http://www.straitstimes.com/archive/...alues-20150117

Geylang re-zoning may raise condo values

Experts say less space means better returns for existing units

Published on Jan 17, 2015 1:48 AM

By Cheryl Ong


THE proposal to re-zone some residential parts of Geylang for commercial use could lift the values of nearby condominiums.

Property experts believe reducing the amount of space for homes will bolster values for existing residences as demand is strong, given the area's prime location and good transport links.

"With future supply strapped, owners of existing apartments can expect better returns from their properties, both in terms of rental as well as capital values," said Mr Donald Han, managing director of property consultancy Chestertons.

The proposed zone changes announced by the Urban Redevelopment Authority (URA) on Tuesday are aimed at stemming new residential developments from being built in the areas bounded by Geylang Road, Lorong 22 Geylang, Guillemard Road and Lorong 4 Geylang.

They involve reclassifying land from "residential/institution" use to "commercial/institution".

The move was aimed at "managing friction" arising from the "incompatibility of uses" between residents and commercial activities in the red-light district. There are 24 condominium and apartment blocks - on freehold leases - in the affected zones, two still under construction.

Residents living in the area dotted by nightclubs, eateries and seedy joints have long been up in arms over issues such as noise pollution, illegal parking and littering. Some fear the proposed move will encourage even more shady establishments to be set up.

But experts say the area's proximity to the city centre, Aljunied MRT station and the Singapore Sports Hub make it a popular area, so curtailing the supply of residential land will deliver plenty of upside to existing owners.

Rental yields range between 3 and 5 per cent - about 1 to 1.5 per cent higher than other districts in some instances, because it is common for single units to be rented to multiple tenants in Geylang.

Capital values for existing residences could rise as well, as commercial land typically commands a premium. Though existing residences will not be affected, new developments built in the area must be for either commercial or institutional uses. This includes clans or places of worship.

While the en bloc market is virtually dead now, the small development sites available in Geylang could attract boutique developers or investors seeking to buy smaller buildings for offices, noted Mr Han. But Dr Chua Yang Liang, head of Southeast Asia research at JLL, added: "The fragmented ownership of the land parcels will make the development of any large- scale commercial project more arduous."

The proposed re-zoning would give the green light to offices, shops, restaurants and entertainment joints. There are already restrictions on the number of eateries in Geylang Road to address parking concerns but there are no limits on the number of commercial operators in the affected areas. However, proposals for new pubs and karaoke lounges would be assessed, taking into account the immediate surroundings. This would be done in consultation with the relevant agencies, said the URA.

Dr Chua also noted that a designated zone for commercial activity could stop an infiltration of businesses into the outlying residential areas but it would not prevent visitors from patronising the shops inside the re-zoned cluster.

A resident, who wanted to be known only as Bernard, was "dead against the move" as it would only "perpetuate the status quo" and "worsen the situation".

"Every day when I come home, I can see the sale of contraband cigarettes at a coffee shop; what has been done to stamp this out and other vices?"

Second Minister for Home Affairs and Trade and Industry S. Iswaran said in reply to a parliamentary question from Marina Parade GRC MP Fatima Lateef in April that the Geylang Neighbourhood Police Centre has about 160 officers - 60 per cent more than other areas. The significant police presence and regular enforcement has lowered the number of "major offences" in Geylang by 36 per cent since 2008, he said.

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