Sunday, December 4, 2011

The Expressway Effect

Straits Times: Sun, Dec 04
It will be nearly a decade later before the North-South Expressway (NSE), which will run from the north of Singapore to the city, is ready.

When it is built, it will bring a lot of convenience to those who drive, cutting up to one-third of peak-hour travel time.

But the convenience will come at a price to some property owners, particularly those who own units directly facing the expressway, long before it can be used.

The Land Transport Authority (LTA) recently announced the alignment details of the southern section of the NSE, after it had announced details of the northern section at the start of the year.

Nearly half of the 21.5km NSE will be underground, with the 5.6km southern stretch being fully subterranean and running from Toa Payoh Rise to East Coast Parkway.

To make way for the latter, the Government will acquire Rochor Centre, a clan building, and part of 21 plots used for schools, condominiums and commercial property.

Major construction works will start in 2015 and last for at least five years.

New research by property consultancy DTZ shows properties located very close to the NSE will likely see a small drop in their values while rents may be slightly hit.

Another group that may be temporarily hit are retailers near the NSE, it said.

Its check on prices shows that as of October, there is no evidence of underperformance compared with the general market trend in the transacted prices of residential properties along the northern part of the NSE since January.

Jones Lang LaSalle's head of research, Dr Chua Yang Liang, said the current heavy traffic along the route is possibly depressing the values of projects around the area.

The highway, which should ease congestion and thus improve the overall quality of the environment especially along the route, should thus enhance property prices around the area.

Typically, the public will react only closer to the start of construction when they can feel the inconvenience and disamenities, said DTZ head of Asia-Pacific research, Ms Chua Chor Hoon.

During construction

The LTA said it will adopt the cut-and-cover method of excavation as the expressway is too big for it to use the less disruptive and often safer boring method.

Residents of properties along the NSE will have to put up with road diversions, inconvenience due to movement of construction vehicles, and noise and dust from construction works.

This means investors who own these properties may not be able to push up rents substantially.

'Tenants won't pay you good rentals because of the inconvenience,' said a veteran consultant.

They have other housing choices and some will just choose to live elsewhere since a tenancy agreement binds them for two years.

Residential rents could therefore underperform by up to 5 per cent during the construction period, projects Ms Chua.

Where prices are concerned, she found that while property prices along the NSE are not expected to underperform the market in general, there are exceptions. These are the 'severely affected' properties, which include those located close to the construction works, she said.

The facing and distance of the residential blocks to the NSE will determine how their prices will be hit, experts said.

'Those that will face the viaduct after completion of the NSE will see some impact on prices generally in the range of 3 per cent to 10 per cent, depending on the facing and distance of the units to the viaduct,' said Ms Chua.

Properties located near the in-and-out ramps and the semi-tunnel will also be affected by the increased noise level and higher volume of traffic, and may thus see prices fall slightly, perhaps by 0.5 per cent, she said.

When the market is bad, buyers will likely use the inconvenience as an excuse to push down prices, experts said.

The NSE will have 16 in-ramps and 17 out-ramps connecting towns such as Woodlands, Sembawang and Yishun with the city.

'While the entire construction process is expected to take five years, the construction period in any specific area along the route is likely to be shorter, say, two to three years,' said Ms Chua, explaining that generally, prices along the NSE should not underperform the market.

Besides, with many parts of Singapore undergoing road construction works at one point or another, there is high tolerance towards road works. 'Owners will look beyond the construction period,' she said.

Interestingly, Ms Chua found that retailers may be a group that will be indirectly affected by the NSE.

'Due to road diversions around the construction area, the public may avoid traffic-congested areas, which will then affect shopper traffic in retail properties such as those in Thomson Road and Rochor Canal Road/Rochor Road,' she said.

After construction

Things will go back to normal for properties in the southern stretch where the NSE is underground, but not for properties next to the viaduct in the north and near the ramps. These will be adversely affected by the loss of privacy and increased traffic noise.

Residents of properties in the north with easy access to the NSE but not necessarily along the NSE route will benefit more than those in the southern stretch from travel-time savings.

'However, any price outperformance will not be solely due to the NSE, but also from new MRT lines (Thomson line, Downtown line) that will improve the accessibility of the north,' said Ms Chua.

