MRT changing OCR and CCR concept permanently?

[Eldenfirefly]

Hi,

Would just like to bring this up for discussion. I believe the MRT system and its future lines are bringing about a permanent increase in the property prices and value of OCR condos.

Looking at all the new MRT stations, the completion of circle line all stages soon, and the future MRT lines. I link this with the large increase in prices of the outer region condos as compared to central.

In the past, distance was a much bigger factor and natrally, the nearer you are to the central region, the better because it would mean less travel time. The initial 2 MRT lines NS and EW line only reaffirmed that, because only the central region can quickly change lines and the lines went outwards from the centre mostly.

The circle line, and the upcoming line will redefine this entire concept. No longer will it be necessary to take an MRT to the centre and change lines there. You use circle line, and other future lines to change lines. This has dramatically increased the connectivity and hence desirability of outer lying stations and hence areas.

The increased car traffic in Singapore and traffic congestion has also meant that transport travel via MRT is valuable in its own right. If they are having an F1 event or NDP event. You are advised to take the train anyway because the roads will be closed. In fact, the train, even if congested at least gaurantees arrival within a fixed time. Taking a car and then running into a 2 hour jam does not even have that kind of reliability.

This means that we may be looking at a permanent increase in the attractiveness and pricing of OCR condos, especially those which have easy access to MRT. This explains why even places like Lakeside, Tampines, etc which in the past would have been seen as very far very the centre and seeing over 1000 psf for condo launches.

If we look forward, by 2020, pretty much most areas in Singapore will be well linked by MRT by then. When that happens, will people be choosing property more based on whehter they get a good view, a sea view, a park view, the more immediate ammenities and good schools within walking distance? Because by 2020, it may be that if you want to reach the city centre or the CBD area, it will take 30 minutes for most people because of MRT.

[Jadey]

Lets be realistic about MRT as a transportation mode.
MRT today are jam packed during peak hours and it will get worst as the population increase. And when the number of stations increases, so will be your travelling time from OCR to CCR. It is not going to cut short your travelling time dramatically.

The reason why central will always have the highest concentration of people because it is the most convenient meeting points for everyone and for business or leisure.

[phantom_opera]

Both of you have extreme views, the truth lies somewhere in between

[rattydrama]

OCR away from MRT will suffer slow appreciation.

[howgozit]

Lets be realistic about MRT as a transportation mode.
MRT today are jam packed during peak hours and it will get worst as the population increase. And when the number of stations increases, so will be your travelling time from OCR to CCR. It is not going to cut short your travelling time dramatically.

The reason why central will always have the highest concentration of people because it is the most convenient meeting points for everyone and for business or leisure.

From what you say MRT is all the more relevant. We are heading(population density wise) towards the direction of cities like Hong Kong, Tokyo...etc. Worse still don't forget that we don't have a hinterland, we are a city state. This makes connectivity by MRT very important in OCR.

[fclim]

It will still be proximity to central area. The MRTs are differentiated by:

1. MRTs located nearer central will command a premium over outlying MRTs (e.g. Bishan MRT vs Boon Lay MRT).

2. MRTs at intersections will command a premium (e.g. Serangoon MRT vs Hougang MRT).

That's how I see property prices moving within the MRT domain itself. Even if your property is not at MRT doorstep, but within 1km from MRT, it will still command a premium e.g. Clover will command a premium over Centris.

The faster you get home by MRT, the better since you won't have to put up with the smell and crowd for too long.

[gn108]

1) CCR with MRT and Premier schools or Shopping Malls nearby
2) CCR in general
3) MRT within 300m/5mins walk and within 4-5 MRT station from Orchard or Raffles Place. (Basically the area within the area of the CCL)
4) MRT within 300m/5mins walk from all other stations

Sea-facing/River-facing/Unblocked/Iconic design/Exclusive.

In addition to layout/NS facing/high-rise/mountain behind-sea in-front

[Jadey]

From what you say MRT is all the more relevant. We are heading(population density wise) towards the direction of cities like Hong Kong, Tokyo...etc. Worse still don't forget that we don't have a hinterland, we are a city state. This makes connectivity by MRT very important in OCR.

