Loft @ Rangoon hits $1,667 psft

The 24-unit Loft @ Rangoon by Oxley Holdings is fully sold and obtained TOP more than a month ago

|BY JO-ANN HUANG | THE EDGE SINGAPORE | MAY 6, 2013

Shoebox apartments in the neighbourhood of Rangoon Road have seen a pick-up un buying activity lately. Property agents reckon the catalyst in the neighbourhood is the upcoming integrated retail-medical hub, Connexion, adjacent to Farrer Park MRT station.

The integrated medical-retail hub comprises Farrer Park Hospital, the 189-suite Farrer Park Medical Centre, a 250-room hotel and spa, as well as a retail, F&B and life-style strip called Owen Link. The sprawling property has twin 20-storey wings atop a six-storey podium and is expected to add more buzz to the already-bustling Little India cultural enclave. Developed by a group of private medical practitioners, hospitality firms and foreign investors called The Farrer Park Co, Connexion is expected to be completed later this year.

Given its proximity to Connexion, Oxley Holdings’ Loft @ Rangoon has been popular with foreign buyers, according to DTZ property agent Carrie Zhang. “Some foreign investors bought into Loft @ Rangoon for capital appreciation, as well as to put up any family members or friends who might need to stay near the medical hub for their treatments,” she says. “The small size of the apartments is suitable for putting up their guests of family members for short-term stays.”

The 24-unit boutique residential project also has three commercial units and it has been fully sold since its launch in July 2010. The property is said to have received its Temporary Occupancy Permit in March, according to property agents. On April 15, a 420 sq ft unit on the fourth floor of Loft @ Rangoon was transacted in a sub-sale at $700,000 ($1,667 psf). The unit was first purchased in July 2010 at $587,200 ($1,399 psf); thus, the seller has seen the price appreciate 13%.

In 2010, shoebox apartments measuring just below 500 sq ft were popular with first-time property investors because of their affordable quantum price and expected yields of 5%. The units in the five-storey Loft @ Rangoon measure 409 to 495 sq ft; and there are two penthouses, measuring 861 sq ft and 883 sq ft. It is located a few minutes’ walk away from Farrer Park MRT station, City Square Mall and the popular 24-hour Mustafa Centre.

Nearby, also on Rangoon Road, is the 28-unit Citigate Residence, another property with predominantly small units. Launched in mid-2008, the units were snapped up within the first month of launch at prices averaging $1,000 psf.

A 614 sq ft unit on the second floor of the five storey residential block changed hands on April 15 for $975,000 ($1,589 psf), according to URA Realis. The previous owner had purchased the unit, at launch, for $623,000 ($1,015 psf), hence seeing a price increase of 56%. The units measure 441 to 570 sqft for one-bedroom and one-bedroom-plus study units, and 614 sq ft for two-bedroom units. Citigate Residence, which was completed in 2010, also has a 495 sq ft retail unit on the ground floor that has yet to be leased out.

Rangoon Road is seeing much rejuvenation, with a bevy of boutique apartment and condominium blocks featuring predominantly shoebox apartments. There are several such condo projects under construction along Rangoon Road, including Rangoon 88.

Developed by construction company-turned-property developer, Kay Lim Holdings, it was launched in late 2011 and expected to be completed in 2015. Forty units have been sold as at end-March, according to URA new-home sales figures. It has 48 units, measuring 420 to 1,313 sq ft, and prices of units sold last year ranged from $1,201 to $1,565 psf.

SJ Capital’s Jool Suites, a 52-unit freehold condo developed on Sing Joo Road, is located behind Rangoon 88. Launched in August 2011, with units measuring 388 to 1,249 sqft, the project is under construction and expected to be completed next year. Only two units are still available. The most recent transaction was done last September, when a 657 sqft unit was sold for $854,100 ($1,301 psf), according to URA Realis.

Investor appetite in such shoebox apartments has waned lately, following the imposition of the latest round of property cooling measures on Jan 12, which saw a hike in the additional buyer’s stamp duty. DTZ’s Zhang believes, however, that the city fringe location of such units in the Rangoon area and the proximity to amenities such as shopping malls, eateries and public transport make it popular among young singles, couples or those with small families. Connexion itself adds to the attraction of the area.

“For some, renting in the prime districts may be out of their reach, so they opt for the Rangoon area, where rents are more affordable and it is still near the city,” says Zhang. At Loft @ Rangoon, a 402 sq ft unit commands $2,800 in rents, and a 517 sq ft unit at Citigate Residence commands $3,000 in rents. Thus, investors can still enjoy rental yields of 4.8% to 5% at today’s prices.