Narrowing price gap between CCR and RCR properties

By Lee Sze Teck

Huttons Asia

September 21, 2022

When it comes to property investing, buyers will want to seek out undervalued properties so that they can maximise their potential returns.

This can be in the form of properties selling below market prices, freehold properties selling at leasehold prices, and better located or more central properties priced below properties that are further away from the center of Singapore.

Property prices have increased by 3.5% in 2Q2022, driven by prices in the Rest of Central Region (RCR) which went up by 6.4%. Two major non-landed private residential projects in the RCR, Piccadilly Grand and [email protected] may have contributed partly to the price gains. Piccadilly Grand sold 77% of its units at an average of $2,150 psf on launch day while [email protected] moved more than 75% of its units at an average of $2,387 psf on the first day of launch.

In fact, some price anomalies have appeared in the property market as early as April even before the launch of Piccadilly Grand and [email protected] These have presented an excellent opportunity for investors to take advantage of such arbitrage opportunities.

The property market is broadly segmented into the Core Central Region (CCR), Rest of Central Region (RCR) and the Outside Central Region (OCR).

Homes in the CCR typically cost more than homes in the RCR and OCR. In the past ten years (2012 to 2021), the median price per sq ft gap between CCR and RCR non-landed new homes is around 42.7%.

This price gap started narrowing in April to 25.7%. The gap further closed in August to 14.9%. Some buyers realized the narrowing gap and bought new homes in the CCR. Developers sold an estimated 199 homes per month from April to August, 66.7% more than the monthly average in 1Q2022.

Developer sales in the CCR made up 50% of total sales in August, the first time since October 2017 that sales in the CCR exceeded 50% of monthly sales.

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