This write-up was reproduced with permission from Ray’s Estate Clinic, written by Founder, Raymond Chng. Please refer to the end of the article for more information on Raymond.
There is rarely a time where we think a new condominium is almost a perfect 10, we think we finally found the one. This is one for both visionary homeowners and investors who would like to participate in two of Singapore’s most ambitious masterplan which we will elaborate further in the article.
Sustainable desirability is an important trait that has to be built from the beginning and we believe that the condo will stand the test of time. The new lifestyle, amenities and infrastructure collectively contributes to livability of the neighborhood.
Introducing, Avenue South Residence, The Skyscraper for Keppel+ Visionaries.
Now you may be wondering what is Keppel+?
Keppel+ is our one-word description of a cluster of neighborhoods that will benefit from the Singapore Government’s Plans for the regeneration of Sentosa and development of the main section (centre) of Greater Southern Waterfront (GSW). This is an exciting cluster because the desirability of visiting, working and living in this area will increase many folds. We will show you where Keppel+ is below.
Where is Keppel+?
Image 1: Keppel+ Radius, Source: Streetdirectory
Keppel+ consists of the a few neighborhoods, Sentosa Island, Keppel Bay, Telok Blangah, Cantonment and stretches towards Tanjong Pagar. Each neighborhood in Keppel+ will cater to buyers with different needs and desires.
Image 2: Keppel+ Overview, Source: Streetdirectory
Here is a bird’s eye view of Keppel+.
Where is Avenue South Residence?
The property is located in the heart of Cantonment. When the Cantonment MRT (Circle Line) is completed in 2025, Avenue South Residence will be just 8 minutes’ walk away.
Image 3: Avenue South Residence Location, Source: UOL, Screengrab from Brochure
Cantonment is a really significant neighborhood in Singapore’s next growth phase because it is at the center of the GSW Masterplan. There is also rich history about the land in which Cantonment MRT sits on. Our Singapore Government managed to negotiate a deal with Malaysian Government in 2013 to return ownership of the land back to Singapore in a historic Land Swap deal (which you can read further on via Straits Times).
Image 4: Timeline of Circle line, Land swap and Cantonment Growth, Source: ST and various sources
We believe the deal enabled GSW Masterplan to come to life in full force because the final stage (stage 6) of the circle line could finally proceed.
Before any big Masterplan can be implemented, infrastructure development starts the ball rolling, in this case, it was Cantonment MRT (old KTM Railway Station). The land swap deal also enabled Singapore to concurrently kick start another Masterplan, the regeneration and development of Railway Corridor. We will elaborate on the Rail Corridor later in the article.
Image 5: Rail Corridor Masterplan, Source: ST (Published 9th Nov 2015)
Our Thoughts on Avenue South Residence
While we think that this is the almost perfect condo, there are pros and cons for the property. We like to analyse properties without emotion (although at times you would buy based on how your feel), this removes the guess work, inconsistencies and bias. Before we go through the factors, please note that this should be only used as a reference and the content here is purely our own personal opinion and views only.
With that out of the way, here we go! We will start with our 8-factor model.
A look into Avenue South Residence with our 8-factor model
1. Is this property undervalued (is there a mismatch in price)?
Image 6: Selected new launch PSF price, Source: Various sources including Edgeprop, URA, Edited by: REC
To determine if there is a mismatch in price for a new property, an apple to apple comparison has to be made (new to new). We input some comparable new properties on the map and take properties in other areas to see where the pricing of Avenue South Residence stand. What is interesting in particular is Jadescape and Sengkang Grand, their selling prices for selected units have hit around $1900 and $1800 PSF respectively.
Let us take a look at Woodleigh Residences where prices are around $2000 PSF, while One Holland Village has some units selling at $3000 PSF. While some units at Avenue South Residence are going for +/- $2100 PSF. Avenue South Residence is within very close proximity to the CBD, Keppel Bay and near the Greater Southern Waterfront Masterplan, and at a price point of $2100 PSF range, we think it is attractive.
On the other hand, properties inside the CBD like Wallich Residences managed to transact units at up to $3800 PSF. Not too far away, at middle road, there are new properties transacting in the range of $2500 to $3000 PSF. This gives hope that the future of Avenue South Residence is positive as at $2100 PSF range, there could still be room to move higher.
2. Is there a strong Masterplan to boost infrastructure?
Image 7: Artist impression of new masterplan within the area, Source: Various sources
Within a 10-minute drive radius, there are various new infrastructures that will improve the area. You can see the various improvements and masterplan that will elevate the potential of Avenue South Residence’s surroundings. Image 7 above is self-explanatory.
Image 8: Showcase of masterplan near Avenue South Residences, Collated by: REC
Here is another image to show you where are the masterplans relative to Avenue South Residence’s location.
