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Magnet for private home transactions
IN 2019, the North-east Region recorded the highest number of private residential transactions in the suburban market, accounting for 40.3 per cent of the Outside Central Region (OCR) total, while the East, West and North regions accounted for 32.1 per cent, 22.1 per cent and 5.5 per cent respectively.
The Urban Redevelopment Authority divided Singapore into planning regions and the real estate industry roughly equates OCR (which comprises the North-east, East, West and North regions) to the suburban market of the residential sector.
Faster growing than most other regions
Like the rest of OCR, the North-east Region has become an established residential sub-market. It comprises seven planning areas, namely, Ang Mo Kio, Seletar, Serangoon, Hougang, Sengkang, Punggol and the North-eastern islands. Except for the North-eastern islands, the rest are familiar names to home buyers.
In the past five years, the total stock of private residential properties in the North-east Region grew by 41.3 per cent from 41,989 units in Q1 2015 to 59,345 units in Q1 2020. It surpassed the growth in total stock in each of the other regions which ranged between 13.3 per cent and 30.1 per cent for the same period.
As at Q1 2020, 63.4 per cent of the number of private homes in the North-east Region were non-landed units while 36.6 per cent were landed properties. Terrace houses constituted 63.5 per cent of landed homes with semi-detached (28.9 per cent) and detached (7.6 per cent) making up the rest.
The stock of non-landed properties which comprises apartments and condominiums expanded by 78.4 per cent in the past five years while growth in the landed segment was low, due to limited land for such development.
The main growth areas were Punggol and Sengkang, which saw their total stock of private homes increase by 36.3 per cent and 32.2 per cent respectively, in the three years from Q1 2017 to Q1 2020.
During the same period, lower growth in total stock was seen in the more mature planning areas, that is, Ang Mo Kio (10.5 per cent), Hougang (6.8 per cent) and Serangoon (4.4 per cent).
The strong growth in the stock of private residential properties in Punggol and Sengkang was mainly due to the sale and development of residential sites under the Government Land Sales Programme, which provided opportunities for home buyers including HDB upgraders.
What attracts home buyers to North-east Region
Looking at 2019 data, the North-east Region was also the most active private home market compared to other regions in terms of total transaction volume relative to total stock. The total transaction volume of private homes over total stock in 2019 was 6.1 per cent, while those for the other regions varied from 3.6 per cent to 5.0 per cent. This shows that the North-east Region commands good interest and demand from private home buyers.
Amenities abound in the North-east Region. There are numerous popular suburban shopping malls such as Nex in Serangoon, Compass One and The Seletar Mall in Sengkang, Waterway Point in Punggol, AMK Hub in Ang Mo Kio - and Sengkang Grand Mall when completed, will join the list.
The North-east Region is also transportation friendly, being served by the North East and North South MRT lines, abundant bus services and expressways such as the CTE (Central Expressway) and TPE (Tampines Expressway).
Employment nodes such as the Seletar Aerospace Park and the major industrial parks along Ang Mo Kio Avenue 5 and off Yio Chu Kang Road, also boost the attraction of the North-east Region. In the future, employment in the North-east Region will be expanded by the development of the Punggol Digital District which will house key growth industries of the digital economy such as cybersecurity and digital technology.
There are special haunts in the North-east Region such as Jalan Kayu, with its variety of food joints which are highly popular with patrons. The food outlets along Casuarina Road are another popular spot, though on a smaller scale than Jalan Kayu. A number of the "black and white" bungalows in Seletar Aerospace Park have been converted into eateries and pubs, drawing crowds during peak hours and weekends.
Besides these, there are also established F&B outlets in housing estates such as Serangoon Garden and Seletar Hills which are crowd-pullers.
A unique feature in the North-east Region is Punggol Waterway, which was created by damming Punggol and Serangoon Rivers to create reservoirs and a waterway to connect the two rivers. It features a huge riverine park with promenades on both sides of the waterway, allowing residents in the area and visitors to enjoy the attractions of nature.
Private home buyers are attracted to the North-east Region because property prices are more affordable compared with the prime districts or city fringe, while amenities and transport connectivity are good.
Currently, the most affordable new non-landed project is Riverfront Residences in Hougang, which has a 99-year leasehold tenure. Its median price for units sold over the last year was S$1,339 psf. In the landed segment, Nim Collection, a 99-year leasehold project, featured the most affordable primary market terrace houses, which sold for upwards of S$2.7 million over the past year.
In the North-east Region's secondary market, the median price of non-landed private homes sold over the past year was S$1,063 psf and S$1.15 million in absolute terms. The most popular developments were The Minton, Riversound Residence, The Panorama, The Quartz and Grandeur 8, in terms of units transacted.
In the landed secondary market, the median price of terrace houses was S$2.83 million, while those for semi-detached and detached houses were S$3.7 million and S$6.3 million respectively. Luxus Hills, Serangoon Garden Estate and Seletar Hills Estate attracted the highest number of buyers over the past year.
Opportunities for new home buyers
Six private residential and two executive condominium (EC) projects were placed on the market in the North-east Region in the last seventeen months. (see table). Sales performances were mixed. As buyers are price-sensitive, the more affordable projects seem to be selling better. The Florence Residences has been the volume seller among private residential projects while Piermont Grand also garnered strong sales, as an EC.
In addition to the projects listed in the table, there were other major projects launched before 2019 in the North-east Region which are still under active marketing.
These include Affinity at Serangoon (336 units unsold), The Garden Residences (322 units unsold) and Riverfront Residences (192 units unsold), based on URA Realis data as at June 23, 2020.
There are no major fresh private residential launches expected for the rest of 2020 in the North-east Region.
The only major residential project that could be launched in 2021 is the EC development at Fernvale Lane, which could generate around 480 units. However, many of the projects under active marketing in the region have unlaunched inventory totalling some 1,862 units as at May 2020, and we can expect these to be gradually released for sale for the rest of the year.
Value proposition for buyers
Like all suburban submarkets, home buyers in the North-east Region are predominantly owner occupiers who are likely to find living in the region satisfying.
As an investment submarket, the North-east Region caters to the lower to mid-budget tenants where yields are typically below 2 per cent.
According to the URA's private residential property price index, non-landed prices in OCR grew 8.2 per cent between Q1 2015 and Q1 2020.
This is probably indicative of broad capital appreciation trends for non-landed private homes in the North-east Region during that period.
However, as prices are softening due to Covid-19 and the economic slowdown, the private home market has turned in favour of buyers.
While opportunities for buyers abound, they will have to adopt a long-term perspective on capital appreciation given current market uncertainties.
- The writer is senior director, research & consultancy, JLL Singapore