Property commentaries and analyses are often on large condominium projects and less on apartments. For those who are less familiar with the local property regulations, condos must have a minimum site area of 0.4ha to ensure sufficient space for facilities and greenery, among other parameters stipulated by URA. They are, therefore, perceived to be a higher-value private housing product, a notch above apartments.
District 15 accounted for the bulk of the freehold apartment transactions outside the prime districts. These apartments dot the lanes branching out of Joo Chiat Road, Still Road and Telok Kurau Road. Many of them are low-rise, single-block projects with more basic facilities such as a small pool, gymnasium and clubhouse. Given their lack of facilities and green spaces, have apartments suffered a bigger setback in the ongoing property melee?
Demand for freehold apartments is underpinned by their niche positioning. Freehold apartments offer value alternatives for buyers coveting a private address in District 15. In our basket of properties, prices of freehold apartments between 700 and 1,100 sq ft in the district, completed from 2000 onwards, averaged $1,248 psf, a significant discount to their freehold and 99-year leasehold condo counterparts in the area, which traded at $1,603 psf and $1,428 psf respectively. Separately, the average price of these freehold apartments is on par with some 99-year leasehold mass-market projects.
It seems there is also limited stock of smaller-sized and affordable condos in District 15. Therefore, apartments in the area fill the gap between public and private homes for buyers with tighter budgets. Based on caveats lodged in 2014 and 2015, the average condo size in the district was 1,383 sq ft, and around 80% of the caveats involved units larger than 1,000 sq ft. On the other hand, the average size of apartments sold in 2014 and 2015 — 1,096 sq ft — is smaller relative to condos.
Freehold apartments also appeal to those willing to trade off full condo facilities for exclusivity and tranquillity. Despite standing on compact land parcels, these apartments are nested among landed homes in a low 1.4 plot ratio neighbourhood, based on Master Plan 2014. A lifestyle retail concept adds character to the neighbourhood, in place of traditional suburban malls.
The average size of apartments in District 15 is smaller than condos in the area, making them more affordable
A lifestyle retail comcept adds character to the neighbourhood, in place of traditional suburban malls
The Edge Property found that prices of freehold apartments in District 15 have stayed relatively resilient against market headwinds. Analyses of a basket of freehold apartments in the area showed that the average price for units between 700 and 1,100 sq ft eased about 2%, from $1,267 psf at its peak in 1H2013 to $1,248 psf today. For comparison, the URA price index for all non-landed homes in the city fringe or Rest of Central Region (RCR) dipped 8% around the same period. Only four of the 29 properties surveyed saw prices falling at a rate close to or faster than 8%.
In our analysis, prices in 1H2013 were derived based on actual transactions from caveats lodged with URA, while prices in 2015 were derived using Edge Fair Value, a valuation tool on TheEdgeProperty.com. It allows us to track the price movement of the same units between 1H2013 and today, despite a limited number of transactions. For example, an 850 sq ft low-floor unit at Tivoli Grande apartment was transacted at $1,423 psf in 1H2013. Edge Fair Value puts the price of the unit at $1,424 psf today. The tool utilises a valuation algorithm that takes into account variables, such as recent transactions of comparable properties, level, facing, size and outliers, in formulating the values. Using Edge Fair Value to derive the market rents for the same batch of units put the rental yields of these freehold apartments at 3.3%.
In an up market, the prices of freehold apartments in District 15 have appreciated at similar rates as non-landed home prices in the city fringe or RCR. For example, an 872 sq ft low-floor unit at Callidora Ville in Telok Kurau was traded at $786 psf in June 2009. A similar unit in the project changed hands at $1,262 psf in June 2013. In another example, a 1,000-plus sq ft unit at One @ Pulasan was sold at $809 psf in March 2009. In June 2013, a similar unit in the project found a buyer at $1,122 psf.
This article appeared in The Edge Property Pullout of Issue 693 (September 7) of The Edge Singapore.