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News Update

Cluster near Tanah Merah MRT station sees buyer interest

THE District 16 neighbourhood in the vicinity of Tanah Merah MRT station has seen a surge in activity, owing partly to the sale of three government land parcels and the launch of eCO on Bedok South Avenue 3.

The developers of eCO are a consortium made up of Far East Organization, Frasers Centrepoint and Sekisui House, which won the 308,330 sq ft, 99-year leasehold site with a bid of S$345.9 million (S$534 psf per plot ratio) in February. The consortium launched eCO in late September and, as at Nov 6, 547 units of 620 released in the project had been sold at an average price of S$1,300 psf. eCO comprises a mix of five residential types, with 244 condo units, 237 suites, 220 SOHOs, 17 lofts and 34 townhouses.

The take-up in eCO has been strong, and prices achieved have also set new benchmarks for the area. Based on caveats lodged between Oct 19 and 25, transaction prices had ranged from S$1,172 to S$1,491 psf.

Most potential buyers of eCO had initially compared the project with Optima @ Tanah Merah, which was completed earlier this year and is adjacent to Fragrance and World Class Land's Urban Vista. The 297-unit Optima was launched for sale in 2009, and most of the units were snapped up within three days at an average of S$810 psf. The project is developed by TID, a joint venture between Mitsui Fudosan and Hong Leong Group. In recent sub-sales done in October, prices of units ranged from S$1,027 to S$1,350 psf.

Most recently, on Oct 23, an 850 sq ft, two-bedroom apartment on the sixth floor changed hands for S$1.1 million (S$1,294 psf). The previous owner had paid S$748,000 (S$880 psf) for the unit at launch and has enjoyed a price gain of 47% over the last three years. A similar-sized unit on the 11th floor was sold for S$1.02 million (S$1,199 psf), compared with the original purchase price of S$804,800 (S$946 psf).

Meanwhile, two larger units at Optima were also transacted recently in the secondary market. According to Dan Soon, associate branch manager of PropNex Realty, which brokered the sale of the units, sellers are pegging their asking price to those achieved at eCO. For instance, Soon had brokered the recent sale of a 1,259 sq ft three-bedroom unit on the sixth floor of one of the blocks at Optima for S$1.7 million (S$1,350 psf). The original owner paid S$1.04 million (S$828 psf) for the unit three years ago, thus seeing a capital appreciation of 63%. The other one sold was a slightly smaller three-bedroom unit of 1,195 sq ft located on the third floor of another block. It went for S$1.5 million (S$1,255 psf). The previous owner purchased it for S$955,200 (S$799 psf) in 2009, so his capital appreciation was 57%.

"Increasingly, more young couples are looking for small units below S$1.2 million in the East," observes Soon. The area has also attracted more expatriates, as it is near Changi Business Park, where banks such as Citi, DBS, Standard Chartered and Credit Suisse have their global support and backroom services. The Singapore University of Technology and Design coming up near Changi Business Park is also a draw. With amenities such as the upcoming Bedok Mall, the new Changi City Point mall and the proximity to MRT station, the area has become a more desirable neighbourhood to live in, adds Soon, with cheaper rents relative to the CBD.

Older condos in District 16 have also seen their prices being driven up by the new launches. PropNex' Soon observes, however, that there have been fewer transactions in these older developments, as many owners are reluctant to sell. "Once they sell their unit, it is difficult for them to find a replacement property in the same neighbourhood, as the newer units cost more and are generally more compact in size," he says. Besides, most of them are owner-occupiers, so there are also few units for rent in the older condos.

Most of these older condos are trading in the S$1,000 psf range or lower. For instance, at the eight-year-old Tanamera Crest, a 288-unit, 99-year leasehold condominium developed by CapitaLand, a 1,173 sq ft three-bedroom unit on the 10th floor changed hands at S$1.09 million (S$927 psf) on Oct 19. It last changed hands in February 2010, for S$735,000 (S$626 psf). Prior to that, it was sold for S$460,000 (S$392 psf) in 2006. The original buyer paid S$593,800 (S$506 psf) for the unit in late 2001.

At the 1,038-unit The Bayshore, developed by Far East Organization 13 years ago, a 1,184 sq ft three-bedroom unit on the 10th floor was sold for S$1.16 million (S$980 psf). Also, a 1,012 sq ft two-bedroom unit on the 28th floor of another block was sold for S$1.1 million (S$1,087 psf).

Soon is concerned that, based on the three new parcels sold this year (including eCO), there will be about 1,900 new homes coming up over the next few years in the neighbourhood around the Tanah Merah MRT station. In addition, more supply is in the pipeline. For instance, next to eCO is another land parcel (Parcel B), located at the junction of New Upper Changi Road and Bedok South Avenue 3, that is earmarked for a 595-unit residential project sitting on the Reserve List of the government land sales programme. Adjacent to it, where the Tanah Merah MRT station entrance is located, is a parcel designated for "future development".

Even though prices have been stable, and the take-up rate at new launches have been healthy, Soon is concerned that there could be an oversupply in the next few years when these new condos are completed.

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