Far East Organization has launched the second phase of its cluster housing project Greenwood Mews to capitalise on the opening of Downtown Line 2 in December and the increased interest in landed homes in the Bukit Timah area.

Greenwood Mews, giant property developer Far East Organization’s latest strata landed housing project in the prime landed housing estate of Greenwood Avenue, features many refinements based on feedback from owners who bought units at previous projects, says Shaw Lay See, the company’s chief operating officer for property sales.

The latest project features a spacious and fully equipped kitchen, with Kuppersbusch coffee machine, oven, microwave oven and stove hob, as well as Bosch refrigerator and Vintec wine chiller, See points out.

The width of each unit at Greenwood Mews is 7.4m, wider than the average strata landed unit, which is between 6m and 6.5m. Ev en with the expanded width, Greenwood Mews did not incorporate a home lift in each unit. “Owners of previous projects have told us that the lift eats into their living room space, and that they rarely use it,” says Shaw. “So, it’s something they won’t mind doing without.”

For the convenience of senior citizens, however, there is “a granny room” with en suite bathroom on the first level. The other three bedrooms, including the master suite, are situated on the second level, with a room on the attic level that can be turned into a fifth bedroom or an entertainment room. On the attic level, there is a roof terrace with an outdoor Jacuzzi, an open air shower and outdoor dining space. The basement level houses the utility area, a Bosch washer/dryer and a storage room that can be converted into a helper’s room, as well parking space for cars.

Strata landed, or cluster housing, projects made their debut in Singapore in the 1990s. Far East was a pioneer in the segment, and its maiden strata landed project was the 31- unit Kew Gate, located on Kew Drive, within the Limau estate in the east. The project was completed in 1996.

Strata landed housing is popular because it combines “the best of both worlds”, says Donald Han, managing director of Chestertons and one of the marketing agents for Greenwood Mews. While retaining its landed home environment, it also incorporates the features of a private condominium — for instance, security at the gate, and shared facilities such as swimming pools, clubhouse, playground and landscaped garden.

Swimming pool at Greenwood Mews development

First mover
Greenwood Mews contains just 62 strata terraced houses on a 113,734 sq ft site, with a 103-year lease that starts from 2011. The space permits the developer to include ample amenities within the project, such as seven swimming pools, of which three are 50m in length; dining pavilions; playground; and a large clubhouse. In most units, the living room leads out to a swimming pool. “It’s almost like your own private pool,” says Shaw.

Far East is not new to the Greenwood estate, where it has developed many conventional and strata landed housing projects, including The Greenwood, a 54-unit strata landed project that was completed in 2011 and located adjacent to Greenwood Mews. However, The Greenwood contains many phases, and has a mix of freehold conventional landed homes, which were launched in phases between 1998 and 2008, as well as cluster housing developments.

The Bukit Timah neighbourhood in prime District 11 is often said to be the home turf of Far East’s late founder, Ng Teng Fong, whose primary residence was “Ng’s Mansion”, a double- storey bungalow in Watten Estate, where he lived for 40 years. He had developed the neighbouring Watten Estate landed housing area in 1969.

Over the past decade alone, Far East has developed more than a dozen residential projects in the Bukit Timah area. These are a mix of conventional, strata landed and condo developments, with more than 2,100 units in total, says Shaw. Projects include the 278-unit Cyan (completed last year); the 318-unit Gardenvista on Dunearn Road (completed in 2006); as well as the 336-unit Floridian and 242-unit Nexus, which were developed in a joint venture with Wing Tai Holdings. This is excluding many other developments in the Upper Bukit Timah and Hillview Avenue neighbourhoods, where Far East is also “the biggest developer”, according to Shaw. In the Hillview area, Far East’s recent projects include the 528-unit The Hillier, the 214-unit The Lanai and the 127-unit Hillvista.

Renewed interest in landed homes?
Landed homes have seen a spike in transactions in 3Q2015 so far, according to Chestertons Research. “I see opportunistic buyers entering this segment, as prices have become more compelling,” says Han. “They are of the view that private home prices in the prime districts of 9, 10 and 11, as well as Marina Bay and Sentosa Cove, have bottomed.”

Transactions of brand-new landed property have also increased substantially, owing to developers and individual owners being more realistic about their pricing in order to clear their units within a certain timeframe, adds William Wong, managing director of Realstar Premier Group, who specialises in marketing landed homes.

The renewed interest in the landed housing segment is likely to extend to the strata landed sub-segment as well, says Chesterton’s Han. He attributes the increased transactions to scarcity as well. Total stock of private landed homes stood at 71,699 units as at end-2Q2015. Private landed homes account for 22.5% of total private housing stock of 318,524 units. In comparison, there were 83,159 apartments and 163,666 condo units, according to URA data at end-2Q2015.

Affordability factor
Historically, the prices of landed homes across all segments — terraced, semi-detached and detached houses as well as Good Class Bungalows — tend to move in tandem, says Lee Nai Jia, DTZ’s head of research for Singapore. However, the imposition of the total debt servicing ratio (TDSR), with a 60% cap at end-June 2013, has limited homebuyers’ purchasing power.

