Business Times: Tue, Jun 12
[SINGAPORE] The price gap between new suburban homes and secondary prime property has been narrowing as buying euphoria escalates prices of the former.
For instance, one-bedroom units at CapitaLand's Sky Habitat in Bishan have achieved per square foot prices exceeding $1,700 despite its 99-year leasehold status and its location in a traditionally off-prime area.
In contrast, such prices could have easily gotten the buyer a freehold resale unit of a similar size located in Singapore's prime districts, comprising those in the core central region (CCR).
To illustrate, one can acquire a freehold one-bedder unit at completed developments such as Mulberry Tree - which is a short five-minute walk to Velocity@Novena Square and Novena MRT - or District 11's Nineteen Shelford Road - which is within a one-km radius from popular primary schools such as Nanyang Primary and Raffles Girls Primary - for an asking price of around $1,700 psf, according to property sales portal, stproperty.com.sg.
Other popular suburban developments such as Watertown (in Punggol) have also attained record prices for their areas, further narrowing the price gap between homes in suburban and prime regions.
Taking for example, a 1,356 sq ft unit at Watertown was advertised on stproperty.com.sg with an asking price of $1,685 psf which translates to a total of $2.28 million.
But for less than that amount, the same buyer can purchase a 1,324 sq ft unit at Olina Lodge (located at Holland), for an asking price of $1,359 psf or a gross quantum of $1.80 million.
Said Alan Cheong, head of research at Savills Singapore: "We believe May was the nascent start to a trend where those savvy enough to realise that the price gap between suburban and prime districts have been closing, start their due diligence to shop for a prime unit and may put pen to paper in either June or July."
Seconding the view, head of research of Jones Lang LaSalle Singapore, Chua Yang Liang also agreed that prime market homes could see renewed interest as the price gap between prime and non-prime markets converge.
In fact, interest in resale non-landed private CCR homes has already started to pick up with an increasing number of units being transacted over the past few months, according to data compiled by the Singapore Real Estate Exchange (SRX) and the Urban Redevelopment Authority (URA).
The average price of homes in the CCR has also been on a gradual uptrend over the past few months, rising from $1,636 psf in Q1 to $1,733 in Q2 (comprising data from April and May 2012), noted the SRX.
Another interesting snippet to note is that contrary to popular belief, the development that raked in the greatest number of resale units in May was not from the much hyped about suburban regions, but from the CCR. Notably, Paterson Suites, which is located in the heart of the CCR in District 9, transacted a total of 16 units, according to R'ST Research.
Beyond the core region, activity in the broader secondary market has also been gaining speed.
According to preliminary data extracted from URA Realis, the number of resale units in May totalled 621 units, superseding that of developer sales (504 units).
Commenting on the data, Ong Kah Seng, director of R'ST Research said: "The numbers for May are really very preliminary at this stage as more caveats will be streamed into the database over the next few weeks. But, I think there is some consistency in buyers increasingly trending for resale, which probably is at the expense of interest for new launches."
However, experts such as ERA Realty key executive officer Eugene Lim continue to advise that it might be wiser for buyers to hold on to their purse strings and wait for further price discounts before entering the market, given the current global uncertainties.
Property consultancy group Cushman & Wakefield also expects sentiment to remain cautious and does not expect an increase in sales volume over the next few months, though they are positive on the longer term prospects of the local property market.
Said Toby Dodd, country manager of Cushman & Wakefield Singapore: "Our longer term stance is that we're positive about Singapore residential, and as confidence returns to global markets, we shall feel the knock-on effect."...
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Martin Koh/ Sherry Tang
Martin Koh/ Sherry Tang