Home owners of properties on the city fringes need not feel so despondent over heavier than average price falls over the last year.Prices there may have dropped more than properties in the city centre and suburbs, but experts note the resilience of rents there.
They also point out that home prices in this area are now more competitive in relation to homes further out in the suburbs.
Last year, prices for non-landed properties in the region – known as the rest of central region (RCR) – fell 5.3 per cent. This was steeper than price falls of 4.1 per cent in the central region and 2.2 per cent in the suburbs.
A slew of city fringe projects was launched last year amid muted market sentiment due to the introduction of the total debt servicing ratio and additional buyer’s stamp duty, said Knight Frank Singapore research head Alice Tan. But prices of such homes have been competitive in that the price gap with suburban homes has narrowed.
Among new sales, the price premium of homes in the city centre, or core central region (CCR), versus RCR homes was fairly unchanged over the past year. It was 39 per cent in the fourth quarter of 2013 and 41 per cent in the same period last year.
But the price premium of RCR homes over those in the suburbs, or outside central region (OCR), closed a lot, from 61 per cent to 29 per cent over the same period.
“This presents a rising proposition for city fringe homes on a per sq ft basis,” said Ms Tan. At the same time, the rental index for non- landed properties in the RCR declined by 0.2 per cent last year, compared with falls of 3.7 per cent for CCR properties and 2.5 per cent for OCR properties.
“RCR properties offer the best of both worlds – affordability and convenience. Many are in reasonably quiet, exclusive environments as well,” said R’ST Research director Ong Kah Seng.
Average rents in the RCR are $3.50 to $4.50 psf per month, compared with $5 to $6.50 psf per month in the central region and $3 psf per month in the suburbs.
Gross yields for non-landed RCR properties were highest, at 4 per cent, in the second half of last year and are tipped to remain the same this year, said Mr Ong.
It was 3.7 per cent for both central and suburban segments over the same period and is expected to remain at those levels in the first half of this year.
“Leasing demand for RCR homes will continue to be quite strong… Drops in non-landed rents are likely to be most pronounced in the central region as companies cut back on housing allowances,” said Mr Ong.
Overall, absolute prices across the regions will likely hold their ground this year, thanks to new sale prices, which are expected to be flat, said Mr Alan Cheong, Savills Singapore’s research head.
New sale prices should hold as the Urban Redevelopment Authority has tightened efficiency rates over the past two years, resulting in less saleable space for developers, he said.
It is also possible for prices to rebound in the second half of this year, especially for RCR homes, said Ms Tan. “There exists fairly large underlying demand. Buyers are just waiting for projects that are more attractively located.”
One city fringe property which goes on sale today is Sims Urban Oasis. Indicative pricing for the first phase is from $628,000 for a 440 sq ft one-bedroom unit to $1.48 million to $1.55 million for a 990 sq ft four-bedroom “compact” unit. The project also has four- and five- bedroom units.
A GuocoLand spokesman said the project is attractive for home owners and investors, given its proximity to the upcoming Paya Lebar Central sub-regional centre. It is 10 minutes’ drive from Marina Bay and the Central Business District and a five-minute walk to Aljunied MRT station.
Other RCR properties include TRE Residences, which a spokesman said is in the “rapidly gentrifying Geylang-Sims-Mountbatten area”; Eight Riversuites in Whampoa East, near the Kallang River and the major intersection of Central, Pan-Island and Kallang-Paya Lebar Expressways; Highline Residences in Tiong Bahru; and Sky Vue and Sky Habitat in Bishan, which are both near the Bishan MRT station.