Revival of interest in Tanah Merah

A 1,302 sq ft unit at Optima@Tanah merah was sold for $1,412 psf

Two units at The bayshore were sold in the week of Aug 16 to 2

THE EDGE SINGAPORE, September 9, 2013

BY GWYNETH YEO

Following the launch of new projects such as Optima, eCO and Urban Vista over the last three years, interest in the Tanah Merah neighbourhood in the East has increased. That is likely to intensify with the upcoming preview of The Glades — a joint venture between Keppel Land and China Vanke — which sources expect to take place within the next week or two. The Glades is located next to the entrance to the Tanah Merah MRT Interchange station.

Transactions in Tanah Merah have picked up dramatically in the week of Aug 16 to 23. Located across New Changi Road from The Glades is the 293-unit Optima by City Developments Ltd (CDL) in a joint venture with TID Pte Ltd. Optima was completed last year. In August, a 1,302 sq ft unit on the 12th floor of one of the blocks changed hands for close to

$1.84 million ($1,412 psf), making it the second most expensive unit sold in the development within the year. This is the second time the unit has changed hands in the secondary market. The last time was in April 2011, when it was sold for $1.24 million ($952 psf). The first buyer purchased it at launch in August 2009 for just over $1 million ($776 psf).

Prior to that, a 2,336 sq ft three-bedroom-plus study unit at Optima changed hands in April for $2.12 million ($908 psf). The previous owner had purchased the unit from the developer three years ago for $1.45 million ($621 psf). When the 99-year leasehold condo Optima previewed three years ago, it was sold out within three days at an average price of $810 psf. The project had attracted a mix of investors and owner-occupiers, owing to its location next to the Tanah Merah MRT station. Last year marked the launch of eCO, a 748-unit project by Far East, Frasers Centrepoint and Sekisui House. As at end-July, only 91 units remained unsold at the 99-year leasehold condo, and the median price achieved was $1,477 psf.

The most recent launch in the area was that of Urban Vista, developed by joint partners Fragrance Group and World Class Land. It is a 582-unit, 99-year leasehold mixed-use development comprising SOHOs and apartments. Since its launch in March, 478 units (89.3%) of the 535 released have been sold at a median price of $1,490 psf as at end-July.

The latest transaction at Urban Vista was that of 1,485 sq ft three-bedroom unit on the 14th floor that was sold for $1.87 million ($1,258 psf), according to a caveat lodged on Aug 19. Four other units were sold at $1,264 to $1,592 psf last month. According to Joseph Lee, senior marketing director at ERA Realty Network, two-bedroom units at Optima can fetch rental rates of $3,800 to $4,200 a month. As Urban Vista’s unit sizes are more compact, he expects rental rates to be lower and overall rental yields to hover around 4% when the project is completed.

Buyers are increasingly more price-sensitive in the light of the government measures, especially following the Total Debt Service Ratio (TDSR) loan framework with a 60% debt threshold; the recent lowering of the Mortgage Servicing Ratio (MSR) and shortened loan tenure for the HDB resale market; as well as new permanent residents (PRs) disallowed from purchasing HDB resale flats until three years after obtaining their new status.

Some PRs may buy a private condo instead, but they have to pay a 5% additional buyer’s stamp duty (ABSD), and not all the affected PRs have the purchasing power to buy a mass market condominium, says Lee Lay Keng, DTZ’s head of Singapore research. “So, the increase in demand for mass market private condominiums from PRs who would have purchased an HDB resale flat will not be that significant.”

However, Lee reckons the rental demand for mass market private condos could increase, as PRs who cannot buy HDB resale flats now and do not have the purchasing power for a private property will have to rent instead, and some of them could choose to rent a mass market private condo. Thus, while transactions are expected to fall after the TDSR, rental demand may be resilient.

All eyes will be on the launch of The Glades in Tanah Merah, as it will be the most significant new launch after the TDSR and the MSR measures. The 99-year leasehold development is said to comprise 726 residential units and three shops across nine towers. Unit types range from one- to four-bedroom apartments and one- and two-bedroom Small Office Home Office (SOHO) units to four-bedroom, dualkey units and penthouses. According to market sources, indicative prices of the project are likely to be in the $1,400 to $1,600 psf range.The Glades

Meanwhile, there have been several transactions in the Bedok-Upper East Coast area. For instance, two units at The Bayshore were recently sold. One was a 1,227 sq ft unit on the ninth floor of one of the blocks that fetched $1.28 million ($1,043 psf). The other was a 969 sq ft unit on the fifth floor that was sold for $1.06 million (1,094 psf). The Bayshore is a 99-year leasehold condo with 1,038 units. It was developed by Far East Organization and completed in 1999.

Farther up on Bedok Road in the quiet housing estate of Bedok Ria is a detached house sitting on an 8,643 sq ft freehold land parcel at the end of Jalan Nipah. It was sold for $8.3 million ($960 psf) recently by Samuel Eyo, director of prestige home at Savills Singapore, in a co-broke deal. The property had been on the market for more than a year and was sold to a Singaporean who wanted to live near his work place in Bedok. The 5,400 sq ft house was rebuilt seven years ago. “Tanah Merah is a booming area because of the proximity to Changi International Business Park and Changi International Airport,” says Savills’ Eyo. Adding to the buzz is the new Terminal 5, scheduled for completion in the mid-2020s and expected to bring more business to the area.

A 8,643 sq ft detached house located on Jalan Nipah was recently sold for $8.3 million ($960 psf)