Testing the resilience of city fringe at Alexandra-Prince Charles
By Cecilia Chow
/ The Edge Property |
UOL and Kheng Leong set to roll out Principal Garden at an average price of $1,600 psf. It will test the resilience of the city-fringe location at Alexandra-Prince Charles.
Leading an entourage of staff, property agents and reporters around the show flats of Principal Garden, Liam Wee Sin, deputy group CEO of UOL Group, points out the merits of the latest condominium that will spring up on Prince Charles Crescent, just off Alexandra Road.
The oak flooring, high-end kitchen cabinets and appliances as well as full marble bathrooms are equivalent to the specifications at luxury condo Nassim Park Residences. The fully sold 100-unit Nassim Park Residences which was completed in 2011 is a joint-venture (JV) project between the listed UOL Group and privately held sister company Kheng Leong Co, controlled by the family of UOB chairman emeritus Wee Cho Yaw, along with Orix Capital. Another collaboration between UOL and Kheng Leong together with construction company Low Keng Huat was the 405-unit One-North Residences.
Principal Garden is a 70:30 JV between UOL and Kheng Leong. Located on a 269,000 sq ft linear site, the project contains four identical 24-storey blocks. The blocks are oriented such that most units will have an unblocked view of the Alexandra Canal and park connector or the Good Class Bungalow (GCB) neighbourhood of Jervois and Mount Echo Park. “The scheme by Architects 61 is refreshing in its simplicity as it allows every unit to have a unique view,” says Liam.
With the towers raised 15m above street level, units on the second level are equivalent to being on the sixth storey of a typical apartment block in the neighbourhood. Therefore, even the low-floor units will have unblocked views. The towers occupy just 20% of the site area, freeing up the remaining land area for landscaped gardens, swimming pools and other amenities, including a 1,516 sq ft gym, a wine cellar and lounge as well as clubhouse. There’s also a sky club on the 24th floor of one of the towers.
The showflat with a dark wood scheme
Price play
Set to debut on Oct 16 with sales to commence at the end of the month, Principal Garden contains 663 units, making it the largest condo — in terms of number of units — to be launched in the Alexandra area in a decade. Given that projects launched in the area over the past two years are still sitting on unsold units, competition is going to be “tough”, concedes Liam. “But we love it.”
Even though it’s considered to be part of the city fringe or Rest of Central Region (RCR), Principal Garden’s “unique vantage point” is that it’s at the border of an exclusive GCB neighbouhood, adds Liam. “On a micro-level, most of the projects in the area have already [substantially] sold their one- and two-bedroom units,” he continues. “So there is no real direct competition.”
About 73% of the units at Principal Garden are one- and two-bedroom units with sizes ranging from 484 to 807 sq ft. The one-bedroom units will be priced from $770,000 and two-bedroom units from $1.18 million. The remaining units include a mix of dual-key units, three-bedroom, three- and four-bedroom deluxe units, and five-bedroom penthouses. The average price for the initial 250 units to be released is expected to be around $1,600 psf.
“The price point [at Principal Garden] is lower than that for the surrounding projects, which have prices of $1,700 psf or higher, which therefore makes it a compelling buy,” says Mohamed Ismail Gafoor, CEO of PropNex Realty, the joint marketing agents of Principal Garden with CBRE and Huttons Asia.
UOL and Kheng Leong are able to offer a lower average selling price because they had purchased the site “at a reasonable price”, says Liam. The JV partners had won the 99-year leasehold site in a government tender with a top bid of $463.1 million or $821 psf per plot ratio (psf ppr) in April last year. The price is 14.5% lower than the $960 psf ppr paid for the 99-year leasehold site next door by a consortium made up of Wing Tai Holdings, Metro Holdings and UE E&C in September 2012.
Neighbourhood transformed
The Wing Tai-led consortium launched its project last year as the 469-unit The Crest, com prising three 23-storey towers and four five- storey blocks on a 256,000 sq ft site. A total of 90 units have been sold. Last month saw six units sold at a median price of $1,708 psf, according to URA data. Wing Tai and its consortium partners are unlikely to lower their selling prices to match Principal Garden’s.
