Analysing unprofitable condos: 6 reasons why Urban Vista has performed poorly

PHOTO: Stackedhomes

It’s been nearly a year since we last wrote our article on the 13 condos with the most unprofitable transactions.

How time flies.

I’ve previously gone into further detail with why Stellar RV and The Tennery performed the way they did, and this time, I decided to change things up a little to set my sights on the East instead.

There were three that Ryan highlighted in the above article, Urban Vista, Parc Bleu, and The Sound.

In today’s piece, I’ll be starting with Urban Vista.

Urban Vista background information

Here’s some background information to know:

Location: Tanah Merah Kechil Link (District 16)

Developer: Bayfront Realty Pte Ltd

Lease: 99-years from 2012

Completion: 2016

Number of units: 582 units

Profitable transactions: 19

Unprofitable transactions: 61

The average profit so far has been $34,936, while the average loss is -$78,918.

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Like The Tennery (actually, Urban Vista is worse), the majority of its profitable transactions are only profitable from a gross perspective.

If you were to account for agent and lawyer fees, about half of the transactions here would actually be loss-making.

As of today, the average price is around $1,382 psf.

This is a drop from its average launch price of about $1,500 in March/April 2013.

And if you were to compare the average prices of the area during the same time period, it was the highest-priced new launch over March/April 2013 in District 16.

But curiously unlike The Tennery and Stellar RV, the pricing at Urban Vista was actually rather reasonable if you were to compare it to its immediate neighbours.

First, let’s see how much Urban Vista was going for during its launch.

  Urban Vista (launched March 2013)
1 bedder Starts from $588k (431 sqft)
2 bedder Starts from $768k (549 sqft, 2 bed 1 bath)
Starts from $1.032m (689 sqft, 2 bed 2 bath Dual-Key)
3 bedder Starts from $1.108m (786 sqft)

It actually sold a big bulk of its 582 units in the first two months of its launch in 2013, moving 347 units which represent nearly 60 per cent — at an average of $1,494 psf.

Now let’s look at the new launch comparisons nearby at the time of launch.

eCO @ Bedok South was launched back in September 2012, with a similar unit mix of smaller one and two bedroom units.

At the same period, Urban Vista was launched, eCO had already sold 586 units out of its 748 units, so the actual units left to compare with is quite small.

Comparing units of the same size, the average psf that Urban Vista was selling at was $1,471 versus $1,399 — a marginal increase of around five per cent.

Here’s what it looked like comparing the subsequent years:

  eCO Urban Vista
Year Average psf Average psf Psf comparison
March 24 — end 2013 $1,405.34 $1,486.65 5.79 per cent
2014 $1,339.55 $1,202.55 -10.23 per cent
2015 $1,281.00 $1,452.00 13.35 per cent
2016 $924.13
2017 $1,273.67 $1,432.00 12.43 per cent
2018 $1,367.93 $1,433.58 4.80 per cent
2019 $1,353.10 $1,405.89 3.90 per cent
2020 $1,256.27 $1,281.82 2.03 per cent
2021 $1,321.14 $1,374.03 4.00 per cent
2022 $1,317.33 $1,283.33 -2.58 per cent

Prices at Urban Vista actually fell in 2014 as the developer probably looked to clear the remaining units at a lower psf.

While 2015 looked to have the biggest premium in prices, this was due to eCO also clearing their remaining units at a lower psf, and only one registered a new sale in 2015 at Urban Vista, at $1,452 psf for a 689 sqft unit — which isn’t really an equitable comparison.

In short, the price premium over the years for Urban Vista as compared to its new launch competitor isn’t really overpriced.

Let’s look at another to compare, The Glades.

It was launched later in the year in September 2013, with a total of 726 units.

  The Glades Urban Vista
Year Average psf Average psf Psf Comparison
24 Mar – End 2013 $1,476.14 $1,486.65 0.71 per cent
2014 $1,457.28 $1,202.55 -17.48 per cent
2015 $1,427.02 $1,452.00 1.75 per cent
2016 $1,409.22
2017 $1,449.91 $1,432.00 -1.24 per cent
2018 $1,421.86 $1,433.58 0.82 per cent
2019 $1,481.25 $1,405.89 -5.09 per cent
2020 $1,433.15 $1,281.82 -10.56 per cent
2021 $1,463.43 $1,374.03 -6.11 per cent
2022 $1,359.00 $1,283.33 -5.57 per cent

Likewise, the prices were actually pretty reasonable, with just a slight premium recorded for The Glades as it is marginally newer as well.

So unlike The Tennery, Urban Vista was actually priced competitively with its two new launch neighbours.

Now how about its resale competition?

During its launch, it had four resale condos in its immediate vicinity, Casa Merah, East Meadows, Optima @ Tanah Merah, and The Tanamera.

