourmet restaurants will find their place here, replacing money changers and hawker stalls, for instance,” he said.
“I think we have not hit a high threshold for residential inner-city living, judging from price and rental trends,” he added.
Demand for residences in the area will also be helped by investors hoping to reap high returns from renting out these inner-city units, analysts say.
Monthly rentals in the Tanjong Pagar area are currently between $4.50 psf and $6.00 psf and are estimated to hit as much as $7 next year, while yields will remain at 3 to 4 per cent.
Source : Today – 10 Dec 2010