Tag Archives: Geylang

Geylang – Looking past red lights to hot yields

THE red lights that dot Geylang might reflect the area’s seamy side, but they have not stopped developers from flocking in with new condominium projects.

The area, bounded by Sims Way and Paya Lebar Avenue, has seen a flurry of new launches over the past three years – at least one has sprung up on each of its famous lorongs, or streets.

Despite its colourful history, rental yields there are among the highest of any suburban residential district, experts say. Leasing activity is tipped to surge with the formation of a commercial centre at nearby Paya Lebar Central.

“It’s worth looking at. All capital appreciation is a by-product of rental yields,” said Mr Mohd Ismail, the chief executive of real estate firm PropNex.

“Rental yields are as high as 5 per cent, when market norms are about 3 per cent, simply because tenants are prepared to rent rooms rather than the whole unit. A two-bedder could be leased out for about $1,000 per room.”

The area’s proximity to the city centre and business district is a draw for office executives, most of whom are Chinese tenants attracted by a fast-forming Chinese community there, market watchers say.

Among the developers keen to cash in on this appeal, the newest kid on the block is a joint venture by MCC Land, Sustained Land and Greatview Development. Its TRE Residences at Geylang East Avenue 1 lies on the “right side” of the red-light district.

The 250-unit project is being launched today. Indicative starting prices range from $693,500 for a 420 sq ft one-bedder to $1.36 million for a 947 sq ft four-bedder, said MCL Land.

TRE comes ahead of a larger project by GuocoLand at Sims Drive – the 1,024-unit Sims Urban Oasis – which is due to be launched early next year.

Older completed developments such as the 262-unit Central Grove have achieved capital gains, with a 1,206 sq ft unit selling for a profit of $686,000 in September and a 1,277 sq ft unit bringing in a profit of $716,000 in July.

The price works out to about $1,000 per sq ft (psf) – a level that R’ST Research director Ong Kah Seng deems “attractive” for a “well-located” project.

He noted that an upcoming mixed-use development, with a potential gross floor area of 1.78 million sq ft, in Paya Lebar Central is likely to draw in MNCs looking for office space. Thus, investors could benefit from rental demand from Asian professionals working in the area.

Govt to sell land for 14,200 homes

The Government plans to sell land that can yield up to 14,200 new private homes, including Executive Condominium (EC) units, in the second half of this year, broadly matching its previous sales programmes as it seeks to meet demand for affordable housing.

“It is a lot of supply,” said Mr Ku Swee Yong, Chief Executive of real estate consultancy International Property Advisor. “But more supply doesn’t necessarily translate into lower prices, because unlike other consumer goods, the winning bid for the land sets the price,” he said, adding that recent private housing sites released for sale had received more than 10 bids each, showing that developers remained keen on building up their land banks.

Under the Government Land Sales programme for the second half of the year, a total of 24 private residential sites, including six for ECs, will be made available for sale, the Ministry of National Development (MND) said yesterday.

Ten of these sites, which can accommodate up to 6,000 residences, are put on the Confirmed List along with one commercial land parcel at Woodlands Avenue 5.

“The supply … comes on top of the record-high supply of 100,600 units (including ECs) in the pipeline, of which 39,000 units still remain unsold as of the first quarter of 2013,” the MND said.

The Woodlands site, offering commercial space of about 742,000 sq ft, will kick-start the development of Woodlands Regional Centre.

The remaining 14 private housing sites are put on the Reserve List together with one mixed commercial and residential site, one commercial plot, three hotel land parcels, as well as a white site that gives developers more usage flexibility. They can yield about 8,200 private homes, 960 hotel rooms and 2.1 million sq ft of commercial space.

Some sites on the Reserve List are more attractive than the ones on the Confirmed List due to their better locations, Mr Ku noted.

“Stirling Road, Alexandra View, Sturdee Road are considered nice locations, compared to those on the Confirmed List that are mainly in the outskirts. So, these will likely be triggered by the developers,” he said.

Reserve List land will be put up to sale only if a developer commits to place a minimum bid acceptable to the Government, or if the site is deemed to have “sufficient market interest” when more than one developer bid for it.

On the other hand, there are attractive sites in suburban locations. Ms Chia Siew Chuin, Colliers International’s Director of Research and Advisory, pointed out that the sites at Sims Drive and Upper Paya Lebar Road from the Confirmed List would be well-received as they are close to MRT stations and reputable schools.

For Sims Drive, “besides being close to the city, the immediate locality also provides prospective buyers and occupants an array of established F&B options at the shophouses located in Sims Avenue and Geylang”, she said.

Source – CNA – 26 Jun 2013