Sunday, February 10, 2008

The MRT guide to home prices

Buyers increasingly keen on units near stations, which can command up to a 20% premium

HOME seeker Wan Kum Wai is hunting for a flat that is well-located - specifically, within walking distance of an MRT station.

For this convenience, the multimedia designer and his wife Jessie are willing to pay 10 to 20 per cent more than they would for a home a few bus stops away from a station.

‘We don’t drive, and the cost of living is running high,’ he said. ‘We don’t mind paying more because we think this will help us save on transportation costs and other expenses in the long run.’

In an era of sky-high petrol prices, multiplying Electronic Road Pricing gantries and increasing worries over environmental degradation, the all-important ‘location, location, location’ element of a home purchase has taken on a new slant.

While the classic prime districts of 9, 10, 11 are still sought after, home buyers are also increasingly keen on properties near MRT stations.

Apart from non-drivers, MRT-accessible homes also attract buyers with school-going children as well as investors who want to rent the units to expatriates, many of whom rely heavily on public transport, say property agents.

Ms Mylene Kwan, a PropNex agent who is helping Mr Wan find a home, said some of her clients have only one priority: to be near an MRT station.

‘Many of them don’t drive, so it’s very important to these buyers,’ she said.

But such proximity comes at a price.

Ms Kwan estimated that HDB flats with this privilege have their valuations alone jacked up by at least $20,000 or $30,000, and buyers often pay even more in cash on top of that.

The most popular HDB flats near MRT stations are those close to town, such as in the Tiong Bahru, Redhill and Queenstown areas, she said.

But even in the suburbs, a nearby station can give a big boost to prices.

In Woodlands, owners of flats near the MRT station are asking $40,000 to $50,000 above valuation just because of the location, said Ms Rohaizah Ramjan, another PropNex agent.

Whenever these flats come on the market, they get snapped up within two or three weeks, she added. For ‘normal ones’ further from the station, it can take a few months for a sale to be closed.
‘Flats near MRT stations are harder to come by, because owners are comfortable there and don’t want to sell,’ she said. ‘So if a buyer has the budget and they see a well-located flat for sale, they just grab.’

The same principle applies to private property. Condominiums near MRT stations can command a premium of up to 20 per cent over similar units a bit further away, said Mr Eric Cheng, executive director of HSR Property Group.

The price difference stems partly from the convenience of these homes, but is also due to their limited supply, he added.

‘If you look at the whole map of Singapore, I dare say only about half the MRT stations have condos right next door. Of course, they command a premium, a good 10 to 20 per cent above neighbouring properties 10 minutes’ walk away.’

At Tiong Bahru MRT station, for instance, new condos that are at the doorstep of the station - such as Twin Regency and Regency Heights in Kim Tian Road - fetch $1,240 per sq ft (psf) on average.

About five to 10 minutes away, prices average $1,072 psf, or about 15 per cent less, at the equally new The Regency at Tiong Bahru on Chay Yan Street.

‘Most of these units are rarely on the market,’ said Mr Cheng. ‘Even if the owners are not staying in them, they might not want to sell because they can get very high rental returns.’

Still, not all MRT stations are equal. Property values can differ widely between two consecutive stops, such as in the case of Novena and Toa Payoh, where condos around the former are almost double the price of those around the latter, according to an extensive analysis done by property firm Savills Singapore.

Even stations within a few kilometres of each other can see significantly different prices.

Savills’ data showed that condos around the Dhoby Ghaut station, for instance, fetched an average of around $1,600 psf in the first six months of the year. Less than 2km away, condos near the Little India station cost only two-thirds that on average, or $1,071 psf.

‘Apart from the proximity to an MRT station, buyers do look at other factors,’ said Mr Ku Swee Yong, Savills’ director of marketing and business development.

“Equally important is the quality, age and tenure of the project and its facilities, how much the unit can fetch in rentals and what amenities are nearby.”

Mr Ku cited Lavender and Farrer Park MRT stations, separated by just 1.5km in distance but about $200 psf in price

At Lavender, well-equipped condos such as Citylights boosted prices in the vicinity to an average of $1,104 psf in the first six months of the year. But Farrer Park is surrounded by several smaller condos with minimal facilities, so rents and prices tend to be lower, said Mr Ku.

Source: Straits Times - 2 Oct 2008