“The Crest is targeted at a different market segment,” says an industry observer. “One- and two-bedroom units only make up about 30% of the total units. The units are also larger, with one-bedroom units starting at 614 sq ft, so the quantum price is also higher.”
Located behind Principal Garden is the 109-unit Mon Jervois, a five-storey project on Jervois Road by Singapore Land, which was delisted in August last year. Singapore Land is, in turn, a subsidiary of listed United Industrial Corp, an associate company of UOL which owns 44% of its shares. About 40% of the units at the 99-year leasehold Mon Jervois have been sold to date, at an average price of $1,941 psf based on caveats lodged with URA Realis.
Mon Jervois may be just behind Principal Garden, but it has a Jervois Road address which puts it in prime District 10.
Meanwhile, projects such as Principal Garden at Prince Charles Crescent and those located at Alexandra Road/Alexandra View, which are developments sitting on 99-year leasehold parcels purchased from government land sales in recent years, are considered to be in District 3 in the RCR or city-fringe neighbourhood.
For example, on Alexandra View and within a short walk of the Redhill MRT station is Alex Residences, a 99-year leasehold condo by Singapore Land. The project has 429 units in a single 40-storey tower. Launched at end-2013, 252 units (59%) have been sold to date. Two units were sold in September at a median price of $1,719 psf, according to URA data. As most of the lower floor units were sold at prices closer to $1,600 psf, the overall average price achieved to date is $1,676 psf (see table).
Next door to Alex Residences is Echelon, a 508-unit project by listed property giant City Developments Ltd. The 99-year leasehold condo previewed at end-December 2012. It was just a month before the before the seventh round of property cooling measures was introduced in January 2013, which included a hike in additional buyer’s stamp duty (ABSD). All except three units have been sold at an average price of $1,734 psf. The 43-storey twin tower project is expected to be completed towards end-2016.
Adjacent to Echelon is the 373-unit Ascentia Sky by Wing Tai, which was completed in 2013 and is fully sold to date. Ascentia Sky was launched in 2009 at an average price of $1,300 psf. The launch coincided with the completion of the 383-unit The Metropolitan by CapitaLand and Lippo Group, located close to the Red Hill MRT station. The 99-year leasehold The Metropolitan with twin 45-storey towers was launched in November 2006. At that time, the average price was about $780 psf.
“I remember when The Metropolitan first launched, people thought it was expensive for a city fringe location,” recounts Nicholas Mak, executive director of research & consultancy at SLP International. “And when Ascentia Sky was launched in 2009 at $1,300 psf, people again said it was expensive. But recent new launches in the area have been even higher, at $1,700 psf. So it seems like the Alexandra area is constantly testing new highs.”
However, with Principal Garden being launched at $1,600 psf, it’s evident the developer is pricing the project “very competitively”, adds Mak.
New launches in the Alexandra-Prince Charles area: 2006 to 2015
PROJECT NAME | DEVELOPER(S) | TOTAL NO OF UNITS | NO OF UNITS
SOLD | PERCENTAGE OF UNITS SOLD (%) | AVERAGE LAUNCH PRICE PSF ($) | LAUNCH DATE | TENURE (YEARS) | TOP DATE |
|---|---|---|---|---|---|---|---|---|
Wing Tai/Metro Holdings/UE E&C | 469 | 90 | 19 | 1,741 | July 14 | 99 | 2018 | |
Singapore Land | 429 | 252 | 59 | 1,676 | Oct 13 | 99 | 2018 | |
Singapore Land | 109 | 44 | 40 | 1,943 | March 13 | 99 | 2017 | |
City Developments Ltd | 508 | 505 | 99 | 1,734 | Dec 12 | 99 | 2016 | |
Wing Tai | 373 | 373 | 100 | 1,309 | July 9 | 99 | 2013 | |
CapitaLand/Lippo Group | 382 | 382 | 100 | 784 | Nov 6 | 99 | 2009 | |
Total no of units | 2,270 |
Source: SLP Research, URA
Prices double in less than a decade
A Singaporean property investor, Mr Lim, owns two units at The Metropolitan. They are both two-bedroom units. One was purchased for his own use, while the other is an investment property for rent. “The rentals there are very good,” says Lim. “A two-bedroom unit can still command $4,500 a month. But with more competition coming onstream in the future, rents may come off.” He had purchased both units when The Metropolitan first launched nine years ago, and rode the property wave.
