Does it make sense to buy strata landed property today?

/ EdgeProp Singapore |
Belgravia Green, an 81 strata housing development with 18 semi-detached and 71 terraced houses, developed by the Teo family of Tong Eng Group and the Yeap family (Credit: Fairview Developments)
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SINGAPORE (EDGEPROP) - Jip Ng, senior group district director at PropNex, has been a realtor focused on the strata landed segment for the past two decades. A question he is frequently asked is: “Why doesn’t strata landed property appreciate as much as conventional landed property?” True enough, the question came up at the landed property webinar held by PropNex and EdgeProp Singapore on Oct 3.
The URA defines strata landed housing as strata-titled housing units that occupy a common development site with shared communal facilities and a single vehicular access point. Hence, it is akin to a gated community. Residents get to enjoy the perks of communal facilities, such as the swimming pool and gym, with the maintenance under the care of the management corporation strata title (MCST) in return for paying quarterly maintenance fees. “As a strata landed property owner, you enjoy the best of both worlds,” says Ng. “You get to live in a landed property, while enjoying condo facilities.” (Discover insightful data of any Singapore condominium with our condo directory)
Strata landed developments can be standalone developments, such as Tong Eng Group’s Belgravia Green at Belgravia Drive, off Ang Mo Kio Avenue 5; and Parkwood Collection at Lorong 1 Realty Park, off Upper Serangoon Road by Fantasia Investment (Singapore).
Riverfront Residences scale model - EDGEPROP SINGAPORE
Riverfront Residences, which is fully sold, including the strata houses within the 1,472 unit development by a consortium led by Oxley Holdings (Photo: Samuel Isaac Chua/EdgeProp Singapore)
There are also large-scale condominium developments that include strata houses, for instance, the 1,472-unit Riverfront Residences, of which 21 are strata houses; and the 1,052-unit Affinity at Serangoon, of which 40 are strata terraces. Both projects are developed by consortia led by Oxley Holdings, and the strata houses are fully sold. The 548-unit Kent Ridge Hill Residences, also by Oxley Holdings, includes 50 strata houses.
Over the past year, it is not just conventional landed property that has seen strong sales, but strata housing too.

Strata landed transaction volume: 2012 to 2021YTD

Sources: URA, PropNex
“After every crisis, from SARS to TDSR [total debt servicing ratio], the average price of strata houses in the overall market has climbed,” notes Ng. “Even in the Covid situation we are in today, property prices have not fallen. In a way, it’s probably due to the TDSR loan framework that has been put in place; people have better holding power. It has also led to a healthy property market, including for landed property."

Overall Strata Landed Average Price Performance: 2000-2021YTD

Overall Strata Landed Average Price Performance - EDGEPROP SINGAPORE
Sources: URA, PropNex
Over the past decade (from 2012 to 2021), conventional landed prices have seen an average growth of 61.74% or 5.49% per annum, while strata landed property has appreciated 56.54% at a rate of 5.11% per annum. “Based on the price performance over the past 10 years, the percentage increases for conventional and strata land- ed properties have been pretty close,” notes Ng.

Conventional Landed: Average Price Growth from 2012-2021YTD

Conventional Landed - EDGEPROP SINGAPORE
Source: URA, PropNex

Strata Landed: Average Price Growth from 2012-2021YTD

Sources: URA, PropNex
Overall transaction volume for strata houses has also increased, Ng adds. On the other hand, the supply of strata landed units has declined. Based on his research, only 725 new strata houses have entered the market since 2015.
Source: PropNex
Ng attributes this to URA’s new guidelines for strata housing developments in August 2014. Prior to that, developers only needed to set aside 30% of the site area for communal space and facilities. There was no greenery control and 100% of the site area could be used for computing the number of housing units to be developed.

New strata landed guidelines by URA in Aug 2014

New strata landed guidelines by URA - EDGEPROP SINGAPORE
Source: URA
Under the new guidelines, 45% of the site area has to be set aside for communal space and facilities. Of the 45%, at least 25% has to be greenery. And only 40% of the site area can be used for computation of the number of dwelling units. “Since then, developers have had less incentive to develop strata houses,” notes Ng. “Many have decided to develop conventional landed property instead.”
With the supply of new strata landed developments on the decline, and prices of conventional landed property on an uptrend, those who want to buy strata landed property may have to turn to the resale market in the future, reckons Ng.
Ng: Based on the price performance over the past 10 years, the percentage increase for both conventional and strata landed has been pretty close (Photo: PropNex)
He likens strata houses to executive maisonettes, which have been able to hold their value over time as HDB no longer builds such housing units. Hence, buyers who want such executive maisonettes for their generous spaces have had to turn to the resale market.
Strata landed property has a more affordable entry level compared to conventional landed property, according to Ng. The majority of the buyers of such strata housing units are HDB and condo upgraders, especially families with children, he adds. (Find HDB flats for rent or sale with our Singapore HDB directory)
Location is therefore important. Ng suggests buying strata houses in areas with growth potential, such as areas where there is urban trans- formation. Proximity to public transport is key, while other amenities such as schools are “a bonus”, he says.

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