Sitting on a goldmine: Owners of HDB flats in coveted sites can profit from soaring prices

SEP 1, 2019

Tan Ee Lyn


Interest in newer public housing projects like Pinnacle @ Duxton resurfaced recently when Prime Minister Lee Hsien Loong unveiled in his National Day Rally speech that 9,000 public and private residential flats will be built on the sea-fronting strip of land now occupied by the Keppel Club after its land lease expires at the end of 2021.

Judging by its waterfront location and proximity to the central business district, the future Keppel units could well become as popular as the Pinnacle's and the announcement quickly prompted questions on whether the Government should try to mitigate the "lottery effect" of these prized assets that are, after all, taxpayer-subsidised.

In 2004, when the Pinnacle was launched, there were nearly 5,000 applications for 1,848 units and the flats were eventually allocated through a balloting system. Getting one such unit was like winning the lottery. As it turned out, sellers of Pinnacle units hit the jackpot in recent years - an outcome that is now billed as the "lottery effect".

But while projects like Keppel and the Pinnacle undoubtedly fire the public imagination, the value of flats in older public housing estates such as Marine Parade, Tiong Bahru and Queenstown has also risen strongly over time. And many former flat owners in these older estates have gone on to make a tidy profit, albeit more quietly.

Mr Francis Loh, a self-employed sand trader, bought a sea-facing three-room HDB flat in Marine Crescent five years ago for $430,000.

"I bought it because we wanted to be close to Tao Nan School for my two children," said the 45-year-old father of two daughters, who are eight and two years old.

"My friends asked me why I chose such an old flat, when I could buy a five-room flat elsewhere for the same amount of money.

"I know this area well, I grew up in the east. We go to the beach and we've got this sea view. It's a huge park."

The flats in Marine Crescent went for around $11,000 in the 1970s, said Mr Richard Tay, a 75-year-old retiree who lives in the same block.

In the past 12 months, seven units in the same block with only 55 years left on their lease changed hands, six of them averaging at $463,000. The cheapest unit that went for $315,000 was smaller and on a low floor in the 44-year-old block.

The eight-year-old Pinnacle in Tanjong Pagar continues to command attention because of the way its flats have consistently crossed the million-dollar mark in recent years. Twenty-nine five-room flats have sold for $1 million or more since the start of last year. The estate has seven blocks.

Mr Albert Lim, an associate agent with G A Realty who has helped Pinnacle owners sell or lease their properties since 2008, said the estate is especially attractive because of its central location, proximity to two MRT stations and refreshingly different architecture.

While rentals have generally softened in recent years across the island, a five-room Pinnacle unit still commands $3,500 a month, while a common bedroom can fetch $1,200 and the master bedroom $1,800. Those levels were $4,300, $1,500 and $2,100, respectively, in 2008, said Mr Lim.

He is now also acting for the seller of a high-floor, five-room Pinnacle unit, who is asking for $1.2 million.

He related how his brother successfully balloted for a four-room Pinnacle unit. According to media reports, four-room Pinnacle units cost between $289,200 and $380,900 at the launch in 2004.

But his brother settled instead for a four-room flat in Ang Mo Kio for around $280,000.

Mr Lim estimated that the Ang Mo Kio flat is probably worth around $360,000 now.

"This (Pinnacle) is a goldmine. If he had bought Pinnacle, it would be worth near a million now," Mr Lim said.

IS EVERYONE CASHING OUT?

Residents at older, coveted housing estates are well aware they are sitting on sizeable profits but not everyone is in a hurry to cash out.

The owner of a three-room unit in Tanglin Halt recalled how she and her family were approached by property agents to sell their home after they were told that their unit was intended for compulsory acquisition by the Housing Board under the Selective En bloc Redevelopment Scheme (Sers).

Such homeowners are given the option of replacing their old units with newly built HDB apartments nearby. If these new flats are in good locations, close to the central business district for instance, then they are seen as likely to command hefty resale prices in time to come because of the maturity of the neighbourhood, and their new construction, accompanied by new 99-year leases.

"Agents came knocking on our door to tell us they had buyers from China who would pay $490,000 to $500,000," said Madam Nancy Koh, 82. "But they were not really interested in our old flat. They just wanted to be allocated the new replacement unit."

Madam Koh and her late husband raised their five children in this Tanglin Halt flat, which they began renting in 1969. They bought it for $17,000 when the Government offered it for purchase in 1982.

Two much newer three-room units close by that have just passed their minimum occupation period of five years changed hands recently for an average of around $550,000.

Three of her children have moved out, but Madam Koh has no intention of cashing out or moving away from the area where she has lived for 50 years.

"We have everything here," she said. She will move to a new three-room HDB flat with two of her children in nearby Margaret Drive next year.

Such mature estates have a completely different appeal from the new developments, with owners reluctant to leave the places where they have lived for decades, and raised their children.

"There is sometimes a premium placed (on estates like Marine Parade and Tiong Bahru) because of 'sentimental' reasons. The sense of place in new housing in Chinatown, Boon Keng, etc might be higher because some people have grown up in those areas," said Dr Harvey Neo, senior fellow and programme head of the Lee Kuan Yew Centre for Innovative Cities at the Singapore University of Technology and Design.

"For the Keppel site, I think this sense of attachment is not as high," he added.

A sense of attachment is what Ms Heather Ho, 41, feels for her five-room flat in Marine Drive where she now raises her three children with her husband, a university tutor.

She grew up in the area, and her parents transferred the ownership of this flat to her in 2007 when she was preparing to get married. The older couple went on to build a home in nearby Frankel estate.

"It's too nice a place to give up," said Ms Ho, in her flat on the 13th floor - with a sweeping view of the lush greenery along the east coast and the sea beyond.

Her parents bought it for around $35,000 in 1978. Three units in the same block were sold for between $808,000 and $918,000 this year, according to data from an HDB website on resale prices.

"If my kid left his ruler (in school), I can pop into the Popular bookstore. The amenities are all around. If I do late-night baking, I can go to FairPrice downstairs (for ingredients)," said the former educator, who gave up her career to raise her three children, aged 10, eight and five.

"My whole extended family is in the east. I will find it hard to leave the east."