Developers have been bracing themselves for a tough 2019: the full effects of the property cooling measures are weighing on homebuyers’ decisions, while a pipeline of about 60 projects with close to 20,000 new units is geared up for launch.
However, some developers received an unexpected windfall on Jan 25: On that day, Transport Minister Khaw Boon Wan and the Land Transport Authority (LTA) revealed the locations of the 12 new stations for the first phase of the Cross Island Line.
Although construction works are scheduled to start only next year, with the first phase of the Cross Island Line to be completed in 2029 – a good 10 years from now -- sales have already started to ramp up for some developers since the weekend of Jan 26-27.
The most immediate beneficiary of the announcement was Affinity at Serangoon, the 1,052-unit residential project located at Serangoon North Avenue 1. The condominium, developed by a consortium led by Oxley Holdings, saw 31 units snapped up on the weekend of Jan 26–27, according to Eugene Lim, director of marketing and sales at Oxley Holdings. By Feb 7, the sales figure had risen to 70 units, bringing the total number of units sold in the project to 390 (about 37%).
The spike in sales is due to the location of the Serangoon North station, one of the 12 new MRT stations on the Cross Island Line. The station is located just one street away from Affinity at Serangoon; in fact, one of the station’s exits is situated just 350m from the upcoming development.
Given the strength of the sales over the weekend, the Oxley-led consortium has decided to build a new compact, three-bedroom show suite at the sales gallery of Affinity at Serangoon. It is scheduled to open to the public by the end February, says Oxley's Lim. The developer is expected to adjust prices upward after the Chinese New Year period.
“The new Serangoon North station has benefitted Affinity at Serangoon and it is going to help clear the unsold units,” says PropNex CEO Ismail Gafoor.
The Garden Residences, a 613-unit private condo jointly developed by Wing Tai Holdings and Keppel Land, also saw an increase in enquiries following the announcement of the 12 stations on the Cross Island Line.
This is because the project, located along Serangoon North Avenue 1, is just 532m from the Serangoon North station, according to Wing Tai. The project was launched last June.
Generally, homebuyers are prepared to pay a premium in terms of selling prices if the distance to the MRT station is less than 500m, says Ismail. If the distance is between 500m and 800m, it is still “a good selling point” but does not translate into premium pricing, he observes. “If one were to stroll, it takes about 10 minutes to walk 800m – equivalent to two rounds on the 400m track at the stadium – and that’s a comfortable walking distance in this weather.”
Developments near Hougang MRT Station will also benefit, says Eugene Lim, key executive officer at ERA Realty Network. This is because the station will become a new interchange for the North East and Cross Island lines. The projects that are likely to benefit from their proximity to Hougang station are Logan Property’s 1,410-unit The Florence Residences and Oxley’s 18-unit boutique development, Parkwood Residences.
“Certainly, these developments will become more attractive to potential buyers,” adds ERA’s Lim. “This is likely to translate into a faster pace of sales at current prices. Developers are unlikely to hike prices by much, as buying sentiment is not very strong currently. Hence, this could be a good opportunity for buyers to pick up units.”
Developers are also unlikely to hike prices amid tepid buying sentiment, says Lim. As a result, he thinks this could be a good opportunity for buyers to purchase properties.
There are more benefits from getting a new MRT station compared to upgrading an existing station into an interchange, says Nicholas Mak, executive director of ZACD Group. “While there are some perceived economic benefits in estates like Hougang and Ang Mo Kio where the stations will become interchanges, it will not be as pronounced as areas where there was no MRT station [previously].”
An example of this is Chip Eng Seng Corp’s upcoming project on the site of the former Changi Garden. The new mixed-use development, expected to have 270 to 280 condominium units and two levels of retail and F&B space, is scheduled for launch in 2Q2019.
The former Changi Garden is located about 960m from the new Loyang station on the Cross Island Line, says Mak. Even though the distance is more than 500m, the Changi Garden site is likely to benefit as public transport in the area was previously lacking, he points out.
“Benefits of proximity drop for projects that are further than 600m from the MRT station,” says Mak. “This is because of our hot and humid weather. Most people do not want to walk more than 15 minutes. Once you have to take a feeder bus to the station, it becomes an incremental inconvenience because of the waiting time.”
Unlike new launches, existing condos may not benefit immediately from the announcement as it takes some years to complete the new MRT stations, says Christine Sun, head of research and consultancy at OrangeTee & Tie.
“Residents and tenants in existing condos have to endure the noise, dust and inconvenience from the construction sites for a period of time,” adds Sun. “Buyers of new condos, on the other hand, are less affected as the construction period of the project may coincide with the building of the new MRT stations. The values of completed homes will usually rise nearing the completion of the MRT stations.”