Are properties near Desker Road investment-worthy?

While it’s not as flamboyant as Geylang, many Singaporeans may also know that Desker Road is a red-light area. But as areas like Bugis* and Keong Saik Road demonstrate, these locations can clean up over time.

And when they do, those still holding on to properties there can see huge returns – Bugis today, for example, is in a district that beats Orchard on a price per square foot basis, and Keong Saik is packed with high-end boutique hotels.

As such, some forward-thinking investors have begun to scrutinise Desker Road, and its shrinking red-light areas.

Given the central location, are we seeing something investment worthy? Here’s a quick look at the numbers:

*The area where Bugis Junction and Bugis+ are currently located was once the heart of a red-light district, right up till the early ‘80s.

It’s reputation aside, what’s the true potential of Desker Road?

Desker Road is within the Rochor Planning Area, placing it in District 8 (this also encompasses Little India and Farrer Park). In terms of HDB towns, this will place it within the Central Area.

Here’s how far Desker Road would be to some key locations:

• CBD (Raffles Place) – 8km, 10 min. drive
• Orchard Road – 3.9km, 7 min. drive
• Suntec City – 3.4km, 7 min. drive
• Changi Airport – 17.8 km, 16 min. drive
• Tuas Port – 42.5km, 41 min. drive
• Paya Lebar Quarter – 5.6km, 9 min. drive
• Mediapolis – 13.4 km, 14 min. drive
• Mapletree Business City – 15 km, 16 min. drive
• Tuas Checkpoint – 32.4 km, 26 min. drive
• Woodlands Checkpoint – 28 km, 34 min. drive
• Jurong Cluster (JCube) – 20.4 km, 19 min. drive
• Woodlands Cluster (Causeway Point) – 23.3 km, 21 min. drive
• HarbourFront Cluster (VivoCity) – 11.1 km, 14 min. drive
• Punggol Cluster (Waterway Point) – 17.6 km, 17 min. drive

Some quick points of comparison for price:

So that we can understand relative property values around Desker Road, here’s a quick snapshot of the town / district as a whole:

For HDB properties, central area flats currently average $616 psf:

For private non-landed properties, District 8 prices average $1,593 psf:

Next, we compare the prices of properties of the red light area, to see how they fare against the district / town average.

Note that the immediate areas around Desker and Rowell Road are mainly zoned for commercial and not residential use (this has more recently been the case with Geylang as well).

As such, we have picked the absolute closest residential properties to the red-light area:

HDB properties near Desker road

Most flats near Desker Road date back to the 1980s. Based on our checks, the earliest HDB properties built around Desker Road were “ 88 units ” in 1982. Sadly, we’re unable to pinpoint any transactions or records involving the original 88 units.

We did find, however, that the closest flats to Desker Road today is Rowell Court; this HDB development runs alongside Jalan Besar and Veerasamy Road, and is just 500 metres or a six-minute walk to Desker Road.

As you might expect, transaction volumes for the area are low. However, we did find some transactions within the year:

(Note that there are only four and five-room flats for this development, and almost all the transactions are four-room units)

Private properties near Desker Road

The following properties are among the closest to Desker Road:

• Jalan Besar Plaza (250 metres)
• City Square Residences (300 metres)
• Soho 188 (450 metres)
• Parc Somme (500 metres)
• 28 RC Suites (750 metres)

1. Jalan Besar Plaza

Location: 101 Kitchener Road

Lease: Freehold

Completion: 1980

Number of units: 44

There have been no transactions here for some time, but the very last transaction (April 2019) was at $973 psf. It is quite staggering to see that even in 2009, you could have purchased a unit here for just $289 psf.

2. City Square residences

Location: Kitchener Link

Lease: Freehold

Completion: 2009

Number of units: 910 units

Square Foot Research indicates a price range of $1,387 to $1,835 psf, with an average of $1,612 psf.

There have been 753 profitable transactions and just 28 unprofitable ones so far.

3. Soho 188

Location: Race Course Road

Lease: Freehold

Completion: 2008

Number of units: 49

Square Foot Research indicates a price range of $1,469 to $1,514 psf, with an average of $1,492 psf.

