It is no longer true that special product designs are found only in high-end residential projects. Indeed, these projects displayed new designs and concepts from 2003, and it was also then that new residential lifestyle enclaves such as Sentosa Cove, Keppel Bay and Marina Bay were conceptualised and developed. From 2010 to 2013, when there was an increased demand for private housing, suburban condominium projects, including those in far-flung areas, were innovatively conceptualised and offered new, special designs. Even executive condos, which are lower-cost alternatives compared with private condos, had thematic project designs.
There are reasons why projects launched from 2010 to 2013 and completed from 2014 have comprehensive, modern designs. The need to brand suburban residential projects arose around 2010, owing to the intense competition among developers, as some had bidded high prices for sites, and special designs could partially help to achieve higher project launch prices and realise projected investment returns. This was before the introduction of the total debt servicing ratio (TDSR) framework in 2013, which ultimately cooled buyers’ interest and property prices. Also, as special product designs became the norm in new launches from 2010, developers saw the opportunity to challenge themselves in product excellence.
From 2010 to 2013, homebuyers, who were increasingly young, educated and savvy, had higher expectations. The buyers were interested in private homes, including stylish shoebox apartments. Developers had to work extra hard to design projects that met sophisticated requirements. Many of these new projects launched from 2010 to 2013 and completed from 2014 offer exotic and exciting designs and concepts.
Results of improved project designs
Projects launched from 2010 to 2013 seem to have tapped on society’s structural transformation and stakeholders’ preferences. Such homes saw good buying interest. These included SOHO and small apartments, which appeal to white-collar single professionals who appreciate a “therapeutic” space after a stressful workday. Projects that were affordable and creatively designed were popular. Small units were also an attractive value proposition, as buyers need only pay a low price quantum and could enjoy the full benefits of private housing, essentially all the facilities in the condo project.
Projects in far-flung locations were increasingly conceptualised with relaxing, continental, retreat themes. For such projects, the design does add significant value, as it addresses the constraints due to location, which is an unchangeable fact. The creative branding efforts of new private residential projects sustain the attention of buyers, mitigating the high risks stemming from the ample new supply.
The efforts to brand new projects reflect attempts to increase the quality of private housing in Singapore. However, buyers who wish to buy such new completions in the resale market should understand that purchasing a condo in a development with modern designs is not a sure-win approach. There are various longerterm considerations, and the envisaged (resale) premium may not necessarily pan out.
• Fashion or fad?
Properties that are conceptualised based on prevailing trends and living concepts may risk a dilution in their relevance and desirability, particularly years down the road after a project’s completion. Products conceptualised on hype during the launch year or that rely too much on certain concepts may see a drop in the trends’ popularity after TOP, or temporary occupation permit, is issued. On the other hand, properties that are tastefully and synergistically designed, rather than those that have too “adventurous” concepts, are expected to stay relevant.
• Mixed-use developments have enduring appeal
Mixed-use developments comprising mall and residential towers seem to be a lasting concept, as can be seen from North Park Residences, which was launched in 2015 and is well liked. It was around 2011 that mixed-use developments seemed to garner strong buyers’ interest. The mall will definitely provide convenience for residents, but we must note that how successful it is can only be ascertained after the project’s completion. A strata mall that has no central landlord to control tenant mix is more likely to have a mixed and perhaps incompatible profile of tenants.
Meanwhile, a vibrant single-landlord mall in a mixed-use development can be seen by residents as indeed contributing to a lively integrated environment. These are parameters that can affect resale buyers’ interest and the prices of homes in mixed-use developments. In the context of the increasing number of shoebox and small apartments completed in many new suburban condo projects, this means there will be residents with varied profiles. Singles or couples without children may prefer a quieter living environment, as opposed to families, who enjoy a fun-filled life and more get-together activities.
• Valuation of special project features
As developers jumped on the bandwagon of providing special project designs from 2010 to 2013, and more of such projects were completed since 2014, we can anticipate some exciting challenges for appraisal (valuation) of new completions. These challenges will become more relevant when more of such owners put up units for sale in the future. Since the new developments are so uniquely designed that nearby comparable properties may be fundamentally different, the challenge will be for appraisers to best ascertain the value of such development concepts. How can the special project features be best valued — on what basis — and how can they affect the resale property price?
An appraisal exercise that focuses strictly on the condo unit and ignores the special development concept may not be beneficial to the owner, who paid a premium to the developer for it. Likewise, a valuation that takes the comparison approach may have to ensure that the comparable properties are similar in nature, and any adjustments will mean ascribing a best-opined value to the special development design. The role of the appraiser will be more exciting as we see a handful of these special-concept residential projects being completed.
• Property maintenance
Signing on the dotted line is the first step to owning a private property, but financing and property upkeep make up the rest of the property journey. Buyers attracted to a comprehensive range of facilities in newly completed projects may want to consider the costs required to maintain the facilities. The maintenance fee in the initial year(s) may be spelled out for the buyer, but further down the years, higher maintenance fees or even facility replacement costs are expected, especially when the facilities undergo frequent wear and tear. For instance, bigger pools, and lifestyle amenities may need more maintenance fees and sinking funds from residents.
Long-term considerations
While a comprehensive range of condo facilities is attractive to buyers and beneficial to increasing the quality of residential products in Singapore, buyers should critically evaluate the longer-term viability in relation to their longterm affordability. A long-term owner who has already stretched his affordability in purchasing a private home may like to consider a development with less frills compared with a condo with comprehensive facilities that requires more costs to upkeep in the longer run.
Buyers with higher affordability may like to consider buying a resale property in a mixed-use development, as the residential property can benefit from the vibrant new mall. After the implementation of the TDSR, private residential property prices have become more attractive and affordable to buyers. A residential property in a mixed-use development is usually pegged at a realistic, attractive price by the owner in the secondary market.
It is essential to note that from 2010 to 2013, when there was a high demand for private housing and before the implementation of the TDSR, many new projects that offered extensive, special designs were launched. For projects launched from 2014, generally, the selling point is pricing and affordability, not the special designs, although the project design is definitely stylish and upmarket. Resale homebuyers may wish to note that although there is a substantial number of private residential new completions from 2014 to 2017, the properties have beautiful, special designs, compared with projects completed before 2014.
Ong Kah Seng is a director and Alex Sun is a senior analyst at R’ST Research (www. rstresearch.com. sg), a property market research firm in Singapore. Ong can be reached at kahseng.ong@ rstresearch. com.sg.
This article appeared in The Edge Property Pullout of Issue 692 (August 31) of The Edge Singapore.