River Valley leverages Thomson-East Coast Line, resilient demand

March 3, 2023

Horizon Towers, the 99-year leasehold condo on Leonie Hill Road in prime District 9, was relaunched for collective sale tender on Feb 16 with an unchanged reserve price of $1.1 billion. This followed a tender in September 2022, which closed without a successful bid.

The 211-unit condo, completed in 1984, sits on a 1.9ha site, with the reserve price working out to a land rate of about $2,049 psf per plot ratio (psf ppr) after factoring in a lease top-up premium estimated at around $277 million.

Among Horizon Towers’ selling points is its location. Situated in the River Valley planning area within the Central Region, it is close to the Orchard area and the CBD. It is also a five-minute walk from the Great World MRT Station on the Thomson-East Coast Line (TEL).

Besides its central location, River Valley remains a coveted residential neighbourhood for a number of reasons, says Elizabeth Choong, EdgeProp Singapore’s property research analyst. Speaking at an EdgeProp Master Plan Masterclass webinar on Feb 25, Choong presented key developments impacting the area, as well as market insights garnered through EdgeProp Singapore’s analytical tools.

Upscale residential enclave

The River Valley planning area spans about 148ha, and is bounded by the Orchard, Singapore River, Museum and Tanglin planning areas. The majority of land-plots in River Valley are zoned for residential use. As such, despite being close to key commercial centres in the city, River Valley is a relatively quiet neighbourhood.

Housing in the area predominantly comprises high-rise private condos. According to EdgeProp LandLens data, there are 12,061 condo units in River Valley across 145 projects. Several of these condos, like Horizon Towers, date back to the 1980s and 1990s, when a crop of high-rise developments emerged around River Valley Road as part of a government-led redevelopment of areas along the Singapore River.

Today, River Valley is known as an upscale residential enclave catering to well-heeled households and expatriates. Census data for 2020 shows nearly half of the households in River Valley earn a monthly household income of at least $20,000 — more than double the median monthly household income of $9,189 for employed Singapore residents.

In addition, residents aged between 40 and 49 make up the largest group in River Valley. “These are usually prime working and earning years, which helps explain the high income level of residents here,” Choong says.

Higher prices and rents

Given its prime location, River Valley condos can command higher prices relative to other areas. Data compiled on EdgeProp Singapore’s Market Trends tool shows that prices transacted year-to-date for condo units in River Valley stand at $2,789 psf, higher than the average price for the Central Region ($2,503 psf) as well as the whole of Singapore ($2,019 psf).

However, while prices are higher, they are growing at a slower pace. Since 2013, average transacted prices in River Valley have grown 32%, versus 44% for the Central Region and 46% for the whole of Singapore. “This may indicate that buyers in River Valley have a higher sensitivity to pricing,” Choong says.

The same pattern shows up for rents. Average condo rental rates in River Valley stand at $5.49 psf per month (psf pm) year-to-date, compared to $5.17 psf pm for the Central Region and $4.69 psf pm islandwide. Choong attributes the higher rents to River Valley’s popularity among renters: census data shows 33% of the area’s population are tenants, higher than the national average of 12%.

Enhancing connectivity

Despite its central location, prior to the launch of TEL, River Valley had no MRT station. “While there were some stations nearby like Orchard or Tiong Bahru, there weren’t any within the River Valley area itself,” Choong points out.

This has changed with the opening of Stage 3 of the TEL last November — extending the line from Caldecott to Gardens by the Bay. Within this stretch, three of the stations fall within the River Valley planning area, namely Orchard Boulevard, Orchard and Great World.

The stations greatly enhance connectivity within River Valley, bringing easier access to the MRT network for residents in the area. Once all stages of TEL are fully operational by 2025, residents will also have a direct MRT route to the East Coast.

Choong believes the stations also bode well for property values. “A survey by EdgeProp Singapore last year found that people are actually willing to pay at least 10% more for a home near an MRT station or bus interchange,” she explains.

New launches, en bloc attempts

A number of recent launches in River Valley have performed well, signalling continued confidence in the area. Just across Horizon Towers is Irwell Hill Residences, a 99- year leasehold development on Irwell Bank Road by City Developments. Launched in April 2021, the 540-unit condo has seen 94% of units sold at an average price of $2,703 psf.

The Avenir is a 376-unit freehold project by Hong Leong Holdings, GuocoLand and Hong Realty on River Valley Close, launched in January 2020. It currently has a take-up of 91% at an average price of $3,206 psf.

The most recent launch in River Valley was Hill House, a 999-year leasehold project by a consortium led by Macly Group. Comprising 72 units, the project has seen 15 units sold since its launch in November 2022 at an average price of $2,977 psf.

Meanwhile, en bloc attempts have also seen a revival. Besides Horizon Towers, Orchard Bel Air, a 99-year leasehold condo along Orchard Boulevard, also relaunched its collective sale tender with an unchanged price tag of $587.5 million (or an estimated $2,551 psf ppr). The site is adjacent to the Orchard Boulevard MRT Station, right at the boundary between the River Valley and Orchard planning areas.

Tenders for both Horizon Towers and Orchard Bel Air will close in March.

More at: https://www.edgeprop.sg/property-new...silient-demand