MRT will improve the connectivity within the OCR region, however it will not drastically reduce the the traveling time to CCR. Hence if you are working in CBD for example, you are unlikely to want to move further outskirt because there is a new MRT line.

And CCR being the home of CBD, the meeting point for most businesses, shoppers, tourist etc will always command a higher value due to the quantity and quality of jobs available in CCR region.

For me, the key to sustainable property appreciation in OCR is the availability of jobs rather than MRT station.

[howgozit]

For me, the key to sustainable property appreciation in OCR is the availability of jobs rather than MRT station.

The availabilty of jobs affect both OCR and CCR. It affects everything and everyone. But the MRT affects the OCR more directly.

I believe for a country like Singapore, MRT is the way to go. In Manhattan, taking the subway is a lifestyle, even top executives earning megabucks take the subway to work. In Singapore we just have not built it into our psyche yet maybe because the connectivity is still lacking.

[Jonathan0503]

The availabilty of jobs affect both OCR and CCR. It affects everything and everyone. But the MRT affects the OCR more directly.

I believe for a country like Singapore, MRT is the way to go. In Manhattan, taking the subway is a lifestyle, even top executives earning megabucks take the subway to work. In Singapore we just have not built it into our psyche yet maybe because the connectivity is still lacking.

Don't think it's purely due to lacking of connectivity but because driving in Singapore is till relatively hassle-free compared to other major cities in the world

[Jadey]

The availabilty of jobs affect both OCR and CCR. It affects everything and everyone. But the MRT affects the OCR more directly.

I believe for a country like Singapore, MRT is the way to go. In Manhattan, taking the subway is a lifestyle, even top executives earning megabucks take the subway to work. In Singapore we just have not built it into our psyche yet maybe because the connectivity is still lacking.

JLD is one of the hottest OCR property at the moment, and the main driver behind the crazy property price has got nothing to do with new MRT station, but rather the JLD development that will bring in tenths of thousand of skilled and white collar jobs.

MRT will make connectivity better, but its impact will be very localize around the station, rather than widespread like JLD.

[Eldenfirefly]

I am not saying OCR will become more expensive than CCR. That should not happen. But the rate of appreciation of OCR will be higher than CCR. Last time CCR used to say they are in the central region, so that's part of the premiun.

But nowadays, in central region means kenna ERP, means traffic jam, and everywhere in future will have MRT, so the location aspect of CCR will be not as powerful in future.

Instead, it may be the other aspects. So, MRT is changing the OCR and CCR concept permanently. Maybe last time, CCR will command a much bigger permium than OCR. In future, this may not necessarily be the case. The premium will narrow, and it is a permanent narrowing.

[howgozit]

Don't think it's purely due to lacking of connectivity but because driving in Singapore is till relatively hassle-free compared to other major cities in the world

That's true, but at what price? the cost of a car can buy you a home, it just doesn't make economic sense.

(btw, I am not against cars in fact I lurrvve cars and have burnt many holes in my pockets loving them)

[Eldenfirefly]

I agree with howgozit. Singapore may be moving towards driving car being a luxury and mostly for people who are very rich. They are reducing the number of parking spaces available in the city, so next time, even if have money also maybe difficult to drive to work in the city because no place to park.

That's why MRT will become even more important, and that will change the concept of CCR and OCR. The two will never be totally equal, but the ap will narrow, and maybe in future, there will be some exclusive places outside of CCR which command very high prices also.

Either that, or CCR will get "expanded" to encompass the entire area all within easy reach of circle line.

[rockinsg]

But why u think companies are moving to OCR location?
Cause of cost cutting.. and cost cutting is not just in the office rent..but as well as benefits to employees..

How much appreciating to OCR property these people will be able to provide, working for compaies trying to cut cost?

[windcar]

typical trend of property boom:
1. Prices of properties in prime location will raise fastest and highest in the initial stage of property boom.
2. Next to rise is those in RCR.
3. The last to raise is OCR properties.
By now, the people will have their money exhausted. The last stage is a property crash.
Then the cycle repeats itself again.

[Eldenfirefly]

Got no choice lor. Increasing demand = higher prices.

