Will You Buy a LeaseHold Condo at Pasir Ris for SGD2,000 psf?

This week, I read the news and see that Pasir Ris 8, a suburban condo located just next to Pasir Ris MRT saw multiple price hikes over the weekend to over S$2000 psf.

I was shocked by the pricing.

Rewind more than a decade back, when I was looking for my first private home, I thought that anything more than S$1,000 psf was expensive. And mind you, that is Freehold (FH) status and not leasehold (LH) in a better location in my opinion. Of course it is not brand new, but still within the 10 year old +/- age.

In 2012-2013, when several of my friends booked their brand new condo at >S$1,300 psf, I thought to myself, wow….. crazy! It’s so expensive for a 99 year old LH apartment. And those condos are also near to MRT and located at more prime location than Pasir Ris.

Who will have thought that now….. people are buying at S$2,000 psf for a LH 99 year old condo, at Pasir Ris?

PASIR RIS 8 BRIEF DETAILS

Anyway, some facts for Pasir Ris 8 below:

• Developers – Allgreen Properties and Kerry Properties
• 487 units of 99-year leasehold condo
• Range – S$1,400 psf to S$2,000 psf
• Next to Pasir Ris MRT and Mall.

The developer sold 415 units or 85 per cent during the first weekend of launch at an average price of ~S$1,600 psf.

Source references: Business Times and Yahoo News.

It was reported that prices started at S$1,400 in the morning of July 24, and prices increased six times throughout the day. A 2 Bedroom unit, ninth floor of 710 sqft with an indicative price of S$1.145 million (S$1,613 psf) at 9am was eventually sold for S$1.503 million at 1030 pm.

This was an adjustment of more than S$350K (or more than 30%) within a single day.

It was quoted by another prospective buyer that he was told a indicative price of S$1.5-1.6 million before the weekend launch for a 3-Bedroom unit and by the time it was his turn at the queue, it was priced at S$1.9million.

COMPARISONS

The Linq @ Beauty World, directly above the Beauty World MRT sold 115 of its 120 units on its launch weekend last November. Likewise, it also saw several rounds of price revisions. It was reported that 96% sold on the first day of the launch at an average price S$2,150 to 2,200 psf. The Linq is a freehold status and is located at Bukit Timah area, an area near to the CBD and that is pretty exclusive with many good schools in the vicinity.

Another project that in prime location with 99 year old leasehold status is Normanton Park that sold nearly a third (600 units) of its 1,862 units on the first day at average S$1,750 psf.

As from BT, “a report by Citi analyst states that units in nearby existing 99-year leasehold developments in Pasir Ris recently transacted at lower prices, such as the 944-unit Coco Palms at S$1,200-1,300 psf, and the 912-unit d’Nest at S$1,100-1,300 psf.”

INTEGRATED DEVELOPMENTS ARE VERY RARE

While the pricing of S$2,000 psf for 99 year-old sub-urban condos sounds a bit absurd, integrated developments with MRT and Malls are very rare in Singapore, and hence fetching premium prices.

According to URA data end of 1Q2021, there are only a mere 14 completed condos within 13 integrated developments across Singapore today. This is equalled to just 2.5% of the total non-landed stock of 304,562 condos and apartment units.

Staying just above the MRT and Malls also bring a lot of convenience and savings to transport costs and time. Rental yields are also in general better, if it is for investment.

For example, North Park Residences is a development above Northpoint. Based on EdgeProp data, the average rental rate there is $3.6 psf per month, which is a 20% premium to the average rents of $2.9 to $3.1 psf of the other three condominiums in the Yishun area, two of which are mixed-use developments, namely Nine Residences and The Wisteria, while the third project is the condominium, Symphony Suites (see below).

Below is a list of completed integrated developments in the last two decades by edgeprop.

Source : www.edgeprop.sg

CAN WE EXPECT LUCRATIVE CAPITAL APPRECIATION?

Let’s consider another similar integrated sub-urban condo, Hillion Residences that sits above Bukit Panjang MRT and Hillion Mall that was launched in 2013 and TOP in 2017.

Looking at the PSF graph below from Edgeprop (for >500 sqft unit), you can see that price trends from S$1,400 psf from Mid 2013 to S$1,520 psf Mid 2021.

Over a period of 8 years, the increase in the 99 year leasehold condo appreciated 8.6%. That is less than 1.1% per year.

In fact, if you bought at the toppish range of close to S$1,500 psf during the condo launch (refer to the red circled area), then there will be almost no capital appreciation even after 8 years.

However if you are able to be the first in the queue to get those units priced at S$1250 to 1300 psf, you can expect capital appreciation of up to 20%.  At the same time, you can enjoy all the intangible benefits of living in such a convenient house.

WILL I BUY PASIR RIS 8 AT S$2,000 PSF?

If you want my honest opinion, I will say “absolutely not”! At least not for me. And definitely not a lease-hold condo at this kind of price.

As an investor, who look at capital appreciation of property even for my own stay, it is not at all a good investment.

To me, even for FH/999 landed properties, I will not pay for S$2,000 psf on land, let alone paying for “air space”, now.

With S$2,000 psf, there are many options all over island with FH status and in better central location. Perhaps not directly above MRT or Mall but near enough walking distance.

Are we that lazy to walk a bit?