Property Review of Sengkang Grand Residences (Part 2) – Price analysis

Indicative price guides for Sengkang Grand Residences are now available! They say the prices are incredibly attractive. Don’t just take their word for it. Let’s check it out!

How does the pricing for Sengkang Grand Residences compare against the surrounding condos?

Let us take a look at the resale prices that neighbouring condos are commanding, based on the caveats lodged this year for Esparina Residences, Jewel@Buangkok and The Quartz.

By comparing with the neighbouring condos based on similar sizes, Sengkang Grand Residences is being priced at a 19% to 45% premium!

Does it mean that Sengkang Grand Residences is a bad investment or bad purchase for own stay?

Coming to this question, most agents will probably sell you the story of how great an integrated development is or how good the developers - Capitaland and City Developments are. But I would prefer to look at empirical evidence and data to make a judgement.

Looking at the historical data of mixed use integrated condo launches, there is evidence pointing towards a premium in pricing of integrated developments over other surrounding condos.

Watertown at Punggol Central, which was completed in 2017, would be a good case study given that the year of completion of its surrounding condos such as A Treasure Trove and Parc Centros were quite close. The premium in pricing of Watertown over A Treasure Trove for 2 Bedroom types is 16% and for 3 Bedroom types is 31%. The premium in pricing of Watertown over Parc Centros for 1 Bedroom types is 4%, 2 Bedroom types is 17% and for 3 Bedroom types is 12%.

Take Poiz Residences at Potong Pasir as another example. The development is integrated with the MRT station but there is no bus interchange. The nearby condos are Nin Residence and Sennett Residence.

The premium in pricing of Poiz Residences over Nin Residence for 2 Bedroom types is 27% and for 3 Bedroom types is 31%. The premium in pricing of Poiz Residences over Sennett Residence for 2 Bedroom types is 21% and for 3 Bedroom types is 9%.

So is this premium sustainable over the long run? The above analysis of price premiums is based on transactions over the last five years. Hence, it would be safe to say historical data shows that such premiums of mixed use integrated developments remain over time.

Investment perspective

For those who are buying for investments, mixed use integrated developments also tend to command better rental rates in comparison to surrounding condos. Tenants are willing to pay a premium for the convenience, especially when they do not have the luxury of owning their own vehicles. Finding tenants is also relatively easier for integrated developments due to their unique value propositions.

An intangible benefit of owning a mixed use integrated condominium is the ease of selling in future. In the vicinity, you have no competition. Someone looking for the convenience of an integrated development in Buangkok can only turn to Sengkang Grand Residences, and no other condo. On the other hand, owners of Jewel, Esparina and Quartz will be competing with each other for potential buyers.

Moving beyond Buangkok vicinity, pricing of Sengkang Grand Residences would look more palatable to buyers if we compare against other recent new launches in District 19. For instance, based on caveats lodged in September, the units at The Garden Residences went for as high as S$1,708 psf for a 797sqf unit. Affinity at Serangoon achieved a maximum of S$1,696psf and while The Florence Residences achieved S$1,625psf. Stand-alone condo developments such as this are not linked to any MRT station/bus interchange or a comprehensive amenity hub at the moment.

Compared to other new mixed-use developments like Woodleigh Residences, which had achieved an average price of S$1,848 psf, the indicative prices of Sengkang Grand Residences look cheap. Woodleigh Residences achieved a maximum price of S$2,331 psf while neighbouring Park Colonial achieved S$2,062 psf. One may argue that Woodleigh is of closer proximity to city centre than Buangkok. But is paying a premium of S$400 to S$700 psf justifiable for a distance of four MRT stop difference? This is something to ponder over.

Is today’s High..Tomorrow’s Bargain?

One must not forget about the impact of land cost on property prices. Take a look at the Potong Pasir area - Poiz Residences was bought at a land cost of S$775 psfppr. Launched in 2015Q4, the project achieved an average selling price of S$1,423 psf. The Tre Ver, whose land cost was S$797psf, was launched in 2018Q3 and achieved an average price of S$1,587psf. Park Colonial’s land cost was S$1,110 psfppr and it launched in 2018Q3 at an average of S$1,757 psf. Finally, Woodleigh Residences, whose land cost was S$1,181 psfppr achieved average price of S$1,886.

Is today’s High..Tomorrow’s Bargain? History tells us a lot.

269 views0 comments