Overlooked gem in the East

A Singaporean who only wants to be known as Tee says he currently lives in the Changi area and is looking for his next property investment. “I want to see if there’s any chance to buy in this area (Tampines North),” he says. Tee was at the sales gallery and showflat of the 597-unit The Santorini, a condominium located off Tampines Avenue 10. It is being developed by Chinese developer MCC Land, which is a subsidiary of Hong Kong and Shanghai-listed Metallurgy Corp of China.

There was a hubbub five years ago over the new Jurong Lake District, which is poised to be the next CBD in the 2008 Master Plan; the announcement of the North Coast Innovation Corridor in the northern reaches of Woodlands in 2013; as well as the revamped Master Plan for Punggol 21 Plus announced by Prime Minister Lee Hsien Loong at the National Day Rally speech in August 2007, with enhancements and introduction of leisure facilities in August 2014. “By comparison, Tampines appears to be overlooked,” says Ooi Yi Tung, director of analytics and technology at TheEdgeProperty.com.

More than two decades ago, Tampines, Woodlands and Jurong were identified as regional centres. Tampines Regional Centre was the first to take off, and is by far the most established regional centre compared with Jurong and Woodlands, which have largely been associated with industrial estates.

“Traditionally, Tampines has been perceived as a more upmarket suburb compared with Jurong and Woodlands, and therefore, a more desirable neighbourhood to live in,” says Ooi. However, the price trend between Tampines and Jurong started to reverse sometime in 2008, following the announcement of the new Jurong Lake District. “The Master Plan had a huge influence on property prices,” he adds.

When the first private condo in the new district was launched in June 2013, namely the 738-unit J Gateway by MCL Land, all units were sold on the first day of launch. The 99- year leasehold condo, which is located near the Jurong East MRT interchange station, even saw a 484 sq ft unit hit a record high of $1,774 psf. Even though the launch coincided with the introduction of the total debt servicing ratio (TDSR) that same evening, units that were returned to the developer were quickly snapped up by other interested parties.

The 696-unit Lakeville, MCL Land’s 99-year leasehold condo in Jurong West, was launched in April last year. As at end-August, 518 units had been sold at a median price of $1,261 psf. The highest price psf achieved for the condo was for a 635 sq ft unit that was sold for $1,526 in February.

“Having seen some of the projects achieve highs of $1,500 to $1,700 psf, I think private condos in the West have already priced in future growth,” says Ooi.

In other suburban areas, 99-year leasehold private condos similarly hit record highs. Among them was Centro Residences on Ang Mo Kio Avenue 8, where a 1,001 sq ft unit was sold in early 2013 for a jaw-dropping $1,920 psf. The price was higher than the $1,893 psf achieved at Sky Habitat in Bishan in 2012. Even after discounting the furnishing (the unit was sold fully furnished), the price of the unit at Centro Residences is likely to be about $1,800 psf, reckons Ooi.

At Watertown, an integrated development with private condo and shopping mall, a 1,475 sq ft unit in the condo was sold for $1,654 psf in February 2013. The project is linked to the Punggol MRT, LRT and bus interchange stations in Punggol Central. “Punggol is one of the furthest points from the CBD, and yet, it managed to achieve such prices,” says Ooi. “Ten years ago, nobody wanted to live in Punggol.” Even the first government land tender in Punggol drew no bids.

It was not until the government rolled out its revamped Punggol 21 Plus master plan to turn Punggol into the first waterfront public housing estate in 2007 that more young couples were willing to move there. In August 2014, the prime minister announced the introduction of lifestyle elements with Punggol Waterway, facilities for water sports, parks, new eateries, shopping mall, as well as the positioning of Punggol as a town in the northeast region.

“My view is that the government wants Punggol to succeed as it will help divert demand from some of the hot areas in Singapore, thereby ensuring that prices will not be driven up and congestion will ease,” reckons Ooi. “So, the amount of attention on Punggol has been tremendous.

"Riding on the future of the upcoming North Coast Innovation Corridor is North Park Residences in Yishun. The 920-unit, 99-year leasehold condo sits on top of North Point City, a future shopping mall linked to the existing Northpoint Shopping Centre and integrated with the Yishun MRT station, bus interchange and a new regional library as well as community club. Launched in April, the prices of 431 sq ft studio units at the condo crossed $1,500 psf and hit a high of $1,572 psf.

In the East, the market has been more segmented, notes Ooi. New launches of 99-year leasehold condos around the Tanah Merah MRT interchange, such as Eco, Urban Vista and The Glades, have seen prices surpass $1,700 psf. In Simei, My Manhattan, which is located across the road from the revamped Eastpoint Mall and the Simei MRT station, saw prices hit a high of $1,462 psf for a 441 sq ft unit. Launched in early 2011, the 301-unit condo was completed last year.

A new private residential enclave has sprouted up in the area bordered by Tampines Avenue 10 and Avenue 1, which is adjacent to Tampines Quarry and just a three-minute drive to Tampines Regional Centre. One example is the 630- unit Q Bay Residences, which is located next to The Santorini. Launched in January 2013, the 99-year leasehold condo has been fully sold and is expected to obtain Temporary Occupation Permit by early 2016.

