Project Spotlight: This condo has the most profitable transactions in Jurong
By Elizabeth Choong
/ EdgeProp Singapore |
The Lakeshore is the most profitable condo in District 22 (Photo: EdgeProp Market Trends as at 15 May 2024)
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SINGAPORE (EDGEPROP) – The West Region of Singapore is poised for transformation with three large-scale development projects. Jurong Lake District (JLD) is planned to be Singapore’s secondary CBD. The tender for a 6.5-hectare government land sales (GLS) site in JLD closed in March. The site can yield approximately 1,700 housing units, 1.57 million sq ft of office space, and 785,765 sq ft of gross floor area for complementary uses such as retail, hospitality, and communal spaces. The massive development will be completed in phases over the next 10 to 15 years and will spearhead the development of JLD. At the time of writing, the site has not been awarded.
Two other complementary large-scale projects include Jurong Region Line (JRL) and Tuas Port. JRL will improve the connectivity for the Jurong neighbourhood while Tuas Port will be a major employment hub.
We examined the condos in District 22, which comprises Jurong, Lakeside, Boon Lay, and Tuas, in search of hidden gems. We discovered that The Lakeshore has the most number of profitable transactions among the condos in the district. In this article, we analysed the development to discover the reasons for its profitability.
Presenting The Lakeshore
The Lakeshore is located along Jurong West Street 41 in the Jurong West Planning Area. The development obtained a temporary occupation permit (TOP) in 2008 and features 848 units of two- to four-bedders.
There are two completed condos within walking distance of The Lakeshore, namely Lake Grande and Lakeville. All three condos are 99-year leasehold developments that face Jurong Lake. They are also located adjacent to each other. There are two other uncompleted leasehold condos within a 2 km radius, namely Sora and The LakeGarden Residences. Both upcoming condos also overlook Jurong Lake.
Source: EdgeProp LandLens (as at 15 May 2024)
A slow start
The Lakeshore was launched for sale in October 2003. According to caveats lodged with URA, only one unit was sold during the launch month. However, 93 caveats were lodged in November 2003, translating to a cumulative take-up rate of 11.1%. The cumulative take-up rate improved to 29.2% and 37.7% by the end of 2004 and 2005, respectively. Furthermore, the average new sale price for The Lakeshore grew significantly from $424 psf in October 2003 to $730 psf in November 2008.
Source: EdgeProp Market Trends (as at 15 May 2024)
The weak initial sales performance could be attributed to Severe Acute Respiratory Syndrome (SARS), which was first detected in Singapore in March 2003. Furthermore, GDP for Singapore increased by 4.5% y-o-y in 2003, which is an improvement over the 3.9% y-o-y growth in 2002 but significantly lower than the growths of 9.9% y-o-y in 2004 and 7.4% y-o-y in 2005.
In contrast, the sales performances for Lake Grande and Lakeville were much stronger during their respective launches. Lakeville was launched in April 2014 and achieved a cumulative take-up rate of 22.7% during the first month of launch. Lake Grande achieved a stronger take-up rate of 63% during its launch weekend in July 2016.
Most number of profitable transactions in the district
Despite its weak sales performance during launch, 702 profitable transactions have been recorded for The Lakeshore. This represents 75.8% of the 926 sub-sale and resale transactions that have taken place for the condo. Additionally, 37 unprofitable transactions (4% of all sub-sale and resale transactions) have been recorded. Profits range from $1,000 to over $1 million, while losses range from $2,160 to $217,000. At the time of writing, The Lakeshore has the most profitable transactions among all condos in District 22.
It is noteworthy that the top three profitable transactions for The Lakeshore all took place last year and this year. Furthermore, the three units were purchased for below $600 psf but were sold for above $1,300 psf.
More profitable transactions than nearest neighbours
The Lakeshore has more profitable transactions than Lake Grande and Lakeville, both of which are its nearest neighbours. However, Lake Grande and Lakeville are younger and feature fewer units than The Lakeshore. The 696-unit Lakeville obtained its TOP in 2017, while the 710-unit Lake Grande obtained its TOP in 2019.
At the time of writing, Lakeville had 120 profitable sales transactions, representing 93% of the 129 sub-sale and resale transactions for the condo. Lakeville also had three unprofitable transactions. Profits ranged from $5,760 to $791,240, while losses ranged from $16,000 to $43,765.
At the time of writing, Lake Grande had 95 profitable transactions, which account for all of its sales transactions in the secondary market. Profits ranged from $18,000 to $568,000. The development had no unprofitable transactions.
The lower launch prices for The Lakeshore could explain its significantly higher profits from its top three profitable transactions compared to Lakeville and Lake Grande. It is also notable that the majority of the top three transactions for all three condos are for larger units that measure at least 1,000 sq ft and have at least three bedrooms.
A variety of nearby amenities
The popularity of The Lakeshore could be attributed to the variety of surrounding amenities. Jurong Central Plaza, Jurong Lake, Rulang Primary School, Shuqun Primary School, Fuhua Secondary School, Yuan Ching Secondary School, Yuhua Secondary School, and the Canadian International School (Lakeside Campus) are within walking distance. Jurong West Street 52 Market and Hawker Centre, Yuhua Market and Hawker Centre, Lakeside Primary School, Hua Yi Secondary School, and Jurongville Secondary School are within a 1 km radius.
