Why Mount Sophia still draws investors

By Michael Lim

/ The Edge Property |

July 7, 2017 3:30 PM SGT

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The Mount Sophia area in District 9 has been seeing a buzz of activity over the past six months. That is partly because of the ongoing marketing activity at the 493-unit Sophia Hills — the latest as well as the largest development in the area so far. A joint development by a consortium comprising Hoi Hup Realty, Sunway Developments and SC Wong Holdings, the 99-year leasehold condo is scheduled for completion next year. Based on caveats lodged, 263 units have been sold at an average price of $1,943 psf.

Sophia Hills previewed in late 2014 and sales have picked up significantly this year ahead of its Temporary Occupation Permit (TOP). The project is located on a 255,900 sq ft site bounded by Mount Sophia and Adis Road. On the site are the former Methodist Girls’ School, Trinity Theological College and Sophia Student Hostel buildings, which have been conserved and will form part of the Sophia Hills residential development.

The consortium purchased the site in September 2013 in a government land sale tender for $442 million, or $1,157 psf per plot ratio.

Wilkie Edge sold for $1,812 psf

Located at the corner of Selegie Road and Wilkie Road is Wilkie Edge, a 12-storey mixed-use development with retail, office and serviced residences. On July 3, CapitaLand Commercial Trust announced that it had sold Wilkie Edge to Lian Beng (8) Pte Ltd, a joint venture between Lian Beng Group and the family of Super Group founder David Teo. The purchase price works out to $280 million, or $1,812 psf, based on the building’s net lettable area.

Lian Beng (8) is acquiring the commercial components of Wilkie Edge, which was put up for sale on Dec 18, 2016. It comprises a two-level retail podium, six floors of primegrade office space and two basement car parks. Meanwhile, serviced residences Citadines Mount Sophia is leased to Ascott Residence Trust for 96 years from Nov 17, 2008.

“The price of $1,812 psf represents good value for a District 9 asset,” says Matthew Ong, executive director of Lian Beng Realty, the property investment arm of listed construction and property development company Lian Beng Group.

Wilkie Edge was 99.9% leased as at March 31, 2017. Based on Wilkie Edge’s net property income of $9.5 million for the 12-month period ended March 31, the purchase price translates into a net property yield of 3.39% a year.

Farther down Selegie Road, PoMo, a retail and office development, changed hands for $336 million in 2013. The buyer was a joint venture between BS Capital and Enviro-Hub Holdings, while the seller was a vehicle controlled by CLSA Capital Partners. The CLSA vehicle purchased PoMo from Lendlease and Silverpeak Real Estate Partners in 2011 for $255 million. The price translates into $1,894 psf based on the net lettable area of 177,381 sq ft.

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Revitalisation of Mount Sophia

The revitalisation of Mount Sophia started with the launch of 8 @ Mount Sophia by Frasers Centrepoint in November 2002. The site was purchased on a 99-year lease from the Methodist Church in 2000. Completed in 2007, the 313-unit condominium comprises a mix of units ranging from studios to three-bedroom apartments measuring 816 to 1,464 sq ft. The project was fully sold at launch, with prices averaging $730 psf 15 years ago.

Many of the buyers of units at 8 @ Mount Sophia are investors, given its proximity to Plaza Singapura shopping centre and the Dhoby Ghaut MRT interchange station. Prices have more than doubled since its launch. Recently, a 1,378 sq ft, three-bedroom unit was sold for $1.8 million ($1,357 psf), according to a caveat lodged in May. Prior to that, a 1,464 sq ft, three-bedroom unit fetched $2.1 million ($1,421 psf) in March.

Chris Choo, group district director of PropNex Realty, says besides investors, 8 @ Mount Sophia has also been popular with owner-occupiers, especially young families with school-going children, given the proximity to St Margaret Primary School.

Alvin Khoo, associate division director of KF Property Network, says: “Savvy investors are attracted to the area because the per-square-foot prices for projects aged 10 years or less are among the lowest in District 9.” Khoo has been marketing units in the Mount Sophia area for the past five years.

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Prices in $1,500-to-$2,000-psf range

Next door to 8 @ Mount Sophia is Allgreen Properties’ 118-unit Suites at Orchard. The 99-year leasehold project contains a mix of one- to three-bedroom duplexes and penthouses, and was completed in 2014. The project was launched in late 2010, and many of the units were sold at prices above $2,000 psf then. The most recent transaction at Suites at Orchard was that of a 915 sq ft, one-bedroom duplex on the 10th floor that was sold for $1.6 million ($1,749 psf) in March.

Meanwhile, GuocoLand’s 272-unit Sophia Residence was also completed in 2014. The freehold project previewed in July 2009 and, at the time, units sold ranged in price from $1,450 to $1,850 psf. The project comprises a mix of two- to four-bedroom units and penthouses. The most recent transaction at Sophia Residence was that of a 1,432 sq ft, three-bedroom unit that fetched $2.08 million ($1,453 psf). Units that changed hands in March and April this year were done at prices ranging from $1,418 to $1,805 psf, based on caveats lodged.

