Best-kept property secret

IMAGINE paying no more than $3,500 a month to live in a centrally located, million-dollar, two-bedroom apartment.

But here’s the catch: The apartment could be decades old, and already sold en bloc – so you may not have very long to live there.

For the time being, rent is going for a song in at least 23 mature condominium developments in the central part of Singapore.

These developments, with more than 2,000 units in all, had originally been bought by developers for en bloc redevelopment in 2006 and 2007.

About half of the 23 estates are located within prime districts nine to 11 – the prestigious Newton, Orchard and Tanglin belt – based on data compiled by property consultancy CB Richard Ellis’ (CBRE) research team, online property-search firm All Property Media and my paper.

But after the recession hit, demand for new properties nosedived, so developers held back redevelopment plans and leased out these condos instead.

This move would help the developers defray the costs of holding onto the properties without developing them, industry experts said.

Ngee Ann Polytechnic real-estate lecturer Nicholas Mak said: “The property market softened during the second quarter last year.

“Developers realised that the high-end market couldn’t support prices they wanted, and braced themselves for a long recession in the second half of last year.

“No one at that time knew how long it would last. So, rather than leaving the acquired buildings empty, developers decided to rent their properties out.”

Inhabitants of these en bloc estates run the gamut from Middle Eastern medical tourists to expatriates, foreign students and Singaporeans waiting for HDB flats.

Particularly popular with foreign students taking courses at the East Asia Institute of Management (EASB) in Ah Hood Road are five properties located in an area bound by Balestier Road, Thomson Road, Jalan Raja Udang and Jalan Datoh.

A mechanic working in the area, who declined to be named, noted: “Some of the girls living here might appear to be students by day, but by night they prowl the streets all dolled up. A friend was solicited once.”

Real-estate developer City Developments Limited (CDL) had acquired the five properties – The Albany, Thomson Mansion, Bright Building, Concorde Residences and Balestier Court – in 2006 and 2007.

my paper understands that these condos were leased out sometime in March this year to three master tenants – companies that shoulder responsibility for the maintenance and occupancy of these properties.

One of them, Malaysia-based intermediary-services company British Capital Group, is the master tenant for Balestier Court and the adjoining Concorde Residences and Bright Building.

The group’s on-site manager, Ms Michelle Feng, said that the company, whose main business is to provide financial services, had spent tens of thousands to upgrade the lifts and mend the water pipes.

It also pays for weekly fogging of the condominiums to kill mosquitoes.

It leases the apartments out to individuals, up to eight of whom can share a unit.

A month’s rent costs $500 to $600 for a bedroom in one of its 72 units, and $2,250 for a 167-sq m apartment.

But business has not been terribly lucrative because many expatriates have returned to their home countries during the recession, and because of maintenance costs, said Ms Feng.

When asked how it kept tabs on the estate and its tenants, Ms Feng said staff from CDL drop by every month. Officers from the Urban Redevelopment Authority and the Ministry of Manpower often visit to check the estate for signs of illegal activities.

Ms Han Jing Jing, 19, and Ms Lu Jiali, 23, both students of EASB’s three-year bachelor’s degree programme in hospitality and tourism management, had found lodgings in Bright Building and Concorde Residences, respectively, in August through word of mouth.

Ms Han, who is from Wunan, China, pays $350 a month and shares her room with two other women, also classmates. Ms Lu, a Malaysian, pays $300.

Their rental contracts are for six months.

Both expressed surprise when this reporter asked when their buildings would be torn down.

“I love the location. It’s only a 15-minute walk away from my school. It would be a pity if we’re not allowed to live here anymore,” said Ms Lu.

But the good times for such tenants are set to end soon. CBRE investment properties executive director Jeremy Lake said: “For most of the projects, they are probably back into profit, whereas nine months ago they were not… It is a plausible proposition to redevelop now, in view of the strong market conditions and demand for new launches.”

Mr Charles Chua, PropNex’s head of investment sales & en bloc, said: “En bloc projects were put to the rental market, out of a no-choice situation, as the rental yield may not be attractive.

Therefore, if our prognosis is correct, work on all en bloc projects that were put on hold will be resumed as soon as possible to get them to launch in the market.”

A 177-unit freehold condominium is expected to be built by CDL where The Albany and Thomson Mansions are now standing.

While CDL is tight-lipped about the date of its launch, real-estate agents estimate that the showflat would be ready for viewing by the end of this year.

Occupants of The Albany and Thomson Mansions are said to have about another year before they have to move.

Tenants of another development, Lincoln Lodge in Newton, have to move out after May next year.

It will be replaced by Lincoln Suites, which was recently soft-launched by Koh Brothers, Heeton Holdings, KSH Holdings and Lian Beng Group.

Similarly, tenants have to leave Sophia Court in Sophia Road, which is expected to make way for the new Sophia Residences, to be developed by GuocoLand by the end of this year.

Mr Mak said: “Residential rentals are still weak in the market. However, when the midand high-end markets start to recover robustly sometime next year, the developers would launch the proposed redeveloped projects for sale. That would also be the time when rentals are likely to increase. Therefore, the tenants could be asked to look for alternative homes at the time when rentals are rising.”

Source: My Paper, 23 Nov 2009