Source: EdgeProp LandLens (as at 13 May 2024)
Additionally, Lakeside MRT Station is a short walk away. The MRT station is two stops from Jurong East Station and one stop from Boon Lay Station. Jurong East MRT Station serves as an interchange station for the North-South and East-West Lines. Furthermore, Jurong East and Boon Lay Stations will serve as interchange stations for the JRL.
Moreover, Jem, JCube, Westgate, and IMM are located near Jurong East MRT Station, while Jurong Point and Boon Lay Bus Interchange are located near Boon Lay MRT Station.
Family-friendly facilities
Buyers of The Lakeshore are likely to be families because of the numerous nearby schools. Moreover, the majority of its units measure at least 1,000 sq ft. As such, the development features many family-friendly facilities such as numerous pools, several tennis and badminton courts, as well as a children’s play area.
Source: EdgeProp Research
Regular unit layouts and water views remain in demand
The unit with the highest profit of over $1 million has a regular layout with all rooms having a square or rectangular shape. Furthermore, there is very little unusable or wasted space. Additionally, the units in stack 28 face Jurong Lake, so residents of those units are likely to enjoy unblocked views of the lake.
Source: EdgeProp Research
The floor plan for the unit that yielded the second-highest profit of approximately $973,000 also has a regular shape. However, the unit has a corridor leading from the living area to the kitchen and dining area, which can only be used as circulation space. Additionally, the unit does not have a study, unlike the unit with the highest profit.
Furthermore, the units in stack 45 are inward facing so residents are unlikely to be able to enjoy views of Jurong Lake. However, residents would still be able to enjoy water views because the stack faces a pool.
Source: EdgeProp Research
Affordable compared to neighbours
The average resale price for The Lakeshore ($1,416 psf) is trending below that for Lakeville ($1,649 psf) and Lake Grande ($1,826 psf) because The Lakeshore is older than the other two condos by approximately 10 years. However, the price growth for The Lakeshore is significantly stronger than the other two condos. Since 2020, the average resale price for The Lakeshore has surged by 40.5%, compared to Lakeville (16%) and Lake Grande (21.3%).
The resale prices for The Lakeshore could have been given a boost by the planned transformation of the West Region and JLD. Since Lakeville and Lake Grande were launched later, the transformative plans for the neighbourhood would have been factored into their launch prices, resulting in their weaker price growths.
Source: EdgeProp Market Trends (as at 15 May 2024)
The average resale price for The Lakeshore ($1,416 psf) is also lower than that for leasehold condos in District 22 ($1,449 psf) and islandwide ($1,628 psf). Additionally, the price growth for The Lakeshore is weaker than its counterparts in the same district and islandwide. Since 2014, the average resale price for The Lakeshore has grown by 32.7%, which is lower than that for leasehold condos in District 22 (52.7%) and islandwide (53%).
Source: EdgeProp Market Trends (as at 15 May 2024)
The lower average resale price for The Lakeshore makes it an affordable option for owner-occupiers who are keen to live in District 22. However, investors seeking capital gains and price growth might want to consider other options due to its weaker price growth. Furthermore, lease decay is expected to set in deeper as the 16-year-old leasehold development ages.
Additionally, an en bloc sale does not seem to be on the cards for The Lakeshore in the near future. Developers are selective and cautious when purchasing land, as indicated by their lacklustre response to the GLS sites along Zion Road and Upper Thomson Road. Both GLS sites attracted only one bid each when their tenders closed.
Neighbouring future developments
There are two uncompleted leasehold condos within a 2km radius of The Lakeshore, namely Sora and The LakeGarden Residences. Sora sits on the site of the former Park View Mansions, which was sold for $260 million ($1,023 psf ppr) in an en bloc sale in July 2022. The LakeGarden Residences is built on the site of the former Lakeside Apartments, which fetched $273.9 million ($1,250 psf ppr) in an en bloc sale in May 2022. Both condos are located adjacent to each other near Jurong Lake.
Source: EdgeProp LandLens (as at 15 May 2024)
The LakeGarden Residences was launched for sale in August last year and achieved a take-up rate of 23% at an average price of $2,120 psf during its launch weekend. At the time of writing, the take-up rate for The LakeGarden Residences has improved to 37.6%. The sales launch for Sora is expected to take place later this year.
Source: EdgeProp Research (as at 15 May 2024)
Key takeaways
The initial sales performance of a condo is not a predictor of the future profitability of the condo. Despite the weak sales performance of The Lakeshore during its launch, the condo achieved the most number of profitable transactions in the district. The demand for the condo could be due to its excellent location near Jurong Lake, numerous nearby amenities, proximity to an MRT station, and the regular layout of its units.
Sometimes, patience pays off. According to caveats lodged with URA, the units from the top three profitable transactions for The Lakeshore, Lakeville, and Lake Grande were all sold by their first owners to their second owners. The first owners purchased their units directly from the developer and held onto them for at least five years.
Buyers, particularly those seeking properties with strong capital appreciation, should pay attention to the government’s development plans. Properties that fall within neighbourhoods earmarked for development will benefit from the improved connectivity and increased amenities, resulting in more demand and higher prices for the property. A rising tide will lift all boats.
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