CCR no matter what will be more expensive for these people so that's not an option either. If you can't even afford OCR, then what more CCR?

[Jadey]

I am not saying OCR will become more expensive than CCR. That should not happen. But the rate of appreciation of OCR will be higher than CCR. Last time CCR used to say they are in the central region, so that's part of the premiun.

But nowadays, in central region means kenna ERP, means traffic jam, and everywhere in future will have MRT, so the location aspect of CCR will be not as powerful in future.

Instead, it may be the other aspects. So, MRT is changing the OCR and CCR concept permanently. Maybe last time, CCR will command a much bigger permium than OCR. In future, this may not necessarily be the case. The premium will narrow, and it is a permanent narrowing.

Lets get very realistic about OCR properties. how much the property prices can appreciate in OCR will depends very much on the income growth and affordability, not weather if MRT line has suddenly shifted the OCR border to over lap with CCR or vice versa.

At the moment Singaporeans seem very "comfortable" buying $1.3kpsf OCR properties. Once the tide retreat, (interest rate up, job cuts, recession, drop in valuation etc) then you will see how many people these are actually swimming naked.

[SpinCity]

I agree with howgozit. Singapore may be moving towards driving car being a luxury and mostly for people who are very rich. They are reducing the number of parking spaces available in the city, so next time, even if have money also maybe difficult to drive to work in the city because no place to park.

That's why MRT will become even more important, and that will change the concept of CCR and OCR. The two will never be totally equal, but the ap will narrow, and maybe in future, there will be some exclusive places outside of CCR which command very high prices also.

Either that, or CCR will get "expanded" to encompass the entire area all within easy reach of circle line.

Does NSL reduce the gap between Orchard/Somerset/newton/novena and, say, Yishun?
or Has EWL ever help to close the gap Significantly between Orchard/Somerset/newton/novena and, say, Boon Lay?
I agree that more MRT lines make OCR more commutable and accessible, the price gap between CCR and OCR may become smalle, but the more significant impact will be on the price gap between RCR and OCR

[Eldenfirefly]

But I think we shouldn't under estimate the power that the increased connectivity that the MRT lines bring about. With each new MRT station being built, the entire connectivity of the whole MRT network increases.

And if most of Singapore is equally well connected, then the MRT exchange stations become more valuable, and the places with additional selling points besides just being well connected will also be more valuable.

CCR used to be like that, primarily because of the connectivity issue. But the greater the connectivity of the rest of Singapore, then the less powerful that selling point will be to CCR.

[windcar]

Hong Kong has a very efficient underground tunnel system where cars can get from one place to any other in just half an hour. But the basic property trend still hold. The most prime location will be the first to see the biggest increase in price. The last to see the biggest increase are properties in the worst location. Then a crash will happen. The old hierarchy of ranking locations still persist, more or less.

[Eldenfirefly]

CCR will always be more ex. But the gap will narrow.

[windcar]

the gap will widen again after crash and then come the initial stage of another property boom.
Also in the past properties in CCR will be easier to sell off even during a crash (if you need money urgently and do not mind selling at a loss). Those in OCR will have a more difficult time selling off their houses during a crash. But it may be true that those near to MRT in OCR will have a much easier time selling though.

[Jadey]

CCR will always be more ex. But the gap will narrow.

Depending on which segment of the CCR properties.

Also not to forget the CCR properties are also getting their MRT line, so the price impact from MRT station should balance out.

[fclim]

OCR prices have moved up due to upgrader demand and not necessarily due to MRT. And upgraders typically live in OCRs. CCR prices have not moved because of sluggish foreign investments. There are also a lot more OCR new launches than CCR, with each launch driving up prices.

Developers have to sustain their profitability since there isn't much CCR launches for them to earn their big $$$ nowadays. The low interest rates work to their advantage.

Even far flung places like Foresque which is not anywhere near MRT are selling above $1,000psf.

The MRT will eventually be like a spider web, with lines directly to city and radiating lines (like circle line) that connects the various towns.

[Eldenfirefly]

But the question is, to what extent can CCR command the big premiums they had over OCR in the past if in the future, the overall connectivity of everything is increased.