3. Is there future land available for development?
Image 9: Showcase of future land available near Avenue South Residences, Collated by: REC
A quick check in the URA masterplan shows that there are future lands for residential development (indicated as future development). Although this plot of residential land is still subject to detailed planning, it is most probable that the land will be private residential development.
If future residential land is sold at higher prices compared to Avenue South Residence, the developer of the new property is likely to sell at a higher price than Avenue South Residence. As a consequence, residents at Avenue South Residence may benefit as their property value may revise upwards (there are numerous past examples of this happening).
Image 10: Tenant and Buyer potential, Source: Various sources, ST, BT, FT, UOL, Collated by: REC
4. Will there be future tenants and owners?
Understanding who are your future tenants and buyers will allow you to plan your exit strategy and identify if there will be tenants for your property.
Avenue South Residences is located close to the CBD, where Alibaba’s HQ is located at. Dyson’s new Global HQ will move to St James Power Station, just nearby as well. Although these are just 2 examples of large company’s moving their HQ into the area, it shows there will continue to be demand for office spaces in the surrounding areas, and therefore rental demand from expats.
Investors will also be pleased that there is a growing presence of FinTech and Blockchain companies they are increasingly calling Singapore’s CBD home, this is another group of well-paid expats that will most likely be staying around the area and Avenue South Residence is probably a good choice.
On the other hand, will there be home buyers looking to move into Avenue South Residence after it obtains TOP? We believe so. With the rail corridor being refreshed, living near the rail corridor would be like living beside New York High Park (it’s quite popular), having a green corridor just beside your condominium has its plus points due to the increasing trend towards living around greenery.
There are close to 3,800 HDB BTO flats in Queenstown and Bukit Merah that obtained their MOP in 2019 and another 5,072 in 2020 and 2021 (based on BTO completion date 2015 and 2016). HDB upgraders have been the bulk of new home buyers, this trend is likely to continue. We believe that the completion of rail corridor and cantonment MRT will improve the livability and sustainable demand in future.
Although there will be other property choices for HDB upgraders to consider, we believe Avenue South Residences will put up a good fight, we will discuss more later.
5. Is the property in a low supply zone?
If there is a single high probability reason why a new launch property would do well, this probably be one of the factors, it is also because not many new properties are in such an area.
If the new launch property does not have a large number of properties surrounding it, the probability of price appreciation is higher, especially if future demand for the property is highly probable. The premise is that there is less competition in the area for the same number of buyers.
Let us examine.
Image 11: Properties around Avenue South Residence, Source: Edgeprop, URA, Collated by: REC
There are four other properties surrounding the cantonment MRT, of which Sky Everton is another new launch property. There is not a large number of properties currently in the area (for example, more than seven properties), the probability of having price appreciation is fair. In addition, we also believe that Avenue South Residence is in a league of its own due to its overall architecture and built, which we will look into detail later.
Let us look at an example of a profitable new property that is within low supply zone.
Image 12: Thomson Three Performance, Source: Edgeprop, URA, Collated by: REC
There are three other properties in the vicinity, namely Thomson Ville, Thomson 11 and The Windsor, as seen in Image 11, property buyers who bought this new launch were profitable after its TOP. While there may be other reasons for the profitability of Thomson Three, we would attribute one of the reasons to the development being in a low supply zone.
6. Is the floorplan desirable?
If there is anything that would be a deal breaker for your future buyer, it is likely the layout of the unit. While there will always be a buyer for unique units, there will be many buyers for a good unit with a good layout. Let us examine starting with the 1-bedroom units.
Image 13: Floorplans of one bedroom options, Source: Various developer brochures, Collated by: REC
Let’s look at the floorplans for the top 3 properties, they are all currently resale properties. We think that Avenue South Residence has the most efficient layout of them all. If you would like to have the only bathroom accessible by your guest without going through your bedroom, only Avenue South Residences and Sky Everton are designed for that.
All three of the resale properties at Spottisewoode have bomb shelters, which is good if you need a designated space for storage, the downside is that it eats into the living spaces.
For balcony lovers, spottisewoode residences would be a good choice, however, do you really need such a large balcony?
Both Sky Everton and Avenue South Residence has sizable bedrooms, balcony and bathrooms with 2 entrances. The difference is the space at the entrance walkway, Avenue South Residence has a wider space. Out of all of the floorplans, we prefer Avenue South Residence because of its clever space planning that creates a balanced amount of space in every corner of the unit.
Image 14: Floorplans of two bedroom options, Source: Various developer brochures, Collated by: REC
Similar to the 1-bedroom floorplan comparison, the older resale properties in the vicinity may not have the most space efficient floorplan. On the other hand, the newer “dumbbell” layout is a good floorplan for an investor or a home buyer because of the added privacy you get with the bedrooms opposite each other. We believe that the better floorplans here are both Sky Everton and Avenue South Residence, however there is a small difference at the entrance of the unit, the latter has an unblocked walkway into the living room while the former has a slightly smaller walkway into the living room. You be the judge, but similarly, Avenue South Residence’s layout is better here.