Lee expects sales of terraced houses to take off first, owing to the affordability factor. “Although bungalows and semi-detached houses are more expensive, sellers tend to be more firm on asking prices,” he notes.

As at end-2Q2015, prices of leasehold terraced houses in non-prime districts had fallen 9.6% from a year ago, says Lee. Meanwhile, prime freehold terraced houses fell by a smaller margin of 6% y-o-y over the same period, according to DTZ Research.

Anecdotally, prices of landed homes in some parts of Bukit Timah have fallen by 10% to 20%, according to Realstar’s Wong. In 1H2013, prior to the introduction of the TDSR, a brand-new boutique bungalow could command $11 million to $12 million, he says. Today, the price is closer to $10 million, with some owners in the resale market even willing to reduce it to about $8 million, he adds.

According to Chesterton’s Han, the price gap between a conventional landed home and a strata landed home is generally about $500 psf. “Some buyers therefore view 99-year leasehold strata landed homes as a more affordable entry into the landed housing market,” he adds. However, the difference in average price is also due to the way psf price is calculated: for landed homes, it is based on land area, while for strata-landed homes, it is based on strata area. Therefore, the price psf of landed homes tends to be higher, he explains.

In the Greenwood housing estate, recent transactions of conventional freehold terraced houses have ranged from $4.3 million ($1,779 psf) to $4.65 million ($1,820 psf), based on caveats lodged with URA Realis. Meanwhile, at MCL Land’s six-year-old cluster housing project Hillcrest Villa, a 99-year leasehold unit was recently sold for $2.85 million ($923 psf). Far East’s Greenwood Mews, which is brand-new and will only obtain temporary occupation permit (TOP) in December, saw two units sold in May at $3.62 million, or $1,167 and $1,139 psf respectively.

Higher yields at strata landed homes
Investors of strata landed homes are able to achieve rental yields that are “50 to 100 basis points higher” than conventional landed homes, estimates Chestertons’ Han. In the prime districts, there is a lot more competition for tenants among condo landlords. This is because of the increased supply of new condos in prime districts in recent years and the fact that historically, 40% to 50% of the buyers in this segment tend to be investors, he adds. This is unlike the landed housing segment, where 80% to 90% of buyers tend to be owner-occupiers.

“In a tenant’s market, like what we have today, condo units are not only harder to rent out, but owners will have to offer a discount in order to secure a tenant,” says Han. Therefore, net rental yields of private condos in the prime districts are likely to sink below 3%, adds Han. This is unlike 99-year leasehold strata landed homes in the prime districts, which could enjoy higher net yields of 4%.

At Greenwood Mews, five-bedroom units with a strata area of at least 3,100 sq ft are likely to fetch monthly rentals of $10,000 to $12,000, says Far East’s Shaw. In the launch of its latest phase of the project on Oct 3, units will be priced from $3.75 million, after a 6% discount for the first five “early-bird buyers”, she adds. Investors can therefore expect gross rental yields of 3.2% to 3.8% per annum.

Singaporean investor Mr Ng has been investing in private condos in the city fringe areas and prime districts for the past decade. A few years ago, he started investing in 99-year leasehold strata landed homes. “Strata landed homes have better yields of 3.8% to 4%,” he says. “They are also easier to rent out than big condo units.” Strata landed houses are ideal for families who want at least five bedrooms and bedrooms that are spacious, he adds. However, location is important, as well as proximity to an MRT station and amenities. “If not, it’s difficult to rent out,” Ng points out.

MRT effect?
Developers, homeowners and potential stakeholders in the Bukit Timah, Dunearn Road and Stevens Road enclave have been eagerly anticipating the opening of the MRT stations along Downtown Line 2 in December. The nearest station to Greenwood Mews is the Tan Kah Kee MRT station, says Shaw. “It’s convenient for residents with schoolgoing children, as they can drop their children at the MRT station. This should help ease traffic congestion in the Bukit Timah area.”

According to Chestertons’ Han, the value enhancement for projects located within a 500m radius of an MRT station ranges from 9.4% for the Botanic Garden station to 17.3% for the Holland Village station. He expects the value enhancement in the Bukit Timah area to be in the range of 9.4% to 17.3% with the increased accessibility from the opening of the stations along Downtown Line 2.

The Downton Line 2 stations in Bukit Timah will certainly help increase demand for landed properties in the neighbourhood, says Realstar’s Wong. However, he feels that the salient reason for the increase in transactions of landed homes in the Bukit Timah area is the 10% to 20% fall in prices since 1H2013.

Realstar’s Wong is hopeful that the increase in transactions will lead to a price recovery in 2H2016. Until then, prices are likely to “stagnate” or soften further by another 2% to 3%, he reckons.

Developers are revisiting the prime districts to snap up old landed properties with redevelopment potential, according to Wong. “They believe the market will pick up in two years, when their new developments will be ready for launch,” he says.

Far East’s Shaw says the developer has not exhausted its landbank in the neighbourhood of Greenwood Avenue. It is sitting on several old houses that can be redeveloped in the future “when the time is ripe”, she adds.

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This article appeared in the City & Country of Issue 697 (Oct 5, 2015) of The Edge Singapore.