SINGAPORE (EDGEPROP) - Pasir Ris 8, a newly-launched integrated condo, has been in the news recently for its spectacular sales, which prompted a DBS analyst to attribute this to the sign of an asset bubble. Now that the dust has settled and the transactions are published, we decided to look deeper into the sales data at Pasir Ris 8, block by block and stack by stack, to uncover the truth and potential learnings. (See also: Discover all Singapore new launch condos in 2021)
This condo is a great case study for property seekers and professionals to better understand the intricacies of pricing. The fact that all the transactions occurred within two days removes variables such as the passing of time, and thus changing market expectations which may distort the study of pricing from the equation. The development is also sizeable, which averages out the outliers. Additionally, Allgreen, the developer, was able to adjust their prices multiple times during the two days. This meant that the caveated pricing accurately reflected the underlying demand and supply of a well-functioning market, in other words, the actual price (or very close to actual) buyers are willing to pay for. (In contrast, a dysfunctional market meant that either sellers have too much supplies that nobody wants or buyers have demands that can’t be met. For example, during the toilet-paper rush at the beginning of the pandemic, most stores ran out of toilet paper because they were not able to adjust their pricing even though buyers may be willing to pay more for them. The end results were that stores ran out of toilet paper, buyers went home angry and nobody knows the real price buyers are willing to pay for toilet paper). (See: Discover insightful data of any Singapore condominium with our condo directory)
Having looked through every single transaction, now let us reveal what our analysis of the transactions can enlighten us about the real estate market.
There was much fanfare and hype surrounding Pasir Ris 8 with the widely reported news that Allgreen had to adjust their pricing six times during the launch weekend. Some potential buyers even took to social media to voice their frustrations of waiting, only to be told of the higher pricing. The reality, however, is that almost all the transactions, 412 out of 417, were transacted between $1,400 and $1,800 psf, a price range that is perfectly normal for any given development. There were only two transactions which crossed the $2,000 psf mark (we will revisit this later), and only three which exceeded $1,800 psf. In other words, all the noise and hype came from a mere 1.2% of the transactions, or five out of the 417 transactions. So, the next time you feel FOMO (fear of missing out), ask for the facts.
Source: EdgeProp, URA
Despite the strong sales, there were a few stacks that were surprisingly left untouched. Those stacks where not one unit was sold are stacks 2, 6 and 45. Looking at the sitemap will provide better clarity as to why this is the case. Stacks 2 and 6 are premium 3-bedroom + guest units, whereas stack 45 consists of standard 3-bedroom units. Stacks 2 and 6 are the closest to the main road, Pasir Ris Central. Potential buyers may be turned-off by noise generated from traffic or from the pedestrian bridge in stack 45.
Each development will have blocks/stacks that are located in least-preferred locations. However, you may want to avoid putting the expensive units in those stacks, or at least compensate the bad locations with other perks such as better view. The average selling price for 3-bedroom units in this development is between $1.6 million and $1.9 million, definitely not chump change. With this kind of budget, buyers have a variety of options and go for stacks in the better locations in this development, or choose to go elsewhere altogether.
How much more would you pay to avoid looking at the guardhouse, with sights of cars coming in and out of the development? After looking through the data, we now have the answer. On average, buyers are willing to pay 2–3% more to give the guardhouse structure a miss whenever they look out their balconies. For example, in block 14, the average prices of stacks 38 & 37 are 2.8%, or approximately $34,000 higher than stack 33 in the same block. All these stacks are of similar type (2-bedroom premium units) and sizes. Similarly, in block 12, the average prices of stacks 22, 24 and 25 are 2.3%, or $58,000 higher than stack 27 in the same block.
In Pasir Ris 8, there are only two stacks of 2-bedroom units that have a pool-view. These are stacks 60 & 62. The average prices of these stacks are $1,697 psf, or approximately $1.2 million, which is 6.5% or $68,000 more than the prices of those 2-bedroom stacks without a pool-view. This premium attached to pool-view units is probably a conservative figure, as initial buyers who were looking for a 2-bedroom unit would most likely have chosen these units, before the price increases kicked in.
Source: Squarefoot, URA
Okay, as I mentioned earlier, there were only two units that crossed the $2,000 psf threshold. Both of these units belong to stack 65, a 2-bedroom type in Block 20, levels 8 and 9. Although we may never find out the real reason why these buyers are willing to pay such a price, we could make an educated guess.
Block 18 and Block 20 are considered the “premium” blocks, especially for those outward-facing stacks. Residents of these stacks would be able to get a good view of Pasir Ris park and potentially the Serangoon Harbour. However, upon closer inspection of the URA Master Plan, the site directly in front of these blocks across the street has been zoned as a residential site since Master Plan 2008. It is very likely that the view of the park and the sea will eventually be blocked when the new residential site is built. I guess one can enjoy it while it lasts!
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