Tag Archives: Tiong Bahru

Tiong Bahru: One of world’s newest property hotspots

Tiong Bahru has been named one of the ten urban markets to watch in Knight Frank’s inaugural Global Cities 2015 report, joining the likes of London’s Victoria Park and Kowloon West in Hong Kong as the new wave of property investment hotspots.

The neighbourhood stood out for retaining more of its historic character than most of Singapore.

“The growth of high quality café and retail offering in recent years has helped lift values. Development opportunities are available but this is a sensitive urban area which will require skilful interventions,” said Knight Frank.

Meanwhile, those who bought private units in the area over the last two years can expect to see strong returns as property values have increased.

“Condo prices in Tiong Bahru have risen from one percent to 16 percent year-on-year from 2012 to 2013. For example, a freehold condo was transacted at $1,660 to $1,760 psf while another 99-year leasehold development was sold at $1,350 to $1,470 psf. We can see that the market and prices there are quite robust,” said Nicholas Mak, Executive Director at SLP International in an earlier media report.

Most recently, Keppel Land launched Highline Residences at Kim Tian Road. About a quarter of the 500 units available were sold on one weekend at an average price of $1,900 psf. The 99-year leasehold condominium is close to Tiong Bahru MRT station and the future Havelock MRT station on the Thomson Line.

Commenting on the global trend of property investors looking to new markets, Liam Bailey, Research Head at Knight Frank, said: “As prices have risen in some target markets, the opportunity for developers to attract buyers to alternative markets within the same cities, or even alternative city markets is a trend we expect to see expand in 2015.”

He added: “While the ever popular global hubs are set to take the lion’s share of this investment, we also think 2015 will see a growing appetite for alternative markets and more speculative plays from investors.”

10-urban-markets-to-watch

Sustainability of Highline Residences’ demand uncertain

Given the popularity of Tiong Bahru as an estate, the positive response for 500-unit Highline Residences (pictured) by Keppel Land is not unexpected. According to media reports, about a quarter of the units at the condominium in Kim Tian Road were sold over the weekend.

Highline-Residences-Image-source-highline-residence.com_.sg_-e1410928934190

However, DBS Group Research believes investors may be squeezed from lower rental rates due to a high number of new supply completions. Additionally, as the project’s TOP expected to be from 2018 onwards, average mortgage rates are also expected to rise by then.

In a recent report, it said, “Despite the slight premium in pricing, we believe buyers are attracted to the project, given its new and probably the overall ‘lifestyle package’ that Keppel Land is offering buyers. We believe buyers are attracted to the smaller-sized units (and thus smaller total quantum), with the intention of renting them out eventually.”

Based on rentals of properties in the vicinity (about $5,000 to $5,500 per months for a 1,000-sq ft unit), this would work out to a new yield of 2.7 percent. Meanwhile, given expectations of high refinancing rates in the medium term, DBS Group Research foresees higher than current average loan financing costs of around 1.5 to 18 percent.

DBS Group Research will look out for more data points of sales take-up rates for subsequent phases of Highline Residences in the coming months to determine the sustainability of its demand. “Despite the good stats, we believe that this does not signal a turn in sentiments for Singapore property as we believe that demand remains selective – projects located near established amenities and/or MRT stations continue to see stronger demand than others,” it said.

The pricing of Highline Residences also puts the spotlight on prices of resale condos within the vicinity of Tiong Bahru MRT. According to the report, prices average between $1,400psf and $1,700 psf.

For example, the latest transactions at Meraprime at Jalan Bukit Ho Swee were at $1,400 psf while Twin Regency at Kim Tian Road saw its latest transactions at around $1,600 to $1,700 psf.

Image source: highline-residence.com.sg