Suburban condo plots are red-hot

[mr funny]

http://www.straitstimes.com/Invest/S...ry_527085.html

May 16, 2010

Suburban condo plots are red-hot

Developers and buyers are keenly eyeing heartland condos, possibly pushing prices to $1,000 psf again

By Joyce Teo


Can condos and HDB flats co-exist happily?

Property developers certainly think so, going by their high bids for state land for private housing, even if the plots are smack in the middle of an HDB estate.

Going by recent tender results, developers have no qualms paying a lot more, if the sites in these established or up-and-coming HDB estates are near MRT stations. Just last week, a tender for a plot in Simei Street 3 closed with an impressive 18 bids. Chip Eng Seng topped all rivals with an offer of $523 per sq ft (psf) per plot ratio.

This means, at that price, Singapore will likely see another suburban condo selling at or near the $1,000 psf mark, previously thought to be a resistance level.

Property experts said a key attraction of the Simei site - in the middle of an HDB estate - is its proximity to an MRT station and amenities. The land is just across the road from Simei MRT station and Eastpoint Mall.

'Actually, land next to MRT stations has always commanded higher prices than those that are not,' said Mr Nicholas Mak, a real estate lecturer at Ngee Ann Polytechnic. He said there were few attractive private sites for sale in the past 15 months. This is why many developers are competing hard in the Government's land sales tenders.

Said DTZ's head of South-east Asia research, Ms Chua Chor Hoon: 'Developers need to have a portfolio of sites to continually develop to maintain operations. So those with a smaller land bank would bid more aggressively to secure sites.' Also, developers are scrambling for suburban land because there is money to be made. Sales of mass market homes have remained strong since February last year, Mr Mak said.

Mass market launches, such as Caspian in Jurong, Double Bay Residences in Simei, Optima @ Tanah Merah and Trevista in Toa Payoh, met with strong demand last year. At Trevista, some units were sold for more than $1,000 psf.

'Rising prices of new mass market launches give confidence to developers to bid higher for government sites, especially attractive ones,' he added. Hence, the fact that the plot is located within an HDB estate is not a disadvantage when the market is hot.

This was not so in the 1980s to perhaps the early 1990s, when buyers did not see living in a condo in an HDB estate as moving up the social ladder.

'In the past, HDB estates were not as nice and HDB prices were low. People were not too happy to be too near them, if they could afford a private property,' said a property expert.

Ms Chua concurred: 'People weren't keen to buy a private condo next to an HDB estate unless it was priced low.' So, when a developer tries to test the market by launching a project that is not priced as low as expected, there would be 'disbelief and some resistance', she said. 'When the second one is launched, and there's good demand, then it becomes more accepted. That's how new trends start,' she added.

Times have changed. Old HDB estates have been spruced up or had some blocks torn down for rebuilding, while new HDB estates have more whistles and bells, experts said. HDB flats are in hot demand these days, with resale prices at record highs. HDB data showed that resale prices rose 2.8 per cent in the first quarter over the previous one, lifting it to yet another high.

Those living in upper-mid to high-end projects will still prefer more exclusive sites, experts said. But if they are buying and eyeing the rental market, a condo in an HDB estate brings attributes that tenants want. 'There are more expats employed on local terms, with less generous housing budgets. They usually have no cars and thus prefer to stay near MRT stations,' said Mr Mak.

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[RE_Owner]

so is better to buy mass than lux. the downside risk is lower but the upward risk can be quite high if hit the jackpot

[devilplate]

so is better to buy mass than lux. the downside risk is lower but the upward risk can be quite high if hit the jackpot

if u got millions...u will not invest in mass market.

[Wild Falcon]

Not true. Even if you have millions, you still have to make wise decisions and not anyhow throw money without due diligence. After all, a lot of so-called "prime" condos are getting small and focus on studios - which means entry price may not be higher than suburbs - and more people can "play" with the smaller quantum. I know of fairly wealthy people who diversify their investments across regions - not always in first tier cities. It's like whether a company wants to invest in established developed countries or developing countries - and it doesn't mean a company with more funds will only invest in developed countries. If developing countries have greater potential, then you put money there. Same logic for property investment - you invest in an area that gives you the greatest upside potential or yield or both - doesn't mean you have to invest in "established" developed areas all the time. Look at the so-called "developed" countries out there, they are struggling to grow by 3% p.a.. But many developing countries can close one eye and still generate decent growth of 5-6%.

if u got millions...u will not invest in mass market.