The overall impact of infrastructure on property prices is like a 'double-edged sword', said Jones Lang LaSalle's Dr Chua.

'While it generally benefits the larger population/residents living around the nodes where the project is located through enhanced accessibility, the costs of the accessibility - noise and nuisance - will be borne by the community immediately adjacent to the road.'

To sum it up, the veteran consultant said: 'You want access to the expressway but you don't want your property to face it.'

joyceteo@sph.com.sg

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MOSTLY MINIMAL IMPACT IN THE LONG TERM

WOODLANDS/SEMBAWANG/ YISHUN

The North-South Expressway (NSE) along this stretch will be in the form of a viaduct. There are army camps, factories, HDB flats and vacant state-owned land in these areas.

Private residential properties along the route include: Northoaks, Seletaris, Sembawang Cottage, Goodlink Park (landed), Sembawang Park condominium and Euphony Gardens.

Residential units in close proximity of and with full frontage to the viaduct are expected to see some impact in terms of rents and prices.

Occupiers of industrial properties may incur higher operating costs in transportation due to the road diversions. But this will not cause a fall in occupancy as the inconvenience is temporary and it would be too costly to relocate the plants and machinery, says property consultancy DTZ.

YIO CHU KANG/ANG MO KIO/ MARYMOUNT

The NSE along this stretch will be in semi-tunnel form. Developments along this route are mainly HDB and private housing with some institutional uses.

Private residential properties include Bullion Park, Lentor Residences, landed homes on Countryside Road, Castle Green and Nuovo executive condominium.

The semi-tunnel section will not have the same intrusive effect as the viaduct and is unlikely to affect housing prices.

THOMSON ROAD

The NSE from here will be in tunnel form. This stretch is heavily built-up with private housing and some commercial developments.

Properties that will have part of their land acquired include:

•Cube 8 (89.6 sq m)

•Tan Tong Meng Tower (554.9 sq m)

•368 Thomson (239.1 sq m)

•SLF Building (256.6 sq m)

•Celebrities Resort Club (174.1 sq m

•Singapore Polo Club (333.4 sq m)

•Goldhill Shopping Centre (720.4 sq m)

•Novena Garden (466.1 sq m) and

•Novena Ville (29.9 sq m)

Prices of such properties will likely not be adversely affected in the long term as the acquisition will affect only the common green and/or carpark spaces, according to DTZ.

In the short term, as the completion date of some new residential projects is around 2014, subsale prices may see some pressure in the light of the impending construction, especially if the market is not buoyant, DTZ says.

As traffic conditions are expected to worsen along the already congested road, drivers will try to avoid the area which may cause lower visitorship, especially those with access only from Thomson Road.

Retail malls, like United Square and Novena Square, which have alternative access and are destination malls, may see a slight fall in traffic but not enough to warrant a fall in rents.

The upside to retail shopper traffic after the completion of NSE is limited because there is no out-ramp in the vicinity to the Thomson Road stretch.

BUKIT TIMAH ROAD/ ROCHOR/NICOLL HIGHWAY

This stretch of the NSE will be in tunnel form. Many properties along the route are already affected by the construction of the Downtown MRT Line which is expected to be completed by 2015, before construction of the expressway starts.

The MRT line could bring shoppers to the area and mitigate further decreases in business activity in the area. Thus, there should not be any downside to property prices and rents, says DTZ.

At Rochor Centre, where occupiers have to move out by September 2016, many retailers are mum-and-pop shops and can afford only low rents.

Hence, most are likely to relocate to affordable HDB premises and there should not be a rise in rents in the vicinity of Rochor Centre as a result of the displaced retailers, says DTZ.


Source: DTZ

Exposed properties

'Those that will face the viaduct after completion of the NSE will see impact on prices generally in the range of 3 per cent to 10 per cent, depending on the facing and distance of the units to the viaduct.'

MS CHUA CHOR HOON, DTZ head of Asia-Pacific research

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Rents will suffer

'Tenants won't pay you good rentals because of the inconvenience.'

A veteran consultant

Source: The Straits Times © Singapore Press Holdings Ltd

Team Marshe
Martin Koh/ Sherry Tang
9383-3992/ 9844-4400
www.marshe.net

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