There were two resale transactions at The Metropolitan in September. A 786 sq ft two-bedroom unit on the 31st floor changed hands for $1.13 million ($1,438 psf), while a 1,744 sq ft unit on the 40th floor of the other tower was sold for $2.35 million ($1,348 psf), according to caveats lodged with URA Realis. This shows that prices at The Metropolitan have doubled in nine years. “That’s why I welcome new developments,” says investor Lim. “They tend to drive up prices.”
Even older projects in the Prince Charles Crescent area have enjoyed a price uplift owing to the renewal brought on by the recent launches. Located on Prince Charles Crescent, off Alexandra Road, is the 384-unit Tanglin View. Developed by Far East Organization, the 99-year leasehold condo was completed in 2001. A recent transaction saw a 1,249 sq ft ninth-floor unit change hands for $1.438 million ($1,152 psf). The owner had paid $1 million ($801 psf) for the unit in 2001. The project was launched in 1998 and at that time, prices were hovering in the $800 psf range.
The government made available one more new site located adjacent to the Redhill MRT station on Sept 30. The 99-year leasehold site at Alexandra View is also next to The Metropolitan. It can be developed into a project with about 400 residential units, with commercial units on the first level.
“It will be a hotly contested site, given the location,” remarks a listed property developer who declined to be named. “All the established developers in that area will want to submit a bid for it. It’s one of the few remaining sites that’s located next to an MRT station and in a city fringe location. Alexandra remains an attractive location even though there are a lot of new projects there.” There is one more government parcel next to Alex Residences, but it has not been put up for sale yet.
The density at the Prince Charles neighbourhood is generally much lower than at Alexandra View, points out Daniel Lim, associate senior group director of Huttons. Therein lies the attraction of Principal Garden, he adds.
Future capital upside?
However, future capital upside will depend very much on market sentiments going forward, says a property consultant. With greater uncertainty in the global economy, home buyers are likely to be more cautious before committing to a purchase.
Capital upside will also depend on whether a project stands out in its neighbourhood. “Principal Garden’s linear orientation gives every unit a 180° view. The lower-floor units will be above the rooftop level of the GCBs as well as the condos in the Jervois area that are low-rise four- to five-storey blocks,” says Joseph Tan, executive director of CBRE residential services. “The project is therefore likely to see strong demand.”
Principal Garden’s amenities are another plus point, adds Tan. “Buyers are also becoming more discerning, and beyond price, they are also looking at projects by established developers who provide good layout and quality finishes.”
While there have been many launches, not all have done well, notes PropNex’s Ismail. Given that Principal Garden is a 10-minute drive to Orchard Road and the CBD, and a 10-minute MRT ride from the Redhill station to Raffles Place, the project will appeal to both investors and owner occupiers, adds Ismail.
According to SLP Research, over the past eight months, the median take-up rate based on the sales-to-launch ratio for RCR was 115.7% compared with the suburban neighbourhoods of OCR (Outside Central Region), which stood at 104.1%. A take-up rate of more than 100% would imply a reduction of developers’ inventory of unsold units, says SLP’s Mak. The figures, therefore, indicate a higher median take-up rate for RCR, which implies faster absorption of unsold stock relative to those in the OCR, he adds.
“Therefore, while the overall residential market may be sluggish, the RCR has remained the most resilient segment,” says Liam. “That’s why Thomson Three and Botanique at Bartley have done well, and why this project [Principal Garden] should do well too as they are all located within the RCR.”
This article appeared in the City & Country of Issue 699 (Oct 19, 2015) of The Edge Singapore.
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