These are the 10 most popular condo projects among renters - EdgeProp

 

Caribbean at Keppel Bay (Photo: Samuel Isaac Chua/ The Edge Singapore)

SINGAPORE (EDGEPROP) - Investing in property is popular and generally perceived as a lucrative means of investment in Singapore. And there are two ways to go about it: you either enjoy profits on the sale of your unit, or purchase a second, or even third property to generate rental income.

For this exercise, we looked at the most tenanted condos in 2020. If you’re considering buying a condominium unit with good rentability and a high rental yield, we’ve identified some common factors with projects that are most popular among renters.

Alexis (Photo: CBRE)

1. Relatively new properties

Out of the top 10 projects that see the highest number of renters, six of them were completed within the last 10 years. This may indicate that tenants are looking for newer projects, which may require less maintenance. Investors looking at older projects may have to allocate significant costs for renovation, maintenance works, and so on, in order to attract more potential tenants.

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The only exception in our list is Melville Park, which was completed in 1996, making it the oldest project on this list. One factor for this may be its bigger strata size, which ranges from 900 sq ft to 1,500 sq ft.

The project is located near Changi Airport, Changi Business Park, and is near several coffeeshops, childcare centres, as well as Simei and Tampines East MRT stations on the green and blue lines.

Parc Rosewood. (Photo: Samuel Isaac Chua/EdgeProp Singapore)

2. They are mostly leasehold properties

Nine in 10 of these projects are leasehold properties, with the exception of Alexis in Queenstown. Generally, freehold properties tend to be more expensive which would result in owners/landlords demanding a higher psf in terms of rental fees.

While tenants won’t care if a property is leasehold or freehold, the rental fees are definitely a factor in their consideration. Similarly, if you are a property investor seeking to generate cash flow from rental yield, a leasehold property may be a better bet.

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Icon at Gopeng Street

3. Reasonable average rent

The average rent ranges from $2.3 to $5 psf per month across all 10 projects. Minimum rent starts from as low as $1.1 psf pm for properties located further away from the CBD.

For instance, the monthly rent for a one-bedroom apartment measuring about 500 to 600 sq ft at J Gateway in Jurong East costs between $2,400 and $2,600. In contrast, the monthly rent for a two-bedroom apartment for Melville Park between Simei and Tampines ranges between $2,200 to $2,600 for a unit that’s around 900 to 1,000 sq ft. The monthly rent for a one-bedroom apartment at Icon at Tanjong Pagar costs between $2,600 and $2,900 for a unit size of 500 to 600 sq ft.

4. Convenience

Proximity to transport hubs and MRT or LRT stations are clearly a priority for tenants. While six out of 10 projects are located within walking distance – or 500 metres – to an MRT or LRT station, all 10 properties are located within 2km – which is possibly within one or two bus stops – of an MRT or LRT station.

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That said, with remote work arrangements becoming the new normal in a post-Covid-19 world, proximity to MRT stations and transport hubs may become less crucial moving forward.

One North Residences

5. Smaller apartments

One- to two-bedroom units were the most commonly rented units in eight out of the 10 projects, with the exception of Melville Park and Caribbean at Keppel Bay. The smaller units could be due to tenants looking to move in on their own or with friends, as opposed to whole families.

The two- and three-bedroom apartments were most popular for Melville Park and Caribbean at Keppel Bay. This could be attributable to the bigger units available in these projects, which means they tend to be more popular amongst families looking to rent.

6. Larger projects preferred

Eight out of the 10 projects have over 600 units. The way we see it, these projects offer more variety in terms of unit types to cater to the needs of different groups of tenants (e.g. singles, couples, young families and so on).

Larger projects typically have better amenities and facilities. For instance, Melville Park comes with facilities such as a swimming pool, wading pool, sauna, tennis court, playground, gym and clubhouse, BBQ areas, just to name a few.

Caribbean at Keppel Bay has three swimming pools, an open-air jacuzzi, children’s pools, a gym, steam room, jogging tracks, fitness circuits, three tennis courts, BBQ areas, and more.

The top 10 condo developments among renters

Project Name	Rental Vol	Rental Yield (%)	Closest MRT	Tenure	Completion	Number of units	Avg Price (S$ psf)	Min Rent (S$ psf pm)	Avg Rent (S$ psf pm)	Max Rent (S$ psf pm)
J GATEWAY	387	3.5	Jurong East, 365M	99 Yrs FROM 2012	2016	738	1,612	3.1	4.7	6.9
MELVILLE PARK	353	4	Simei, 1.2KM	99 Yrs FROM 1992	1996	1,232	683	1.7	2.3	2.9
CARIBBEAN AT KEPPEL BAY	326	3.5	Harbourfront, 550M	99 Yrs FROM 1999	2004	969	1,436	2.5	4.2	5.9
ICON	323	3.6	Tanjong Pagar, 225M	99 Yrs FROM 2002	2007	646	1,673	3.3	5	6.7
HIGH PARK RESIDENCES	251	3.5	Thanggam LRT, 130M	99 Yrs FROM 2014	2019	1,390	1,215	1.1	3.5	5.1
PARC ROSEWOOD	231	3.6	Woodlands MRT, 1.4KM	99 Yrs FROM 2011	2014	689	1,044	1.1	3.1	4.4
RIPPLE BAY	229	3.5	Pasir Ris, 1.6KM	99 Yrs FROM 2011	2015	679	1,032	1.6	3	4.7
THE ALPS RESIDENCES	209	3.6	Tampines West, 1.8KM	99 Yrs FROM 2015	2019	626	1,188	2.3	3.5	5.2
ONE-NORTH RESIDENCES	197	3.5	One North, 355M	99 Yrs FROM 2005	2009	405	1,422	2.2	4.2	6.4
ALEXIS	194	3.8	Queenstown, 366M	Freehold	2012	293	1,441	2.5	4.6	6.9

