City-fringe home sales chalk up highest price gains

Published on Oct 13, 2012

By Amanda Tan

CITY-FRINGE homes tend to be overshadowed by those in prime and mass-market areas but property experts call the segment a "quiet achiever".

The segment - also known as the Rest of Central Region (RCR) - outperformed homes in the city and suburbs with the highest gains for new and resale units since the trough in the second quarter of 2009.

Mr Lee Sze Teck, Dennis Wee Group's senior manager of training, research and consultancy, said prices in the sector have jumped 59.2 per cent since the low in 2009.

They have also outstripped suburban prices, which rose 55.3 per cent, and the city, where values added 46.8 per cent.

Property consultants said that city-fringe homes are sought after partly for their proximity to the city, exclusivity and accessibility. Generally, there are MRT links and lifestyle amenities.

Investors find it easy to get tenants, especially as expats with smaller housing budgets scale down.

Mr Lee added that such units are "priced more attractively" - possibly 20 per cent or so - than central region homes.

For instance, One Dusun Residences in Balestier is selling for about $1,500 psf compared with Suites @ Newton where flats go for about $2,100 psf.

Areas like Balestier and Geylang have done particularly well.

Within the next five years, nearly 20,000 condominium units are expected to be completed in the city fringe, Mr Lee said.

Four sites have been sold under the Government Land Sales programme this year but experts feel more land could be released given the demand.

PropNex chief executive Mohamed Ismail noted that top-selling projects include Katong Regency, Guillemard Edge and Thomson Grand.

Knight Frank research head Png Poh Soon said The Cascadia in Bukit Timah has recorded the best capital gains.

Prices have risen about 15.4 per cent, from around $1,419 psf last year to about $1,638 psf now.

Beacon Heights, in Kallang, also did well with a 13.1 per cent gain, while 8@Woodleigh notched up 10.9 per cent over the same period.

"The location is close to town, and prices are not so high yet as compared to the core central region... So when you have a bigger market of buyers, then there's more support in terms of prices," Mr Png said.

But he noted that the pace of price growth for city-fringe properties has slowed in the past two years.

City-fringe flat prices rose 18 per cent in 2010, the highest annual increase among all property segments, according to the Urban Redevelopment Authority, but increases slowed to 5 per cent last year and have been around 1 per cent this year.

Rents have increased by about 12.5 per cent over the past two years to June, although the pace of increase has slowed in the first half of the year, said R'ST Research director Ong Kah Seng.

Yields tend to be 3 to 3.5 per cent, higher than in the city and suburbs.

Mr Ong felt that the best city-fringe buy is a resale unit less than 12 years old.

PropNex's Mr Ismail added: "(City fringe) properties will command a higher capital appreciation than (those) in the (suburban areas) due to greater foreign interest."

Last week, the Singapore Real Estate Exchange (SRX) said the RCR segment recorded resale price gains of 7.1 per cent in the third quarter. Prices in the three months to Sept 30 hit $1,199 per sq ft (psf) - the highest since the SRX starting collecting information in 2006 - up from $1,120 psf in the previous quarter.

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