Here’s how they matched up:

  Casa Merah   East Meadows   Optima @ Tanah Merah   The Tanamera
Year Average psf PSF comparison Average psf PSF comparison Average psf PSF comparison Average psf PSF comparison
24 Mar – End 2013 $1,204.57 23.42 per cent $997.10 49.10 per cent $1,160.00 28.16 per cent $905.83 64.12 per cent
2014 $1,126.31 6.77 per cent $964.25 24.71 per cent $1,119.80 7.39 per cent $889.50 35.19 per cent
2015 $1,096.55 32.42 per cent $928.11 56.45 per cent $1,264.57 14.82 per cent $887.00 63.70 per cent
2016 $1,033.65 $908.91 $1,064.80 $841.67
2017 $1,029.79 39.06 per cent $880.23 62.69 per cent $1,175.92 21.78 per cent $850.92 68.29 per cent
2018 $1,140.32 25.72 per cent $944.96 51.71 per cent $1,191.88 20.28 per cent $909.00 57.71 per cent
2019 $1,101.00 27.69 per cent $923.83 52.18 per cent $1,167.38 20.43 per cent $901.67 55.92 per cent
2020 $1,088.93 17.71 per cent $928.71 38.02 per cent $1,160.70 10.43 per cent $875.00 46.49 per cent
2021 $1,150.89 19.39 per cent $990.87 38.67 per cent $1,241.46 10.68 per cent $922.60 48.93 per cent
2022 $1,166.67 10.00 per cent $978.50 31.15 per cent

During the same period in 2013, the premium that Urban Vista was asking over its resale competitors was significant for the older developments East Meadows (2001) and The Tanamera (1994). This was at an increase of 49 per cent and 64 per cent respectively, which is high no doubt.

But because Urban Vista was trading at a PSF level that was relatively comparable to its new launch competitors eCO and The Glades, it’s hard to conclude that pricing was a big contributing issue to its subsequent resale performance.

The price premium was less for its neighbours that were closer in age. For Casa Merah (2009) and Optima @ Tanah Merah (2012), this was at a premium of 23 per cent and 28 per cent respectively.

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Since we can’t pinpoint anything conclusively from the comparisons above, let’s dig a little deeper into the quantum prices of its one bedroom units as compared to its new launch competitors.

Given that a big proportion of the losses at Urban Vista are the smaller units, I had to separate that data out from the rest.

It was tough work as each development had many different sizes for its one bedroom units, and compiling the average prices took some time.

Here’s how it looked in 2013:

Project Quantum Difference
Urban Vista $784,054.18
eCO $901,314.44 15.0 per cent
The Glades $750,142.80 -4.30 per cent

While eCO’s average quantum was higher (it was more than 80 per cent sold at that point), Urban Vista was overall slightly higher than The Glades which launched in Q3 of 2013.

Not much really in it, is there?

As such, despite the higher price overall, it’s just not high enough to point out its pricing as a real cause for concern.

Now that we’ve got the pricing out of the way, let’s take a look at some of the reasons why Urban Vista has performed the way it has so far.

1. Compact unit size

In some instances, having compact unit sizes works.

This would typically be in the central regions where sizes are expected to be smaller, and quantum can be lowered to attract investors.

While there could be a case to be made for investor-led units for rental in this part of the East as it’s near the airport, perhaps this area where it’s closer to Bedok is still more commonly seen for family own-stay than anything else.

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And so if we were to look from that context, the sizes here are possibly not as ideal.

For example, the three bedder units here that most families would look for come in at only 786 to 850 sqft (Non-PES unit). For context, these are usually the sizes of larger two bedroom units in today’s new launches. As a matter of fact, for compact three bedroom units, you’d usually expect a size of around 900 sqft.

PHOTO: Stackedhomes

Likewise, the four bedders here are at only 1,044 sqft which is typically similar in size to a three bedroom premium in today’s new launch context. Worst of all, it comes with three AC ledges, a home shelter, and two balconies. When space is already at a premium, these can make the space look even smaller than it is.

This leads me to my next point.

2. Less ideal Soho units

During that era, Soho/Loft unit types were a popular offering for new launch units (just like The Tennery). There’s no question that it is aesthetically pleasing, but it suffers from a few issues.

PHOTO: Stackedhomes

One, if it’s only a little above three metres in height, it’s really more of a high ceiling that looks good than it is a truly usable space. So it’s a neither here nor there type of scenario that doesn’t serve much purpose in an already small unit. If you can stand up straight on the platform, it’d probably become a white elephant in no time at all.

If you want the advantage of a loft unit, it should be minimally four metres and up such that a mezzanine would come in handy. And unless you are freakishly tall, this should suffice for most Singaporeans.

Two, it’s usually more trouble than it’s worth. Whether you have to climb up to a bed, or to get to additional storage, most people realise after a while that it can be a nuisance day to day. So while it may have looked really alluring in the show flat (high ceilings and all), the reality is that most buyers have become wary of it.

3. Timing issue

It’s probably been well documented by now that 2013 was one of the peaks of the property cycle.

PHOTO: Stackedhomes

While that doesn’t necessarily mean that everyone who buys at a peak will lose money, it’s always more about choosing the right property than it is about timing the market.

There’s not much more to say here, so let’s move on to the next point.

