Wildy the Journeyman (into_the_wild) wrote,
Wildy the Journeyman

District 2 Trending

District 2 Trending

While I have been harping on the benefits on investing in freehold properties in District 15, I think it would only do justice if I take a closer look at District 2 as well. First of all, let us take a look at the current price trends for District 2.

Price Trend for District 2 (as of 11 April 2010)  - For Private Apartments and Condominiums.

There is a general rise in prices of private properties in District 2. If you look at the green arrows, the one on the extreme left would represent Spottiswoode Park, and The Beacon, then The Arris, then The Icon and then International Plaza and The Lumiere. All registered an increase in prices. For the larger red arrow, it represents People's Park Complex, while the smaller red arrow represents One Shenton. Yes, there was a drop in median PSF for One Shenton. For the People's Park Complex, it is a leasehold (99 year lease) apartment with mixed commercial and residential usage. For developments with mixed usage, they are difficult to go en-bloc, due to resistance from the owners of the commercial units/zones. As such, many of such developments, such as Katong Shopping Centre, Ming Arcade, Sim Lim Tower, etc have remained the way they have been for the many decades past.

Price Indices for District 2:
Also, we noted the following for District 2:
  • Median Area = 850sft
  • Number of sales = 135 sales
There is a general trend for units with smaller areas (1 bedroom, 2 bedroom units) to be transacted in District 2.
The number of monthly sales continue to climb steadily. This is aligned with the general trend of a higher percentage of District 1 and District 2 units transactions during good economic times. This could be due to a higher level of interest of properties in the Central Business District. There are always a ready supply of expatriates who prefer to live within the city (and reduce the hassle of the daily commute). This also attracts the savvy investors who will invest in units in this District, in order to rent out to the former.

There is a general drop in the size of the rental unit, which corresponds with drop of the median area to 850sft. We believe that there is a gradual shift of expatriates from the top most tier to the middle to middle-upper tier. This has resulted in the following:

1. Decreasing budget for expats (in middle tier), which means that they are looking for smaller units to rent.
2. Expats are coming to Singapore without their families, which means that they prefer a one-bedroom or two-bedroom unit located closer to their office.
3. Companies giving expats a fixed accommodation allowance. This encourages some expats to choose cheaper housing so that they can save the excess allowance.

In summary, the median rent is hovering at about $3400 for a 942sft unit. We believe that the average median rental will continue to rise to about $4000.
In terms of sales, District 2 units have only pushed north from Jan 2009, with the exception of Sep 2009. In fact, from Feb 2010, there is a sharp rise beyond the $1600sft level. We believe that the strong sales at Altez and 76 Shenton, as well as increased interest in District 2 the main cause for this rise. Perhaps URA's promise of an upcoming rejuvenated harbour area by 2025 has prompted some buyers to make a beeline for the properties here? We wonder.

Conclusion and Our Call
So where do prices go from here? We believe that the limited supply of developments in District 2, coupled by an increase in demand for CBD housing will only push prices up. Our call?
Price per square foot : $1800 psft, by June 2010;
Median rent : $4000 for a 900sft apartment, by June 2010?
Tags: property

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