[RE_Owner]

stock continue to fall today......probably there will be some knee jerk reaction to ppty mkt. no doubt the buying momentum is still there, but the euro crisis somehow will have some pull back reaction from investor. so i find the risk is quite high for lux mkt

[devilplate]

Not true. Even if you have millions, you still have to make wise decisions and not anyhow throw money without due diligence. After all, a lot of so-called "prime" condos are getting small and focus on studios - which means entry price may not be higher than suburbs - and more people can "play" with the smaller quantum. I know of fairly wealthy people who diversify their investments across regions - not always in first tier cities. It's like whether a company wants to invest in established developed countries or developing countries - and it doesn't mean a company with more funds will only invest in developed countries. If developing countries have greater potential, then you put money there. Same logic for property investment - you invest in an area that gives you the greatest upside potential or yield or both - doesn't mean you have to invest in "established" developed areas all the time. Look at the so-called "developed" countries out there, they are struggling to grow by 3% p.a.. But many developing countries can close one eye and still generate decent growth of 5-6%.

i haf seen enuff cases whrby richies only invest in prime areas...however, its a matter of timing. due to my limited funds, i wasnt able to commit in condos like MBR, ardmore2, sky@11, sentosa etc etc during last yr jan-april. which i tink its definitely a better buy den mass-mid tier market at tat time.

[Douk]

Seems like the pulling force from high end market is not there... are they trying to keep up the momentum by pushing from bottom up ?

[teddybear]

Sky@11 is in Toa Payoh, don't think considered Prime.

i haf seen enuff cases whrby richies only invest in prime areas...however, its a matter of timing. due to my limited funds, i wasnt able to commit in condos like MBR, ardmore2, sky@11, sentosa etc etc during last yr jan-april. which i tink its definitely a better buy den mass-mid tier market at tat time.

[jlrx]

Sky@11 is in Toa Payoh, don't think considered Prime.

You've downgraded Sky@11 by two levels to Toa Payoh!

Sky@11 already said they are @ district 11, so should be same as Newton One.

At least say in Balestier.

[teddybear]

Some D10 places also so ulu, so same for D11 like Sky@11 which is basically beside CHIJ Primary (Toa Payoh), so more considered Toa Payoh.
The Balestier area is south of PIE, while the Toa Payoh area is north of PIE. That junction area always jammed like hell.

You've downgraded Sky@11 by two levels to Toa Payoh!

Sky@11 already said they are @ district 11, so should be same as Newton One.

At least say in Balestier.

[devilplate]

Sky@11 is in Toa Payoh, don't think considered Prime.

sky@11 very big units so quantum quite big...somemore in D11 plus very gd view...still not prime enuff

den my mid tier condos like ulu sembawang liao

[Wild Falcon]

But prices were already quite high then in MBR, admore etc. It also depends on one's age. Many of us are only in our early or mid thirties today and it would be really tough to invest simultaneously in Admore, MBR etc few years back but the "older" generation (maybe late 30s or 40s) who have made tons of money from their properties previously would have no problems doing that. Of course those who bought prime properties during 2003-2004 would have made the most, but well, many of us were still too young and poor then to be able to reap those benefits. Therefore, if you enter the market late, e.g. in 2007, you can still make significant returns from so-called "mass market" properties So there is no hard and fast rule on investment - if you are late in the game, then you just have to change your investment strategy to be different from that of your predecessors - i.e. look for undervalued properties which is not necessarily prime.

i haf seen enuff cases whrby richies only invest in prime areas...however, its a matter of timing. due to my limited funds, i wasnt able to commit in condos like MBR, ardmore2, sky@11, sentosa etc etc during last yr jan-april. which i tink its definitely a better buy den mass-mid tier market at tat time.