The highest price psf achieved for the condo was $1,276. Meanwhile, at Waterview, which is located opposite Q Bay Residences, the highest price psf achieved was $1,184 in May 2013. The 99-year leasehold condo was launched in 2010 and completed last year.

At The Santorini, the highest price psf achieved was $1,274. Units sold in the months of June to August generally ranged from $1,058 to $1,198 psf, based on caveats lodged with URA Realis. “Obviously, there are huge price discrepancies among the East, West and Northeast,” says Ooi. “None of the private condos crossed $1,300 psf. I think this part of Tampines is the forgotten part of the East.”

The eight 15-storey blocks at The Santorini are oriented such that units will enjoy views of the nearby Tampines Quarry Park and Bedok Reservoir Park. Besides being a short drive to Tampines Regional Centre, the project is located near schools such as United World College, St Hilda’s Primary School, Temasek Polytechnic and Singapore University of Technology and Design.

Tampines itself is also being transformed. A new Draft Master Plan for Tampines North was announced in 2013, says Eugene Lim, key executive officer of ERA Realty. It includes the addition of 21,000 homes — both public and private housing — as well as shopping facilities and two parks, in addition to the existing Tampines Quarry Park. “Right now, you see construction, but in 10 years’ time, this area will be transformed into a new township,” he says.

The infrastructure for the Tampines North industrial area, which is home to global tech companies such as Hoya Electronics, IBM and Siltronic, has been completed, adds Lim. The advanced display and high-tech wafer parks are also up and running. Tampines is home to big-box retailers such as Courts Megastore, Giant Hypermarket and Ikea Tampines, which have been in operation since 2006. This is on top of the three malls located in Tampines Regional Centre next to the MRT station, namely Tampines Mall, Century Square and Tampines One.

Future residents of Tampines will be able to look forward to the upcoming Tampines Town Hub that is expected to be completed progressively from end-2016, Lim says. The first phase of the hub will see a community centre, retail and F&B outlets, one of Singapore’s largest hawker centres with 800 seats, a badminton hall with 20 courts, six swimming pools and a 5,000-seat stadium with a FIFA-approved football pitch.

Plans are also underway for a future Cross Island MRT Line, which will start from Changi in the East, pass through Loyang, Pasir Ris, Ang Mo Kio, Sin Ming, Bukit Timah and Clementi, and terminate in Jurong Industrial Estate. Ooi reckons prices of private condos located off Tampines Avenue 10, such as The Santorini, will see an uplift in prices when these pipeline plans start to materialise.

In terms of average prices in 2015 to date, Tampines appears to be the most affordable, Ooi points out. Prices of HDB resale flats in Tampines are around $400 psf, while those of executive condos (ECs) — a hybrid between private and public housing — launched in recent years have hovered in the range of $750 to $800 psf. “ECs and HDB flats provide a natural price support level and price stability for private condos in the area,” he adds. Tampines is ranked among the top three HDB towns where owners of five-room HDB flats (that have exceeded the minimum occupation period of five years) have been able to see the highest gross profits — exceeding $150,000 (see Chart 3). There are also more five-room HDB flats in Tampines relative to other established HDB estates, such as Ang Mo Kio and Jurong East, says Ooi. Therefore, in Tampines, HDB flat owners who sell in order to upgrade to a private condo are able to pay a higher down payment and are in a better position to secure financing even in an environment of tightened financing under TDSR, he adds.

At The Santorini, permanent residents account for 25% of the buyers to date. The proportion of PRs is higher than that of recent suburban launches, such as High Park Residences on Fernvale Road, where over 1,000 units were sold within the first weekend of launch in July. More than 90% of the buyers were said to be Singaporeans. The higher proportion of PRs at The Santorini reflects its proximity to schools as well as employment hubs in the East, such as Changi Business Park, the Tampines North industrial area and Changi Airport.

Recognising the potential of the area, MCC Land beat 11 others to win its second residential parcel located off Tampines Avenue 10 in April. The 99-year leasehold site, which is located near The Santorini, was purchased for $227.8 million ($483 psf per plot ratio) and can be developed into a residential project with about 490 units.

In the eastern region, the number of units that are available for rent upon completion is also relatively low at 8% to 12% compared with 20% to 30% in the West, notes Ooi. Gross rental yields for two- to four-bedroom private condos in Tampines are about 4%, which is comparable to yields in Woodlands and Jurong West, he adds (see Chart 4).

Investors such as John Lim, a Singaporean, are convinced that there is growth potential in the East. “I am staying in the northeast region,” he says. “I think this is a good time to explore the East. I now have a better comparison of how the East stacks up against the rest of Singapore.

”Meanwhile, Derrick Ho, who was also at The Santorini showflat for the property talk, hails from Yishun. He is interested in buying a unit in the Tampines area to be near St Hilda’s Primary School. “I’m planning to move to Tampines as it will mean a shorter commuting time to school for my child,” he says.