Image 15: Floorplans of three bedroom options, Source: Various developer brochures, Collated by: REC
Only 4 of the 5 properties in the cluster have 3 bedrooms. Sky Everton has a private lift for their 3 bedroom layout which is nice if you like a private lift, the downside is that you will need to pay for the “wasted” space that you will not utilize often.
A look at Spottisewoode Residences’s 3 bedroom floorplan tells you that it suits a balcony lover, of course due to its large size, it has an average price tag of $2.7 million, a 3 bedroom unit at Spottisewoode Residences would be about $400k and $700k higher than the standard unit at Sky Everton and Avenue South Residence respectively. Spottisewoode Suite’s 3 bedroom unit is compact, so unless you are comfortable with the smaller size, we prefer Sky Everton and Avenue South Residence’s floorplan here.
If you prefer a balanced floorplan with a good amount of space at every corner of your unit, Avenue South Residence is a good choice, while if you have always dreamt of having a private lift, Sky Everton would be the one.
While we recognize the fact that everyone has different preferences, there are some timeless layout that suits the majority of buyers even decades later. You have to make that judgement when purchasing a unit, but no one will reject a unit with a good layout.
7. Current Demand
Since the launch (Sep 2019) of Avenue South Residence, the developer, UOL has sold 472 units (URA data as of 20th May 2020). This represents 44% of the 1074 total units in this development over an 8-month period, a relatively strong performance compared to other new properties launch during the same period.
8. New – Resale Price Gap
Image 16: 1- year Price comparison of 5 projects, Source: Edgeprop, Collated by: REC
Comparing the average price of Avenue South Residence and Sky Everton, Sky Everton has a premium of ~30%. While Avenue South Residence is the only 99-year leasehold property amongst the 5 projects, the premium of a freehold vs leasehold property should definitely not 30%, the number should be around 10% +/- on average.
Looking at the price gap between the three resale properties nearby, Avenue South Residence doesn’t have a premium over them. Due to being a 99-year property, having no premium compared to the nearby freehold property may not be a direct apple to apple comparison, so let’s just put a 10% premium on the price (which still means the price is fair).
If we look at it in another angle, we take the price of Avenue South Residence to be at an average price of $2100 PSF for mid floor units, the property would still be at a 21.7% discount to Sky Everton and only about 5% premium from the surrounding average resale price ($2000 PSF).
Avenue South Residence has passed the test of the New-Resale Price Gap because the premium of Avenue South Residence is between 5% to 15% mark (below the 20% average), depending on the numbers you use to analyze the property.
Things you may not like about this property
For home buyers who require a condominium that is less than 5-minutes walk from an MRT, this is not the project for you. The Cantonment MRT which will only be ready in 2025 (around 1.5 years after expected TOP of the condo) will be roughly an 8-minutes walk away. On a positive note, you can choose to walk to the Cantonment MRT via the rail corridor which should be a nice experience.
As written in a previous article, when buying a condo project within a growth area, expect construction to be the only constant in the area (think dust, noise and dirt during the day). While a handful of property buyers embrace construction knowing that the property cluster will be enhanced (think marina bay), others may not think the same way. Hence, this might not be a project for property buyers that cannot accept construction nearby.
Image 17: Cantonment Property Prices from 2010, Source: Edgeprop
If this chart tells us something, it would be the 3 resale properties at Spottiswoode has gone nowhere since their 2010 to 2013 launch. Amongst other reasons, one of the reasons for this lackluster price movement could also be attributed to the less desirable layout of most of the resale units there.
Image 18: Cantonment Property Selection, Sources: Various Developers, Collated: REC
Will the next decade offer a different fate for this laggard cluster? There certainly is a high probability of cluster rotation into this property cluster. The question is which property suits you better?
If we had to pick, Avenue South Residence would be the choice. We won’t bore you with all the property details in the brochure but here is a summary. A property with seamless landscape design with the rail corridor, facilities your friends wish they had, timeless floorplan layout and most importantly, located at the most ambitious and important masterplan area for Singapore. The Skyscraper for Keppel+ Visionaires.
As always, if you would like to discuss further about the contents of this article, will be happy to be in touch.
About the Author
Ray’s Estate Clinic (REC), founded by Raymond Chng, is a platform for Investors’ and homeowners to have a Property Portfolio Health Check by utilizing data analytics, ensuring that their portfolio remains healthy providing optimized returns.
“Health is Wealth” is what Raymond believes in, and it is not related only to your own body’s health, but it also refers to one’s financial health. Having a Property Portfolio that is not performing does not help improve an investor’s wealth. Hence, converting non-performing assets into optimized performing assets is essential to portfolio’s health improvement.
Raymond can be reached at firstname.lastname@example.org. Do visit his blog HERE for more information.
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