[devilplate]

my initial point is...if u have millions...u will not invest in mass market.

usually ppl will move inwards...start wif mass --mid--prime--landed--GCB

[teddybear]

The "@11" already tell you that it is so unlikely to be associated with D11 that they have to add a "@11" to their name! This must be one of most un-"@11" place in D11

sky@11 very big units so quantum quite big...somemore in D11 plus very gd view...still not prime enuff

den my mid tier condos like ulu sembawang liao

[devilplate]

no lor..the most un-11 is condos like pavilion 11, montebleu tat area...tat area shd be D12...lol

another one very un-11 is Cube 8

[Rysk]

no lor..the most un-11 is condos like pavilion 11, montebleu tat area...tat area shd be D12...lol

another one very un-11 is Cube 8

Basically they base on the entrance on which road.. P11 use Akyab rd.. Moutebleu use Minbu rd.. so Dist 11 lor

[Wild Falcon]

I guess that is the "normal" progression in the past. People move closer and closer to the city center and want to live in Orchard Road. But I believe times have changed, and not everyone is that desperate to hang out in Orchard nowadays - many yuppies try to stay away from the city during the weekends and hang out at "ulu" places. I have seen cases of fairly well-to-do people moving "upstream" as well, unlocking some cash in the process to enjoy other aspects of life When making an investment, you're looking for either (i) Yield (ii) Capital appreciation or both. And today's market, the luxury condos are definitely not fetching decent yields. As for capital appreciation - it is not clear if the much awaited foreign investors are coming in in a BIG way. Both casinos are opened - where are the high net worth foreigners snapping up our prime property? If you're not a gambler, how often will you do to MBS or RWS? The only hope we have is "face-conscious" PRCs who will only buy "high-end" without looking at fundamentals like yields but even they are missing in today's market.

In short, I have seen people with millions moving upstream and staying away from the luxury launches. With bad yields and no long runway for capital appreciation, I would rather stay away.

my initial point is...if u have millions...u will not invest in mass market.

usually ppl will move inwards...start wif mass --mid--prime--landed--GCB

[Komo]

I suppose the market evolves and scenario can change day-to-day. One thing for sure, the current trend is quicker (perhaps also more) money can be made at suburban area. Lux condo may have to hold on a bit longer, with risk of uptrend may reverse anything. Though not so certain is whether developer can make more or buyer. But one thing for sure for buyer, as long as location is near MRT, it shouldn't go wrong. Of course, need to be careful to get good price and not be chopped like vegatable.

[Komo]

my initial point is...if u have millions...u will not invest in mass market.

usually ppl will move inwards...start wif mass --mid--prime--landed--GCB

That process is rather long.
I know of one case: mass --> landed.

[devilplate]

I guess that is the "normal" progression in the past. People move closer and closer to the city center and want to live in Orchard Road. But I believe times have changed, and not everyone is that desperate to hang out in Orchard nowadays - many yuppies try to stay away from the city during the weekends and hang out at "ulu" places. I have seen cases of fairly well-to-do people moving "upstream" as well, unlocking some cash in the process to enjoy other aspects of life When making an investment, you're looking for either (i) Yield (ii) Capital appreciation or both. And today's market, the luxury condos are definitely not fetching decent yields. As for capital appreciation - it is not clear if the much awaited foreign investors are coming in in a BIG way. Both casinos are opened - where are the high net worth foreigners snapping up our prime property? If you're not a gambler, how often will you do to MBS or RWS? The only hope we have is "face-conscious" PRCs who will only buy "high-end" without looking at fundamentals like yields but even they are missing in today's market.

In short, I have seen people with millions moving upstream and staying away from the luxury launches. With bad yields and no long runway for capital appreciation, I would rather stay away.

trust me, if u r able to make millions one day, ur mindset will change.

[Wild Falcon]

devilplate must have made his millions

Anyway, just happen to watch this Channel U version of Money Mind. This Credo property consultant keep saying in the second half of the year, the luxury condos will shine and become the star performer because "foreign buyers are coming" He also says mid-end is now over-valued and mass market has real demand. So.... let's see if his prediction about luxury condos "shining" will come true....