What does that new luxury condo in your neighbourhood mean for your home’s value?

/ EdgeProp
September 17, 2017 10:00 AM SGT
In some cases, property prices can be expected to adjust to changes in amenity and local services arising from new developments, as well as simply to the number of dwellings within the same neighbourhood or locality.
But do new developments always have an uplifting effect on the value of existing, surrounding properties? Using 2017 property launches as examples, we looked at the value of sales transactions at nearby properties that took place before and after these launches to assess their possible impact. We also factored in a typical premium of 0.3% to 0.5% per floor level when comparing the price differences.
D3 – Bukit Merah, Central Region
New Launch: Artra
Launched in April 2017
Average price: $1,640 psf
Artra, a mixed-use development comprise of a single 44-storey tower with a mix of two-, three- and five-bedroom apartments from 786 sq ft to 2,583 sq ft, is linked to the Redhill MRT station and is close to Ascentia Sky (114m away) and The Metropolitan Condominium (136m away).
Ascentia Sky, a 373-unit leasehold development that was completed in 2013, may have benefitted from Artra’s launch. For example, a 1,851 sq ft unit on the 29th floor changed hands for $2.3 million ($1,242 psf) in November 2016. Fast forward to June 2017, a similarly-sized unit on the 39th floor sold for $2.65 million ($1,431 psf).
If a comparable transaction in the same development is $2.3 million for a unit on the 29th floor, an appraiser might add a typical premium of 0.3% per floor. Going by this equation, the value of a unit on the 39th floor would then come up to roughly $2.37 million or $1,280 psf. From this comparison, it can be deduced that the sales transaction in June 2017 showed a 12% increase from the transaction that took place in November 2016.
Artra’s launch however, appears to have had little to no impact on sales transactions at The Metropolitan Condominium, which was completed in 2009 and comprises 382 units. In May 2017, a 1,733 sq ft unit on the 13th floor fetched $2.1...