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:
- Median Area = 850sft
- Number of sales = 135 sales
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.
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?
Median rent : $4000 for a 900sft apartment, by June 2010?