Are CCR properties still worth buying?
By PropNex Research
Artist Impression: Irwell Hill Residences
High-end homes in the Core Central Region (CCR), commonly thought of as the crème de la crème of the non-landed residential market has weathered the pandemic storm of 2020 more resiliently than perhaps expected.
Going by the Urban Redevelopment Authority’s property price index, CCR non-landed private home prices slipped by 0.4% from 2019 to 2020 – a commendable performance compared to the decline of 5.6% in 2008 when the Global Financial Crisis hit.
Despite holding up fairly well in 2020, the CCR sub-market did face headwinds with tighter border measures restricting foreign demand for luxury homes. However, the market sentiment has vastly improved since the second half of 2020, with the more positive economic outlook and the COVID-19 vaccination programme kindling hopes of the re-opening of borders and further recovery.
Having shrugged off a challenging 2020, the CCR should find some support this year, with a several new projects in District 7, 9, and 10 being slated for launch in 2021. For those thinking of buying a CCR property, do consider some of the factors below.
With the weight of the pandemic felt more keenly on the high-end market, the CCR was the only sub-market that posted a price decline in 2020, while the Rest of Central and Outside Central Region saw home values rose by 4.7% and 3.2% respectively last year.
Going by the URA property price index, the CCR had the most modest price increase of the three sub-markets after the 2008/09 Global Financial Crisis. Private home prices in the CCR climbed by 9.2% between Q1 2010 to Q4 2020, compared with 20% in the RCR and 46% in the OCR.
The fact that prices are rising at a slower pace in the CCR is not surprising given that the segment was likely more heavily affected by the various rounds of cooling measures since 2009, especially the higher additional buyer’s stamp duty on foreign buyers. In addition, the CCR being a prime segment with luxury projects also has a smaller demand base compared to more affordable sub-markets.
Amid the pandemic, many buyers saw an opportunity to enter the high-end private home market. For instance, 522-unit The M at Middle Road and 378-unit KOPAR At Newton – which were launched in early 2020 – were both well sough-after given their attractive pricing. The two projects are now completely sold-out about a year after they hit the market.
Other CCR developments that garnered healthy buying interest last year included Fourth Avenue Residences, Leedon Green, and The Avenir. In fact, developers sold 1,260 new homes in the CCR in 2020, one of the strongest annual sales in recent years.
In 2020, the average transacted prices in the CCR was $2,562 psf, lower than the $2,819 psf in 2019. As recovery gets underway and market confidence improves, CCR prices have also started to see some gains in the early months of 2021. In view of some attractive upcoming launches, CCR prices will likely be more resilient this year, with potential for a slight uptick.
About 2,000 new CCR private homes could likely be put on the market this year. Some notable CCR launches in 2021 include: Midtown Modern in downtown Bugis; freehold The Atelier in Newton; Irwell Hill Residences near Orchard Road; freehold Perfect Ten in Bukit Timah Road; freehold KLIMT Cairnhill; and One Bernam in the central business district.
Developers are likely to adopt a sensitive pricing strategy in order to generate sales momentum for the new launches. Contact PropNex agents to get the latest updates on the new projects in order not to miss out on potential buying opportunities.
Based on market observations, Singapore remains an investment magnet, with foreign buyers citing that they see the Republic as a safe place to park their funds, particularly amid market uncertainties. Singapore’s effective handling of the pandemic also further solidifies the country’s reputation as an investment safe haven.
With global capital searching for investment opportunities, Singapore is a strong contender to attract investors given its sound fundamentals such as political stability, safety, transparent regulatory framework, good infrastructure, and its pro-business policies.
Another point to note is that the prices of sizeable luxury apartments in a central location in Singapore are still relatively cheaper compared to many other Asian gateway cities. The more attractive pricing could help to mitigate the ABSD payment for many foreign investors.
With the global COVID-19 vaccination programme in progress, it is hoped that the travel restrictions could be relaxed, paving the way for more investors to return later this year, which will likely prop up demand for CCR homes.