Proximity to the central region was undeniably a big factor in the past, and historically, that has been one of the main reasons for the big gap between OCR and CCR.

If in future, the overall connectivity is increased to such an extent that it is a much smaller issue for most places, then the gap will be permanently reduced. The really far places will never command the kind of psf that CCR commands. But places which are at or near the cirlce line region may not see that big a gap difference in terms of psf pricing compared to CCR because their connectivity is no worse than CCR.

[teddybear]

Ai yoh, what is the point of speculating the effects? either you believe or you don't.

I rather believe what London has experienced will be what we will see in next 30 years, since they are more developed than we are by that number of years. The whole of London is about the same size as Singapore, so good comparison? London says, their Zone 1 prime properties (CCR) can sell at >6x that of Zone 4 (OCR) properties.

But the question is, to what extent can CCR command the big premiums they had over OCR in the past if in the future, the overall connectivity of everything is increased.

Proximity to the central region was undeniably a big factor in the past, and historically, that has been one of the main reasons for the big gap between OCR and CCR.

If in future, the overall connectivity is increased to such an extent that it is a much smaller issue for most places, then the gap will be permanently reduced. The really far places will never command the kind of psf that CCR commands. But places which are at or near the cirlce line region may not see that big a gap difference in terms of psf pricing compared to CCR because their connectivity is no worse than CCR.

[Yin Yin]

Lets get very realistic about OCR properties. how much the property prices can appreciate in OCR will depends very much on the income growth and affordability, not weather if MRT line has suddenly shifted the OCR border to over lap with CCR or vice versa.

At the moment Singaporeans seem very "comfortable" buying $1.3kpsf OCR properties. Once the tide retreat, (interest rate up, job cuts, recession, drop in valuation etc) then you will see how many people these are actually swimming naked.

I truly agree with your opinion about comfort. Just like COE, people are getting comfortable with the current S$50K COE.

[Eldenfirefly]

I kinda disagree with the London example. There's a lot more contral planning and long term planning by the government here. In a country like UK, for London, not as much because politics get in the way.

If you are a good central planner, you want to spread out the density a lot more. You also want to make things far more connected because you don't want over crowding all in the central area.

Leave all that to the private sector, and all the businesses and population will automatically grativate towards the centre and just make it super crowded. Leave it to the politicans only, and you get the same thing (because the companies there can pay the most), plus some special interest groups on top of that.

So, the outlying areas automatically get the least funding and hence the least amount of infrastructure built up.

Singapore has far more central planning. We already have circle line being done even before these other lines. Cities like Melbourne actually discontinued their equivalent circle lines because the traffic didn't justify the expense. But Singapore doesn't just build the MRT infrastructure, it also uses its HDB policies, release of new land to ensure that other non-city centres are formed.

Tampines 20 years ago was a backwater nothing. Tampines today is a bustling self contained newtown all by itself. So, because of this kind of difference, I think the prices will be a lot closer. Just my 2 cents.

[Jadey]

But the question is, to what extent can CCR command the big premiums they had over OCR in the past if in the future, the overall connectivity of everything is increased.

Proximity to the central region was undeniably a big factor in the past, and historically, that has been one of the main reasons for the big gap between OCR and CCR.

If in future, the overall connectivity is increased to such an extent that it is a much smaller issue for most places, then the gap will be permanently reduced. The really far places will never command the kind of psf that CCR commands. But places which are at or near the cirlce line region may not see that big a gap difference in terms of psf pricing compared to CCR because their connectivity is no worse than CCR.

You got to understand that rich Singaporeans living in CCR mostly have 2 or 3 cars at home, to them MRT or ERP doesnt make much of a difference to their lives except for their kids and their helpers.

The people who will greatly benefit from the MRT are people living in he OCR because they often have to commute to CCR region for work and social gathering, while people living in CCR seldom commute outside CCR unless there is something special, e.g like looking for good food, go to the zoo etc.

Prime district will always prime district due to the exclusivity of the neighborhood, the prestige address, the environment, the community, the variety of shops, F&B outlet etc.

To most traveling 30mins to 45 mins to CCR is consider acceptable, for those living in CCR, they are only use to 10mins. So it all boils down to relative.