Source: EdgeProp analytics

By Ida West / EdgeProp Singapore | March 27, 2021 9:00 AM SGT

Source: EdgeProp

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HDB 99-year lease expiry: Potential time bomb for home ownership? - 99.co

 

A majority of Singaporeans live in public housing. According to the Census 2020, 78.7% of resident households live in HDB flats. Many of them also see their flat as more than a home. Some Singaporeans assume their flat will provide for their retirement.

The idea is that, when they get older and need less space, they can sell their flat (which would have appreciated in value), and buy a smaller one. Coupled with their CPF, it should see them through their twilight years. But is this really a safe assumption with all HDBs having just a 99-year lease?

The 99-year lease

Some would argue that HDB flats are not so much owned as they are rented. The reason is the 99-year lease on these units. During a Parliamentary session on 20 January 2014, then Minister of National Development Khaw Boon Wan confirmed that, at the end of their 99-year lease, HDB flats will revert back to the landowner (HDB). The land will then be turned over to the state. This means the value of a HDB flat at the end of the lease is zero.

To most Singaporeans, this is an abstract principle.

To date, no HDB development has reached the end of its 99-year lease. Instead, we’ve seen older flats being chosen for Selective En-Bloc Redevelopment Scheme (SERS).

Is SERS the answer to the time bomb?

SERS was launched in August 1995, and is — by official definition — a programme to rejuvenate aging housing estates. We note that neither HDB nor the Ministry of National Development has explicitly stated that SERS is meant to renew housing leases, although it has served that function in its implementation.

SERS provides residents with compensation based on a valuation of their flat, as well as rehousing benefits. These benefits vary according to each resident’s situation. Some of these include:

• Guaranteed availability of a flat, at a planned replacement site
• A subsidised price for the replacement flat, with S$30,000 grant
• Compensation equal to the market value of the resident’s flat
• Cover reasonable expenses to help with the moving

Before 2004, residents affected by SERS could choose new units only at a given replacement site. From 2004 onwards, residents could choose flats from other estates, without losing their rehousing benefits. As of 2011, residents affected by SERS also receive priority when applying for a new flat anywhere.

HDB often rolls out SERS when an estate is about 40 years into its 99-year lease. Since its inception in 1995, 77 SERS projects have been completed.

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So there is no need to worry about the 99-year lease time bomb, right?

To be blunt, we would worry anyway. The two reasons are:

• No guarantee of SERS happening
• No guarantee of adequate compensation

No guarantee of SERS happening

The locations targeted for SERS are not disclosed until the final announcement, in order to prevent speculation. This means you cannot buy an old flat (one with 59 years or less on the lease) with any confidence that SERS will happen. The fact that it has happened for some HDB projects is not a guarantee that it will happen for all, and the government does not seem to have any obligation to use SERS.

In fact, the number of SERS projects has decreased over the past decade, with the last one announced in 2018. Then Minister of National Development Lawrence Wong has also said in 2017 that only 4% of HDB flats have been identified for SERS since its launch.

Singaporeans who buy old flats — 40 years or more into the lease — should be wary of assuming it provides for their retirement.

Say you are are 35 years old when you buy such a flat. By the time you retire at 65, there will only be 29 years lease left on the flat. Most of your CPF money would have gone into servicing the loan for this flat, but you would be lucky to make even half of what you’ve paid upon resale.

In our experience, few buyers are interested in sinking hundreds of thousands of dollars into a property that will only last another 30 years or so.

Even if there are interested buyers, the prospective pool is limited due to loan limitations. There are banks that will not give out loans for flats with less than 40 years left on the lease. In addition, the CPF withdrawal limit is pro-rated if the flat does not cover the youngest buyer up to age 95.

There’s the Lease Buyback Scheme that you can bank on to supplement your retirement, but it has its drawbacks as well.

So here’s our recommendation: do not fork out high prices for flats with expiring leases, even if the location seems great. If you insist on buying a flat with 30 or 40 years left on the lease, do not count on it to supplement your retirement. SERS may not come around to save you.

No guarantee of adequate compensation

HDB conducts a satisfaction survey for each SERS event, which is posted on their website. The latest survey, published in 2013, had an 87% approval rate. While this is not solely related to financial compensation, we can safely assume that being adequately compensated (i.e. at least being able to purchase a replacement flat) is reflected in this.

However, there is no guarantee that overall compensation will suffice. Even if market valuation is paid for the flat (and we assume it has not drastically declined at the time), it may not be sufficient to pay for a new property in the given market.

We assume that HDB will do everything in its power to mitigate this, such as through the subsidised prices for new flats. But for retirees who are thin on savings, a low valuation — or an inflated property market at the time — can eat into their already meagre funds.

What’s the way to go, then?

Ultimately, regardless of the property type, it falls to each property owner to be financially savvy, and to pick their property investments (or home purchases) with foresight. In the case of HDB flats, it’s best not to bank on SERS if you’re buying an old flat.

2 days ago · 6 min read · by Ryan Ong

Source: 99.co (30-Jun-2021)

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