There have been 51 profitable and 3 unprofitable transactions thus far.

4. Parc Somme

Location: Somme Road

Lease: 99-years

Completion: 2012

Number of units: 30

There have not been many transactions; the last one in January 2021 was abnormally low at $969 psf. The two transactions in January 2020 are a more accurate reflection, at around $1,555 psf.

Till date there have been 15 profitable and 5 unprofitable transactions.

5. 28 RC Suites

Location: Race Course Lane

Lease: Freehold

Completion: 2016

Number of units: 45

The last transaction in February 2021 was at $1,540 psf. There has been 0 profitable and 2 unprofitable transactions so far.

Key points for investors to note

• Freehold properties, often priced lower than the district average
• Low volume of transactions makes the properties unpredictable
• Lease decay and prices make the HDB flats a tough call
• More confined and contained than Geylang
• Desker Road is the oldest and longest-lasting red-light district

1. Freehold properties, often priced lower than the district average

Besides the central location, the other factor that will interest investors are the many freehold properties in the area.

As you can see from the prices shown above, most units present a cheaper option than other District 8 alternatives. While most of these condos are older, this is somewhat negated by the freehold status. Its bears mentioning that the only property above priced higher than the district average above – City Square Residences – is the closest to Farrer Park MRT station at 270 metres. It’s also integrated with City Square Mall.

In general, some of the condos closest to Desker Road / Rowell Road seem “discounted”, possibly due to the red-light stigma. There is value to be found here, as not every tenant is equally bothered. However, being in stigmatised area can result in resale difficulties and lower gains.

As such, residential properties here will appeal more to landlords aiming for cashflow-positive assets, or who are emphasising rental yield / long-term investments over quicker resale gains.

2. Low volume of transactions makes the properties unpredictable

The residential properties close to Desker Road tend to be boutique developments (with the exception of the 910-unit City Square Residences). This poses some challenges – a low volume of transactions can make pricing more volatile. See Parc Somme above, as an example.

Smaller properties also tend to have higher maintenance costs, which could be exacerbated by the age of older developments.

ALSO READ: Top 5 cheapest areas for 5-room flats in Singapore

3. Lease decay and prices still make the HDB flats a tough call

The HDB flats near Desker Road are cheaper than many Central Area flats. Being built in the 1980s, they also have the advantage of being quite big (for reference, the average 4-room flat today is around 980 sq.ft, as opposed to the 1,000+ sq. ft. monsters above).

However, we think their appeal is mainly for home owners who prize spaciousness, and want centrality without the outlandish prices at Bishan and Queenstown.

For investors or those seeking asset progression, there’s limited appeal. Most of these flats are already 36+ years old. After waiting out a further five-year Minimum Occupation Period (MOP), the pool of prospective buyers at resale will be small.

4. More confined and contained than Geylang

Desker Road’s “red-light” streets are not as expansive as Geylang, which spills out over several Lorongs. Like Orchard Towers, it is tightly confined to just one or two streets; and even then “the trade” doesn’t spill out to the main road. It remains confined to alleys between the roads.

A realtor we spoke to, who wanted to remain anonymous, also suggested that we consider the “buffer” zone between the red-light area and the residential properties. The seedy areas are surrounded by commercial shophouses and the like, keeping them out-of-sight for most tenants and home owners.

Simply put, you’re not likely to even glimpse any brothels by accident.

5. Desker Road is the oldest and longest-lasting red-light district

This is regarding speculation that Desker Road will be “cleaned out” like Bugis. While it’s entirely possible, we should remember that Desker Road predates even Geylang as a red-light area; and it operated as such all the way back to the colonial era.

Lots of vice districts – from Bugis to Keong Saik – have been cleared out but Desker Road still remains. In the newspaper clip in the link above, dating back to the 1980’s, there’s even a government spokesperson implying there were no plans to clear the red-light area.

As such, a Bugis-like transformation may be longer in the making than any of us suspect.

This article was first published in Stackedhomes.