Roxy-Pacific Holdings’ 64-unit LIV on Sophia was completed just last year. The project was launched in 2013 and fully sold within three weeks. It comprises two-bedroom dualkey units measuring 527 to 710 sq ft. Prices of units sold ranged from $2,201 to $2,552 psf, according to caveats lodged.

Following the success of LIV on Sophia, Roxy-Pacific launched LIV on Wilkie, just one street away. The freehold, 81-unit project has a mix of one-bedroom, two-bedroom dual-key and three-bedroom triple-key units, with sizes ranging from 452 to 743 sq ft. The project was launched in November 2013. Units at LIV on Wilkie were recently sold at $2,141 to $2,298 psf, according to caveats lodged from January to May 2017. The project is expected to be completed next year.

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One- and two-bedroom shoebox units lure investors

Next to LIV on Sophia is Parc Sophia, a 152-unit freehold development by Oxley Ventures, which was completed in 2011. The project, launched in July 2008 and fully sold, is also a mix of one- and two-bedroom units measuring 474 to 732 sq ft. The most recent transaction was in January 2017, when a 667 sq ft unit changed hands for $1.01 million ($1,513 psf), according to a caveat lodged then.

Given the predominance of oneand two-bedroom units in the Mount Sophia area, most of the buyers in these developments are investors hoping to rent out the units.

According to Khoo, an 893 sq ft, one-bedroom fully furnished unit at 8 @ Mount Sophia was leased for $4,200 a month in March, which is higher than the $3,200 to $3,500 for which a similar-sized unit at The Pier at Robertson Quay was leased. The Pier at Robertson Quay is a 201-unit freehold development by CDL and was completed in 2006. Meanwhile, a partially furnished 1,900 sq ft, three-bedroom unit at Sophia Residence was leased in April for $5,800 a month. Khoo says both units were leased to expatriates working in the CBD.

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Proximity to three MRT stations

KF Property Network’s Khoo says: “Foreigners like this area because it is one of the greenest in District 9, with Mt Emily Park nearby, Istana grounds next door and the predominantly low-rise developments.”

They also like the convenience of the location, as it is served by two MRT stations within a 10-minute walk: Dhoby Ghaut MRT Interchange Station for the North-South, Northeast and Circle Lines; and the Little India MRT Interchange Station for the Northeast and Downtown Lines.

A third station will open later this year: the Bencoolen MRT Station, which is part of the Downtown Line Stage 3. “When Bencoolen MRT opens, the area will be a real draw, as it will be the most connected neighbourhood, served by three MRT stations, and just one MRT stop from the CBD,” adds Khoo.

The other draw is the proliferation of eateries on Selegie Road and Prinsep Street, including Red House seafood restaurant, Der Biergarden restaurant and bar, and a modern Italian restaurant at 28@Wilkie. While Plaza Singapura is the biggest shopping mall in the area, there are also smaller malls such as PoMo, Parklane and Peace Centre on Selegie Road. “Apart from the night clubs on Selegie Road, there are also many nice boutique cafés and bistros on Prinsep Street,” says Khoo.

Besides LIV on Sophia and Parc Sophia, two other developments were completed recently. One is 1919, a 75-unit freehold condo by Aurum Land, which was completed in 2015. The development was launched for sale in 2012 and fully sold within five days. It comprises one- to three-bedroom units measuring 560 to 1,302 sq ft. Aurum Land is a subsidiary of Woh Hup Holdings, one of Singapore’s largest privately held construction and civil engineering companies. A 560 sq ft, one-bedroom unit was sold in March for $1.23 million ($2,203 psf).

Proliferation of boutique developments Across the road from 1919 is Mount Sophia Suites, a 50-unit freehold development by BS Capital Group. The development is also fully sold and was completed in 2010. It comprises a mix of studios, and one- and two-bedroom units measuring 366 to 721 sq ft. The most recent transaction at Mount Sophia Suites this year was in April, when a 560 sq ft, one-bedroom unit was sold for $888,000 ($1,586 psf).

There are also many small apartment and condo blocks with fewer than 20 units in the neighbourhood, including Sophia Lodge and Sophia 98. Sophia Lodge is a 15-unit freehold development by Myriad Forte Construction and completed in 2006. The project, which comprises mainly two- and three-bedroom apartments measuring 861 to 1,173 sq ft, is fully sold. A 1,001 sq ft, three-bedroom unit was sold in October 2016 for $1.48 million ($1,478 psf).

Meanwhile, Sophia 98 is a 16-unit development by City Developments that was fully sold and completed in 2002. The development comprises a mix of studios and two-bedroom units measuring 592 to 1,539 sq ft. A 1,399 sq ft, two-bedroom unit was sold in May for $1.7 million ($1,218 psf).

There are still several old freehold developments in the Mount Sophia neighbourhood, which Khoo says “has collective sale potential”. One such development is Casa Sophia, a freehold condo completed in 1996. The units are mainly three-bedroom units measuring 1,152 to 1,453 sq ft. The last transaction in the development was 10 years ago in July 2007, when a 1,152 sq ft unit was sold for $630,000 ($547 psf).