Industry watchers assuage over-supply concerns

Industry watchers assuage over-supply concerns

SINGAPORE - Even as a large pipeline of residential units in Punggol has sparked market chatter over a possible over-supply, other areas in Singapore, including the Kovan/Lorong Ah Soo/Hougang belt, Pasir Ris, and Bukit Panjang/Upper Bukit Timah too face substantial upcoming supply.

That being said, these areas are relatively well supported by amenities in the region, and healthy take-up by HDB upgraders.

Pasir Ris, which faces the largest upcoming supply of 7,124 private homes expected to be completed from 2014, is able to bank on its proximity to employment hubs such as Changi Business Park, Tampines Business Hub, and the airport, which provides leasing opportunities for property owners, noted R'ST Research director Ong Kah Seng.

In addition, foreigners working in the area and airline crew may find it to be the cheapest among newer accommodation in the east, thus boosting the rentability of homes in the area, said Mr Ong.

Pasir Ris is also arguably a self-contained township, given that leisure options (Pasir Ris Beach and Downtown East) supplement job opportunities (employment hubs listed above, including Pasir Ris Industrial Drive/Loyang).

The Bukit Panjang/Upper Bukit Timah/Cashew/ Chestnut Avenue belt on the other hand, which can expect some 3,920 private units coming on-stream from 2014, will have its "hibernating potential" unlocked with the completion of new MRT stations in the Downtown Line 2.

"Notwithstanding the current excitement about the new Thomson Line, the Downtown Line 2 will be completed earlier, fully bringing out the attractiveness of Upper Bukit Timah as a mid-tier and accessible area, lush with greenery," said Mr Ong.

"The Bukit Panjang MRT station will also shed the image of Bukit Panjang as a sub-town, and complete the offering of it as a major housing estate, where an MRT station is a necessity," he added.

While there are no employment hubs within the vicinity, it is within the range of Jurong East, which is envisioned to be Singapore's largest regional hub outside the city centre.

"Some (foreign) working professionals, including those who were relocated from the CBD to Jurong East, may find renting a room in the Upper Bukit Timah area a feasible option since new private housing will not be quite ready in Jurong East until much later," said Mr Ong. "(But) this number is not expected to be very major as there are a handful of options in the Lakeside area."

The Hougang/Lorong Ah Soo/Kovan area on the other hand can expect rejuvenation, through the spate of new projects lined up, including mixed use developments with strata malls which will renew the residential identity.

"Typically, HDB dwellers upgrade in similar neighbourhoods, and older towns like Hougang and Lor Ah Soo should have a handful of residents whose aspirations have moved beyond public residential options, and choose to buy a new private property in same locality," noted Mr Ong.

Indeed, a buyer's profile analysis through caveats lodged for projects launched over the past two years show that most of the areas surveyed have a larger share of buyers who are HDB dwellers, with Punggol, Sembawang, and Yishun having the highest average share of purchasers with HDB addresses, at 73 per cent.

"Some movement from public to private residential properties may be expected within the same town when the private homes are completed, although there will be a handful who will retain their HDB flats for investment purposes."

Mr Ong said that he expects leasing demand for homes in the area to be encouraging due to its strategic location. However, the substantial quantum of units scheduled for completion (5,368 units) may intensify competition among owners for tenants, leading to realistic, but viable rental income.

While Jurong East too can expect some new private housing supply, to the tune of some 1,415 units, it is well supported by commercial activity and employment hubs (Land Lease parcel, and Westgate by CapitaLand) which will be in place before, or in tandem with, new private housing supply. This adds certainty in terms of leasing demand for new private homes, said Mr Ong.

Conversely, the north-eastern tip of Singapore is seeing more residential-centric development. According to data compiled by R'ST Research, the Sengkang/Buangkok belt and Punggol area can expect some 5,721 and 5,591 new private homes from 2014, respectively.

Given the fact that it is largely green-field also makes providing commercial hubs before a residential catchment is in place a challenge.

Indeed, the challenge for majority of suburban locations, especially the north-eastern part, is a lack of employment hubs and commercial activity that will provide the tenant demand base and support the investment potential, noted Mr Ong.

This is further compounded by the fact that most of these areas have a longer travelling distance to the central business district (CBD), except for Kovan and Bartley.

"Since Punggol and Sengkang do not have major employment hubs, majority of the residents are probably working in the CBD or city-fringe locations, or another corner of Singapore. The lifestyle concept could be the most essential aspect that continually anchors homebuyers' and owners' interest (in the area)," said Mr Ong.

"Either a continual compounding of the lifestyle offerings, or incremental commercial activity will help to support ongoing investment and buyers' interest."

 

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