4. Liveability and realities

One of the major plus points of Urban Vista is its convenient location right next to Tanah Merah MRT station.

But what is a strength, can also be deemed as a weakness.

In 2014 it was announced that there would be a major upgrade to the Tanah Merah MRT station, with works slated to start in 2016 (just before Urban Vista was completed).

PHOTO: Stackedhomes

Commuters heading towards Changi Airport and Expo MRT stations can enjoy faster travel come 2024, with the addition of a new platform at Tanah Merah MRT station.

There was a ton of work planned, here’s an excerpt I took from Today:

The platform will allow for the construction of an additional train track, so that trains moving in various directions from the station will have dedicated tracks, reducing the waiting times that have long frustrated commuters who travel along that stretch.

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I’ve also heard of multiple complaints that the noise from the MRT is particularly bad considering how close it is.

Plus given New Upper Changi Road is a pretty long stretch without much interference from traffic lights, there is a tendency for motorists to speed here, contributing to the road noise.

The combination of these factors has led to reports of potential tenants and buyers being scared off by the commotions going on the outside.

To be fair, it’s not as if these will be going on forever, as the works are planned to be completed in 2024. So there will be some respite and a future upside.

That said, it’s not just the issues on the outside, but problems on the inside as well.

A search on Google reviews reveals problems with the management at Urban Vista.

PHOTO: Google

From unfair clamping of visitor cars to not allowing delivery personnel to park within the estate. Especially since deliveries are such a big part of many people’s lifestyles today, this inconvenience has resulted in arguments with delivery drivers and the security guards at Urban Vista.

Apparently, according to recent reviews, the management has changed and the situation is better now. But that surely would have a negative effect on potential buyers and tenants visiting Urban Vista in those couple of years.

5. Rental play

PHOTO: Urban Vista

As I mentioned earlier, the unit mix at Urban Vista shows that it is geared more towards a rental project than it is for family living.

66 per cent of its units are one and two bedroom units, they are compact, and the presence of dual key units points further conclusively in that direction.

Generally, projects that are positioned towards rental will have lesser staying power as investors who have made their money from rent are more inclined to let go of the property at a loss if they have identified better opportunities elsewhere.

Rental rates and yields, in general, haven’t been fantastic to speak of either:

Rental returns for one bedder

Project 1 bedroom size 2013 Quantum 2016 2017 2018 2019 2020 2021
Urban Vista 431 sqft $663,656 $1,815 $1,793 $1,758 $1,784 $1,784 $1,827
ECO 549 sqft $769,921 $1,943 $1,993 $1,987 $1,998 $2,114
Optima @ Tanah merah 484 sqft $790,000 $2,527 $2,246 $2,246 $2,265 $2,236 $2,246

6. The addition of Grandeur Park Residences

PHOTO: Stackedhomes

Grandeur Park Residences is the latest entrant to this part of town.

It’s a 99-year leasehold that is directly opposite of Urban Vista.

It was launched in 2017, with a total of 720 units and was just recently completed in 2021.

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So far, it’s had a stellar run in the resale market, with 55 profitable transactions so far, and zero unprofitable ones.

Just off a cursory glance, there’s a number of factors that puts it in a better position over Urban Vista:

  • Directly opposite Bedok View Secondary School (plus facing the open field and not school blocks).
  • It has a tennis court.
  • Road facing units are set further back away from the road as compared to Urban Vista.
  • The other side faces the landed enclave (and part of eCO).
  • It faces a open forested area on the other side.

But here’s the best part, Grandeur Park Residences had an average PSF sale of $1,389 in their first year of launch in 2017.

Year Urban Vista Grandeur Park Residences PSF comparison
2017 $1,432.00 $1,389.31 3.07 per cent
2018 $1,433.58 $1,544.98 -7.21 per cent
2019 $1,405.89 $1,535.00 -8.41 per cent
2020 $1,281.82 $1,513.78 -15.32 per cent
2021 $1,374.03 $1,588.49 -13.50 per cent
2022 $1,283.33 $1,651.50 -22.29 per cent

As compared to Urban Vista (which was at that time already 4 years older) which had a very slightly higher PSF price of $1,432.

Admittedly there was only one transaction in 2017 for Urban Vista so it may not be a very fair comparison, but it’s worth noting that Grandeur Park Residences at that time was very well priced against its opposite neighbour — the prices were better than what Urban Vista was priced at in 2013.

Final words

All that said, there are still things to look up to as a whole in this area.

Once the expansion of the MRT platform is done in 2024, the traffic noise should ease and connectivity to the area would improve.

You do have a lot of malls just a short train ride away, and fingers crossed that travel will return with a bang to Singapore by then (a revitalised Changi is good news for this area).

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There is also the mixed-use site next to Urban Vista that drew 15 bids, with the eventual winner MCC Land landing the plot at $248.99 million or a land rate of about $930 per square foot per plot ratio (psf ppr).

This will add more commercial space of about 21,528 sqft and about 265 residential units.

While you will sadly have to deal with prolonged construction noise again, there is at least further upside to the area.

This article was first published in Stackedhomes.