With the recently ended circuit breaker, I have received more queries on the direction of the Singapore property market. Many have asked what will be considered a good investment property. So, I decided to sum up a list of tips on selecting an investment property in Singapore.
Location has always been the most commonly mentioned factor in selecting an investment property but what is it about the location of the property that we should look out for?
Between the 90s – 2000s, the MRT (Mass Rapid Transit) station’s effect has been declining over the years. As more lines are introduced over the years namely the Circle Line and the Downtown Line in the last 10 years, there are more condos with MRT stations within walking proximity.
1) MRT INTERCHANGES
Today we want to look out for MRT Interchanges and currently, there are 22 of them in operation with only 1 of them having 3 intersecting lines, you may guess which one it is.
By 2030, it is projected there will be 41 MRT interchanges with only 4 of them having 3 intersecting lines.
As MRT Stations become more common, MRT interchanges may not yet be. At least not till 2030. And what MRT interchanges provide is a higher level of connectivity, especially those that are and will be having 3 intersecting lines. With this higher connectivity means lesser commuting time, condos with proximity to these interchanges will be much more favored by tenants.
There was also a study done by the National University of Singapore: properties near to MRT interchanges have an additional 4 percent premium over properties near to singular MRT stations. This is the link for this study if you like to find out more.
2) NUMBER OF UNITS
Next, it will be the number of units in the condo.
Most will not realise this point but it’s really just a numbers game. With a condo that has at least approximately 500 units, there is a higher probability for owners to transact be it selling or renting. And with that, the condo is able to attract a bigger pool of buyers and tenants as there will be more choices for them.
Not forgetting the property agents, they are the only marketing function, a condo will have after TOP.
When there are more units in the condo, it means more opportunities for earnings for them, thus attracting more property agents to advertise and promote transactions, which in turn creates more awareness for the condo.
For comparison, a simple example between 2 condos at Queenstown, Queens, and Alexis.
Located next to one another they share the same amenities but the only major difference is that Queens has more than 700 units while Alexis has only about 300 units. Despite being an older condo, in 2019, we see a higher number of transactions in Queens both for sale and for rent. Of course, there are other factors like unit mix, size of the units, and floor level differences, which boils down to tenants’ personal needs and preferences.
3) TRANSFORMATION PLANS
The 3rd factor is transformation plans.
If you visit the Urban redevelopment authority or URA website, Singapore has 8 transformation plans set in motion over various locations on the island. But, not every transformation is the same.
What is more important to note is that, we need to look at how the transformation is going to shift people and communities to the transforming area. Each transformation plan has its own attractions from housing, jobs and family lifestyle to attract the different types of communities.
The only transformation area with the most international recognition will be the Greater Southern waterfront or GSW for short. It is 6 times the size of Marina Bay, with approximately 9,000 private and public new homes. Also the Circle extension and Thomson East Coast Line that runs through this area will be fully ready by 2025.
Not only will global jobs be created, there will be a whole new waterfront precinct and extensive green network for the global citizen. This is the face of Singapore to the world so prepare for it to flourish.
4) FOREIGN VESTED INTEREST
The last point is Foreigners vested interest and what do I mean by that?
Today a foreigner pays 20% more in stamp duties compared to a citizen, that means their entry price would already be 20% higher than a citizen. The foreigner will most probably need to price much higher in the resale market, putting the citizen’s resale property at an advantage.
As a citizen or a foreigner, it only makes sense to target condos that have high foreign ownership as much as possible. And most of the time, such condos are located in prime areas such as:
District 1 (Marina Bay)
District 2 (Tanjong Pagar)
District 3 (Outram, Tiong Bahru)
District 9 (Orchard)
Here are a few examples, to show the percentage of foreign ownership in various condos located in different districts.
If we look at other countries, the same trend appears. The most expensive and favored properties will always be in the Central business district and popular shopping spots.
I hope this will provide a new perspective for you when it comes to looking for an investment property.