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.