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Buyers willing to shell out extra for integrated development projects
CONVENIENCE is king among property buyers in Singapore, this much is clear.
They want a place to call home, but so much the better if home is part of a larger development where they can shop, run errands and seamlessly connect to the MRT as well.
An analysis by OrangeTee & Tie has found that these property buyers are prepared to pony up premiums for projects with that extra value and accessibility, to the tune of anywhere between 7 per cent and 19 per cent within their launch year, compared to new sales of leasehold projects in the same district.
The consultancy says that such "integrated developments" - projects comprising private homes, shopping malls with at least 100,000 sq ft of net lettable area, direct access to a train station and even a bus interchange - are rare.
Hot demand for them will support the pricing for three such upcoming projects, including the soon-to-launch Woodleigh Residences in Bidadari Park Drive.
OrangeTee & Tie studied the average selling prices and rents of seven such projects - all leasehold projects - launched since 2007. All commanded premiums over other leasehold projects in their districts. (Marina One was excluded due to insufficient comparables.)
Park Place Residences in Paya Lebar, by Lendlease, was the most recent such project and the only one in the past 10 years in the city-fringe.
It has fetched an average price of S$1,806 per sq ft (psf) in its launch year, a premium of 18 per cent over leasehold projects in the district.
The development is integrated with Paya Lebar MRT, the Paya Lebar Quarter retail mall and three Grade A office towers.
Luxury condos that are integrated developments have also done well. Guocoland's Wallich Residence fetched a 13 per cent premium over leasehold properties in the district in the year following its launch at the end of 2013.
Christine Sun, head of research and consultancy at OrangeTee & Tie, attributed this trend to two factors in her report: the strong demand for the "unparalleled convenience" of the accompanying amenities, and their relative scarcity currently.
These projects make up less than three per cent of the entire private non-landed residential stock in Singapore of about 294,000 units in Q2, going by Urban Redevelopment Authority (URA) figures, the report said.
Rents also often fetch a premium going by the data in Q2.
For instance, the median rent at Orchard Residences in Q2 was S$6.73 psf a month, much higher than the overall median rent of non-landed homes in district 9, which was S$4.42 psf per month.
Resale prices of two of the projects studied - Bedok Residences and The Orchard Residences, both already sold out - have also stayed above the median.
For instance, Bedok Residences, which is integrated with Bedok Mall and Bedok MRT, fetched a median resale price of S$1,447 psf between Q1 and Q3 this year; leasehold projects in the area went for S$1,089 psf.
Orchard Residences' median resale price was S$3,731 psf - above the S$1,849 psf recorded for leasehold projects in that district.
Ms Sun said: "The potential supply of these developments may not meet the demand of buyers in the coming years, given that there are only three projects in the pipeline."
One is the 667-unit Woodleigh Residences, to be launched before the year-end. Its developers are Kajima Development and Singapore Press Holdings, which owns The Business Times.
Woodleigh Residences will be linked to a 28,000 sq m retail mall, the Woodleigh Village hawker centre, Alkaff Lake and Heritage Walk; it will also offer direct access to Woodleigh MRT station and to Singapore's first air-conditioned underground bus interchange.
The only integrated development in District 13, it is likely to command a price premium over the vicinity's new launches, said Ms Sun.
OrangeTee & Tie and Savills are marketing the development.
Also upcoming are the Sengkang Central site won by a Capitaland-CDL joint venture, and a 3.8 ha mixed-use white site in Pasir Ris Central, which is up for tender now.
Together, these three projects will generate a potential supply of about 2,000 units that could be sold to end-users over the next few years, said Ms Sun in her report.
Lee Nai Jia, senior director and head of research for Knight Frank, said that in his view, such projects will cost 5 to 10 per cent more for the convenience offered by their "package of amenities", compared to those in the rest of the district, especially those more than a 10-minute walk away.
He added, however, that the developers of such projects in prime districts would have to work harder with building design to keep a sense of exclusivity in the residential portion of the project.
"It really depends on how they design it so that they maintain a distance between the residential and office and commercial components," he said.
For developers, he added, integrated developments give the malls a ready catchment of shoppers.
But buyer preference can vary, he also said: "Some people feel that there's a lack of exclusivity, since you may have to go through a large crowd when you go home."
Christine Li, senior director and head of research at Cushman & Wakefield, said the upcoming Woodleigh Residences boasts, in addition to its access to Woodleigh MRT, proximity to the upcoming Bidadari town.
"There'll be future upside because the population in the vicinity will grow, and there'll be demand from upgraders from the HDB flats in the future," she said.