Do older condos in CCR offer better yields?

By Michael Lim / The Edge Property | June 27, 2016 2:30 PM SGT
The launch of CapitaLand’s 268-unit Cairnhill Nine and Oxley Holdings’ 149-unit The Rise at Oxley in March have refocused investors’ attention on prime District 9. OUE’s deferred payment scheme for the 462-unit OUE Twin Peaks and Wheelock Properties’ 15% discount and 15% additional buyer’s stamp duty (ABSD) assistance package for the 84-unit Ardmore Three in April further shone the spotlight on projects in prime Districts 9 and 10.
That seems to have awakened interest in the Core Central Region as a whole. CCR comprises the traditional prime Districts 9, 10 and 11, as well as Marina Bay and the CBD core of District 1 and Sentosa Cove in District 4. Based on the top 50 property searches by users of The Edge Property website from the beginning of the year to June 19, homebuyers are casting their nets beyond the new launches to include older condominium developments such as the 176-unit freehold St Thomas Suites developed by Frasers Centrepoint Ltd and completed in 2010; the 1,111- unit The Sail at Marina Bay by City Developments Ltd that was completed in 2009; and the 89-unit Serenade @ Holland, which was completed by Wing Tai Holdings 12 years ago.
A 2,013 sq ft, four-bedroom unit on the 19th floor of one of the 36-storey twin towers at St Thomas Suites was sold for $1,788 psf, below the developer’s selling price of $1,878 psf in 2010
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The renewal of interest in St Thomas Suites is not surprising, according to Alan Cheong, head of research at Savills Singapore. “The latest transacted price of $1,788 psf for St Thomas Suites is well below that of new launches and is one of the lowest psf prices for a freehold development in District 9,” he says. In fact, the $1,788 psf price for the 2,013 sq ft, four-bedroom unit on the 19th floor of one of the 36-storey twin towers is even lower than the resale price of $2,118 psf achieved in 2012, and even below the developer’s selling price of $1,878 psf in 2010.
In comparison, a 1,603 sq ft, four-bedroom, mid-floor unit at Cairnhill Nine fetched $3.89 million ($2,424 psf) in May. And Cairnhill Nine is 99-year leasehold. At the freehold The Rise @ Oxley, a 1,163 sq ft, three-bedroom unit was sold for $2.45 million ($2,108 psf), while a 1,399 sq ft, three-bedroom unit at the 99- year leasehold OUE Twin Peaks fetched $3.6 million ($2,573 psf) recently. The $1,788 psf price recently achieved at St Thomas Suites is therefore a 15% discount compared with the unit at The Rise @ Oxley, 26% below the unit at Cairnhill Nine and a 30% discount to the unit at OUE Twin Peaks.
“Those who are active today are investors who have done their math and are pouncing on value buys, which will position them for the next property upturn,” says Cheong.
In the Holland Road neighbourhood of District 10, the two most-searched condos were the 99-year leasehold Serenade @ Holland and freehold The Trizon at Ridgewood Close. The 89-unit Serenade @ Holland was developed by Wing Tai Holdings and completed in 2004, while the 289-unit The Trizon was developed by Singapore Land and completed in 2012.
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A 1,507 sq ft, three-bedroom unit at Serenade @ Holland was sold for $1.75 million ($1,160 psf). The asking rent for a similar-sized unit is around $4,500 a month.
“Buyers [see] Serenade @ Holland purely as a rental yield play, as it is one of the most affordable developments in the vicinity,” says Samuel Eyo, managing director of Singapore Christie’s International Real Estate. At Serenade @ Holland, a 1,507 sq ft, three-bedroom unit fetched $1.75 million ($1,160 psf) earlier this month. The asking rent for such a unit has been listed at $4,500 a month, which translates into a rental yield of 3.1%. In comparison, at The Trizon, a 1,550 sq ft, three-bedroom unit was sold for $2.6 million ($1,677 psf) in December 2015. The unit is available for lease, with an asking rent of $5,700 a month, which translates into a gross yield of 2.6%.
Interest has returned to The Sail @ Marina Bay as prices are now below the level in 2008/09 when the 99-year leasehold condo was completed. “It is the most high-profile condo in Marina Bay, being the biggest and the first residential development there,” says Christie’s Eyo. “It is no surprise that it is one of the most-searched condos among both property agents and buyers.”
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A 1,313 sq ft, three-bedroom unit at The Sail was sold for $2.18 million ($1,656 psf) in June. The psf price is even lower than the $1,900 achieved by the unit in November 2009.
The latest transaction at The Sail was for a 1,313 sq ft, three-bedroom unit, which was sold for $2.18 million ($1,656 psf) in June. A similar-sized unit was listed with an asking rent of $6,000 a month recently, which means that if the rent is achieved, the yield will be 3.3%. The recent psf price is even lower than that achieved by the unit in November 2009, when it was sold at $1,900 psf. “The Sail is sought after by investors as there is always a ready pool of tenants who want to live near Raffles Place and Marina Bay, and at today’s prices, the yield is attractive,” points out Eyo.
Top 50 searches in Core Central Region from Jan 1 to June 19
Project
Property Type
Land Tenure
Completion
Total No of Units
26 NEWTON
Apartment
Freehold
2016
180
6 DERBYSHIRE
Condominium
Freehold
Uncompleted
168
ARDMORE THREE
Condominium
Freehold
2014
84
AVALON
Condominium
Freehold
1999
82
CAIRNHILL CREST
Condominium
Freehold
2004
248
CAIRNHILL NINE
Apartment
99 Years Leasehold
Uncompleted
268
CYAN
Condominium
Freehold
2014
278
D'LEEDON
Condominium
99 Yrs From 08/04/2010
2014
1,703
GLENTREES
Condominium
999 Yrs From 17/09/1885
2005
176
ICON
Apartment
99 Yrs From 29/01/2002
2007
646