En bloc heartland is a 4 sq km zone

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Published February 26, 2007

En bloc heartland is a 4 sq km zone

39 of the 69 collective sales last year were done in that corner of Orchard Road


By ARTHUR SIM


(SINGAPORE) More than half of the residential collective sales done in 2006 were confined to an area occupying no more than four square kilometres around Orchard Road, and the supply from these sites could yield over 3,700 new homes.


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Big draw: The proximity of a development to Orchard Road is a huge marketing asset for developers. Some of last year's en bloc sales (from above): The Parisian at Angullia Park, Horizon View in Cairnhill and Furama Tower on Leonie Hill


In an analysis by CB Richard Ellis (CBRE), data revealed that of the 69 collective sales done last year, 39 were in an area defined by the Nassim, Ardmore/ Draycott, Cairnhill/Scotts, Cuscaden/Tomlinson, Grange/Paterson and River Valley areas.

The popularity of this area can be partly attributed to Orchard Road's revamp.

Since 2005, the government has announced several initiatives to spruce up Singapore's most popular shopping corridor. When three important government redevelopment sites on Orchard Road were sold between December 2005 and August 2006, redevelopment activity in the surrounding areas really picked up.

CBRE's director (residential) Joseph Tan says: 'The launch of the Orchard Turn, Somerset Central and Glutton Square sites showed the government was committed to revamping Orchard Road, and this has since helped set off a chain of redevelopment in that area.'

The areas that saw the most collective sales were also those closer to Orchard Road, namely, the Cairnhill/Scotts and Grange/Paterson areas.

The proximity of a development to Orchard Road is huge marketing asset for developers, especially if they intend to target foreigners.

There are no specific numbers for foreigners and permanent residents buying into these neighbourhoods, but Mr Tan believes that in 2006, a total of 369 (or 15 per cent) of all non-landed properties in the Orchard area and District 9 were bought by foreigners.

The number was higher in 2005 at 566 (or 30 per cent), but Mr Tan says: 'The lower number in 2006 could be a function of supply as there were fewer new projects launched in the area compared with 2005.'

This year could see the numbers rise again as Mr Tan expects more launches in 2007.

Foreigners may make up a significant number of buyers but locals are also expected to be drawn to Orchard Road. Affordability will, however, be an issue as not only are apartments getting more expensive, they are also getting bigger and more luxurious.

Smaller units are more affordable, but Mr Tan believes developers of these potential 3,700 homes have yet to decide on whom to market the projects to.

'The current trend is towards big units with quality finishes. However, the developer will decide, based on a couple of factors, including his target market, the take-up rate and price levels of projects in the vicinity,' he said.

Already, Mr Tan notes that SC Global's the marQ at Paterson Hill is expected to have penthouses of about 11,000 square feet while Chywu Fu's Parkview Eclat on Grange Road will have units ranging from 3,000-10,000 sq ft. Others like CapitaLand's Orchard Residences are more likely to be a combination of mid-sized to large units with the largest between 4,000 sq ft and 5,000 sq ft.

With the super-luxury segment here to stay, earlier predictions of a two-tier market within the high-end market could be realised.

'This inner-outer ring within the luxury segment emerged following the strong support for new luxury and investment-grade properties since the second half of 2006,' notes Mr Tan.

Indeed, Mr Tan reveals that although the average price of new high-end projects in Districts 1, 4, 9, 10 and 11 averaged $2,200 per square foot (psf) in Q4 2006, the prices of these projects actually fall within two price bands, $1,600-$2,000 psf and $2,000-$3,000 psf.

Looking at prices for the year ahead, Mr Tan said: 'The luxury segment may see an increase of 10-15 per cent in 2007 for the existing stock, which will be on a par with the 1996 market peak, while new luxury projects with unique attributes may rise by another 15-20 per cent from the current average of $2,200 psf.'