They are easier to rent out; fetch higher prices
TWO property developers were recently in the spotlight for including unconfirmed locations of future MRT stations in their condominium advertisements.
The incident clearly highlighted the popularity of housing developments located near MRT stations.
Property agents say the benefits of such a location are myriad, though buyers can expect to pay significantly more for such properties.
'Singapore has a very comprehensive MRT network which is constantly being expanded, and being near an MRT station will reduce travelling time,' said Mr Eugene Lim, associate director of ERA Asia Pacific. He added that this is a key factor in the attractiveness of such properties to owner-occupiers and tenants.
Property agents The Straits Times spoke to said that buyers can expect to pay a premium of $10,000 to $15,000, or 5 to 15 per cent of the purchase price, for HDB flats located near MRT stations. For private properties, this premium ranges from $20,000 to $50,000.
This is a premium based not just on convenience; there are several other long-term benefits that come with a location near an MRT station.
'Flats near MRT stations are definitely easier to rent out,' said Mr Adam Tan, spokesman for property firm Propnex. Non-Singaporeans working here make up more than 50 per cent of the rental market, and to them, 'public transport is key' as they are unlikely to want to purchase a car, he noted.
'For young expat foreigners with no kids, good schools mean nothing. In contrast, the MRT will link them to work and wherever they need to go,' he added.
The resale value of properties located close to MRT stations is also higher. Coupled with the fact that a number of MRT stations are located in the heart of town centres, it is no surprise that properties close to these stations are more popular and command higher premiums.
'Other amenities such as shopping malls and offices near the MRT station will definitely drive up demand and price,' said Mr Tan.
For a property to be considered near an MRT station, it should be within walking distance of five to eight minutes, or within a 0.5km to 1km radius around the station.
A few additional minutes spent walking make a big difference in price. Property agents say that a property located five minutes away from an MRT station will command a selling price 10 per cent above one that is located 15 minutes away. This premium rises to 15 per cent compared to a property 25 minutes away.
ERA's Mr Lim noted that a flat within five to eight minutes' walk of Tampines Central, now home not just to Tampines MRT station but also three shopping malls and a number of offices, would easily have a resale value of about $20,000 more than a flat of the same age located in a more inaccessible part of the estate.
In addition to the perks that come with convenience, purchasing a property close to an MRT station is a sound investment decision.
Mr Tan cited Astoria Park, near Kembangan MRT station, as an example of a property whose value is likely to appreciate significantly. Units there sold for about $630 per sq foot about six months ago, and are now selling for about $750 psf. Mr Tan said prices of similar developments close to MRT stations should appreciate by 20 to 30 per cent over the next 10 years.
All the agents The Straits Times spoke to agreed that there will always be a demand for properties located close to MRT stations, regardless of market conditions.
But while proximity to MRT stations is a perk, it is possible to be too close. One property agent said that residents of some units in The Jade, a condo development situated right next to Bukit Batok MRT station, have to put up with beeping noises from the station and the roar of trains passing by.
'You definitely should not be getting a place right next to an MRT station if you want total peace and quiet,' said Mr Tan.
Source: Straits Times, 22 Aug 2009