Home in on the suburbs

Looking to invest in real estate next year? We ask property consultants for their recommendations. -ST

Tue, Dec 25, 2012
The Straits Times

Suburban condominiums have generally fared better than those in prime districts this year, and the trend could continue into 2013.

Property analysts told The Sunday Times that their top picks for next year were mostly in the western and northern suburban regions.

4 property hotspots to watch out for in 2013 Click on thumbnail to view (Photos: AFP, Reuters, ST, BT, TNP, Internet)

Interest could also shift to districts at the city fringes.

Those who do not want city living yet want the convenience of being near the city will look to the city fringe, said DWG senior manager Lee Sze Teck.

Though the spotlight will likely be on suburban and city fringe hot spots next year, investors should not rule out homes in the prime districts despite a fairly lacklustre 2012 as economic conditions improve.

Rich investors from overseas may seek unsold units in premier locations next year to take advantage of low interest rates and excess liquidity, said Colliers International director of research and advisory Chia Siew Chuin.

Ms Chia added that signs of recovery in China and other major economies could bring more foreign buyers back into the prime market.

But regardless of the market segment, buyers should look out for homes near MRT stations and in districts where price movements have been subdued, analysts said.

These could be areas that have seen few exciting new launches but have the potential for future development.

10 unlucky things to avoid when buying a new home Click on thumbnail to view (Photos: AFP, Reuters, Bloomberg, ST, TNP, BH)

Other factors to consider are accessibility, congestion and the uniqueness of the development, said Savills research head Alan Cheong.

Buyers should take into consideration the traffic conditions in the surroundings once all the units, both private and public, are completed, Mr Cheong said.

The Sunday Times takes a look at the property consultants' top picks for 2013.

1. Jurong East

There is a buzz in Jurong East, now that it is firmly established as a commercial hub in the western part of Singapore.

The focus is mainly on Jurong Gateway, an area around the Jurong East MRT station, which has been jazzed up by the development of commercial sites such as the Jem and Westgate shopping malls.

The Government is keeping up the rapid pace of development in Jurong East, with the sale of a residential site to MCL Land for $369.4 million, or $705.10 per square foot per plot ratio (psf ppr), in May.

A hotel site was also bought for $238.2 million last month by Resorts World Singapore, a unit of Genting Singapore. This translates to $1,167 psf ppr, a record price for hotel land.

Mr Ku Swee Yong, chief executive of International Property Advisor, said job creation in the area is likely to be strong, which will drive up residential rental demand and capital values.

New malls built in Jurong East will create new jobs, as will hospitals such as the Ng Teng Fong General Hospital, which is under construction. Also, up to 5,000 existing jobs could move to Jurong East as government agencies relocate their premises there, Mr Ku noted.

As a consequence of the large developments there, rental demand is likely to rise as more locals and foreigners move in.

However, the downside of the rapid pace of development in Jurong East is that the area could become more congested in future as it becomes more densely populated, analysts said.

2. Alexandra

Upcoming launches are likely to boost prices in the Alexandra area, which was given a facelift several years ago by the transformation of Alexandra Canal into a waterway and park connector.

Gross rental yields here could climb as high as 5 per cent, said DWG's Mr Lee.

The most recent condo launch in Alexandra was the 373-unit Ascentia Sky in 2009.

Upcoming launches include 508-unit Echelon along Alexandra Road, which could be launched within the next few months.

Also, two land parcels in Alexandra, at Prince Charles Crescent and Alexandra View, were sold this year.

However, prices may have already started to rise. Resale prices in the Redhill and Alexandra area have climbed 6 per cent in the third quarter of this year compared to the same period in the preceding year, Ms Chia said.

3. Woodlands

Woodlands is also designated as one of Singapore's regional centres, but prices here have not appreciated as much as those in the other regional centres due to a relative lack of new launches recently.

Since 2011, there have been only two new launches: Woodhaven in June last year and Parc Rosewood in January this year.

But the area's image as a remote northern outpost could change soon. One factor is the completion of the Thomson MRT line in 2019, which could drive up home prices by as much as 30 per cent, analysts said.

The three stations along the new line - Woodlands, Woodlands North and Woodlands South - will serve the residents of more than 4,300 private homes as well as those living in HDB flats, which dominate the area.

Also, Singaporeans' growing interest in buying second homes in Johor Baru could increase cross-border activity and add buzz to Woodlands, said Colliers' Ms Chia.

However, since Woodlands is still quite far from the city centre, not everyone may want to live there, said SLP International research head Nicholas Mak.

4. Geylang

Although it is more known for its red-light district, Geylang has been thrust into the spotlight by a slew of new launches.

At least 40 projects, yielding 2,190 units, will be launched or completed in this area in the next five years or so.

Most developments in Geylang are small. Recently completed condos include the 78-unit Casa Aerata at Lorong 26 and the 62-unit Centra Suites at Lorong 25A.

The stigma of Geylang's sleaze factor has been holding down prices. Banks are also known to be reluctant to finance home purchases there.

However, that makes it an attractive investment option for cash-rich investors interested in yield accretion, said Colliers' Ms Chia.

Yields are a tad under 4 per cent, which is slightly higher than the average of 2 per cent to 3 per cent for condos islandwide.

5. Potong Pasir

The Potong Pasir area is near the Central Business District and Orchard Road, and is undergoing rejuvenation.

Projects under construction in the area include Nin Residence and 18 Woodsville, and Sennett Residence and Sant Ritz will be launched next year.

There was healthy demand for a 99-year leasehold mixed-use site at Upper Serangoon near the Potong Pasir MRT station. It was sold in September this year for $793 psf ppr.

Also, the Bidadari Cemetery has been cleared and is zoned for residential use, though the exact details of land parcels have not been released yet.

However, DWG's Mr Lee noted that Potong Pasir currently lacks retail amenities.

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