Home buyers willing to pay more for integrated projects

Convenience, scarcity among reasons cited; price premiums can go up to 19%: Report

Yunita Ong

Convenience is king these days with home buyers zeroing in on developments that have retail shops and MRT access.
Such buyers have been willing to shell out premiums of anywhere between 7 and 19 per cent within the launch year for such estates, compared with new sales of leasehold projects in their district.

Those are the findings of an OrangeTee & Tie analysis of “integrated developments” – projects with private homes, shopping malls with at least 100,000 sq ft of net lettable area, direct MRT access and, sometimes, a bus interchange.

The consultancy says strong demand and the relative scarcity of such projects will support pricing for three upcoming developments, including Woodleigh Residences.

OrangeTee & Tie studied the average selling prices and rents of seven such leasehold projects launched since 2007. It found that they commanded premiums over other projects nearby. (Marina One was excluded owing to insufficient comparables.)

Park Place Residences by Lendlease, the newest such project and the only one in the past 10 years in the city fringe, has fetched an average price of $1,806 per square foot (psf) since its launch early this year, a premium of 18 per cent to leasehold projects nearby.

It is integrated with Paya Lebar MRT, the Paya Lebar Quarter mall and three Grade A office towers.

Luxury condominiums in this category have also done well: GuocoLand’s Wallich Residence fetched a 13 per cent premium compared with leasehold properties in the district in the year after its 2013 launch.

Ms Christine Sun, head of research and consultancy at OrangeTee & Tie, attributed this to strong demand for the “unparalleled convenience” of amenities at integrated developments and their relative scarcity.

These projects make up less than 3 per cent of all the private non-landed residential stock of about 294,000 units in the second quarter, according to Urban Redevelopment Authority data, the report said.

Rents also often fetch a premium. Take The Orchard Residences, where median rent in the second quarter was $6.73 psf a month, much higher than the overall median rent of $4.42 psf for non-landed homes in District 9.

Resale prices of two of the projects studied that are fully sold, Bedok Residences and The Orchard Residences, have also stayed above the median.
Bedok Residences, which is integrated with Bedok Mall and Bedok MRT, fetched a median resale price of $1,447 psf between the first and third quarters of this year, above the $1,089 psf for leasehold projects in the area. The median resale price at The Orchard Residences in the same period was $3,731 psf, well above the $1,849 psf for leasehold projects in its district.

“The potential supply of these developments may not meet the demand of buyers in the coming years as there are only three projects in the pipeline,” Ms Sun said.

The 667-unit Woodleigh Residences in Bidadari Park Drive will be launched before the year end. It is being developed by Singapore Press Holdings and Kajima Development. It will boast a 28,000 sq m mall, and is linked to the Woodleigh Village hawker centre, Alkaff Lake and Heritage Walk. It also has direct access to Woodleigh MRT station and Singapore’s first air-conditioned underground bus interchange.

Ms Christine Li, senior director and head of research at Cushman & Wakefield, said it will be near the upcoming Bidadari town, noting: “There will be upside because the population in the vicinity will grow, and there will be demand from upgraders from the HDB flats.”

Woodleigh Residences will be the only integrated development in District 13 and is likely to command a price premium over the vicinity’s new launches, said Ms Sun. OrangeTee & Tie and Savills are marketing the development.

The Sengkang Central plot won by a CapitaLand-CDL joint venture and a 3.8ha mixed-use white site in Pasir Ris Central that is now up for tender will also be integrated developments.

These three projects will generate a potential supply of about 2,000 units in all, noted Ms Sun in her report.

Mr Lee Nai Jia, senior director and head of research at Knight Frank, said that while such projects have higher prices, developers of such estates in prime areas have to work harder on design to make sure that the residential parts keep a sense of exclusivity.

“It really depends on how they design it so that they maintain a distance between the residential, and office and commercial components,” he added.
Such integrated developments could also be more popular because developers will want to ensure that their malls will have sufficient population catchment.

But he also said buyer preference can vary. “Some people feel that there’s a lack of exclusivity, since they may have to go through a large crowd when they go home.”

This article first appeared in The Straits Times on Oct 17, 2018.