Advertisements

Singapore Property Kaki

A place for sharing property, investments and financial management ideas among kakis

New Launch Review: Are the 1-BR and 1+S at The Tapestry good for investment?

Tampines Avenue 10 is already a well-established private residential area, well served with a neighborhood retail centre near Tampines West Community Club, schools, and recreational areas (Bedok Reservoir). SRX has done a very nice drone video of the area:

And at such attractive price point, there is no doubt that The Tapestry will appeal to families who are looking to upgrade from HDB to a private condominium.

What about for investment? The absence of MRT and shopping centre within short walking distance may make the idea of buying a unit there for investment questionable. There might not be a big catchment for tenants here given that there is only an industrial area nearby. But it might surprise you that the 1-Bedroom and 1+Study units of the completed developments in the area are doing decently well in terms of rental demand and yield.

Rental

The table above shows the number of rental contracts and average rental rates of the condominium in the area from January 2017 to January 2018. This information has been extracted from URA. Do note that under URA’s classification, a 1+Study unit is also considered as a 1-Bedroom unit.

It is to my surprise that there is a good demand for 1-Bedroom and 1+Study units in the area. During the period, there were 110 units rented out, which translates to 38% of the existing completed stock of 1-Bedroom and 1+Study unit in the area. 2-Bedroom units seem to be more popular, with 177 units rented out during the same period, but as a % of the existing completed stock of 2-Bedroom unit in the area, the number of units rented out is 21%, less than that of the 1-Bedroom unit.

Moreover, there are only 472 units of 1-Bedroom and 1+Study apartments in the area, whereas, for 2-bedroom units, there are a total of 1,095 units in the area. With healthy rental demand and less competition among 1-Bedroom and 1+Study units in the area, it looks like 1-Bedroom and 1+Study at The Tapestry are good investment choices.

1 Bedroom and 1+Study units command an average rental of around S$1,750 per month. This translates to a gross rental yield of 3.5% based on the starting prices of S$600,000 for 1-Bedroom units at The Tapestry. This gross yield is considered decent and in line with the yield in the property market today. As market experts are anticipating rentals to bottom-out and recover this year, The Tapestry could potentially enjoy a better rental yield by the time it achieves TOP.

 

What are the available 1-Bedroom and 1+Study in the area?

Out of the existing 6 condominium developments in the area, only 3 developments – Q Bay, The Santorini and The Alps, offer 1-bedroom and 1-Bedroom+Study units targeting the property investor market. I estimate that only approximately 13% or 472 out of the 3,660 units in the 6 developments are 1-BR and 1+S units. Developers had generally positioned their developments to capture the upgrader’s market in the Tampines area and hence, unit sizes tend to be bigger to cater for families. The property investment market is under-served in this area.

Let us take a look at what are the 1-BR and 1+Study options in this area for investment:

 

Q Bay

Q Bay offers 78 units of 1-BR and 47 units of 1+Study, out of a total 630 units in the project. Typical size of a 1-BR unit is 527 sq ft and 1+Study is 517 sq ft. Personally, I like the layout of the 1-BR and 1+Study units at Q Bay as they are very efficient with minimal space wastage and no unnecessarily big air-con ledges and balconies. They are of a very comfortable size for own-stay but in today’s context, the sizes are considered ‘big’ as typical unit sizes of 1-BR and 1+Study have shrunk to 500 sq ft and below in the new norm.

The per square foot price of a 1-BR and 1+Study at Q Bay ranges from S$1,200 psf to S$1,300 psf in today’s market. Even though it may be cheaper than The Tapestry on a per square foot basis, but due to the bigger unit size, it might cost a buyer as much as S$50,000 more to buy a 1-BR or 1+Study at Q Bay instead of The Tapestry. I would expect the incremental rental income from the bigger unit size to be minimal, if not, none at all, since tenants in this area are likely to be middle management level without a big budget for accommodation.

Qbay

 

The Santorini

There are 165 1-BR units at The Santorini, out of the total 597 units in the entire development. The typical size of a 1-BR unit is 463 sq ft (open kitchen concept) and 527 sq ft (enclose kitchen concept). In terms of layout, the smaller 1-BR unit layout is typical of most 1-BR, but this layout comes with a long and narrow balcony that runs from living room to the bedroom, meaning that the actual usable area is much lesser.

For the bigger 1-BR unit, having an enclosed kitchen differentiates this unit from the rest of the 1-BR in the market. But one might question if there is really a need for an enclosed kitchen in a 1-BR unit. I feel that the developer could have tweaked the internal layout and design the existing kitchen area as a study room and have an open concept kitchen outside. That might have made the unit look more attractive to me. Just like the smaller 1-BR unit, this bigger unit also comes with a big balcony. And this unit also comes with 2 aircon ledges and a small planter on the balcony. Hence, the actual usable area will also be significantly lesser than the strata area.

In terms of pricing, the 1-BR units were sold at S$1,150 psf to S$1,200 psf on average during the initial launch and the price quantum is in the range of S$550,000 to S$650,000 per unit for most of the units. This was the pricing 2-3 years ago during the launch of the project. There aren’t any transactions made for 1-BR units during last half year. The current asking price for the 1-BR units on PropertyGuru is around S$1,250 psf to S$1,300 psf. The big sizes of the balcony and aircon ledge in the units should be taken into consideration when comparing the prices of the 1-BR units in the area.

Sant

The Alps

The Alps has 56 units of 1-BR apartments and 126 units of 1+Study apartments. There are more 1+Study units in The Alps, probably because the developer – MCC Land took into consideration that its earlier project The Santorini did not have any 1+Study units when designing The Alps. The typical size of a 1-BR unit at The Alps is 441 sq ft to 463 sq ft (with a long living room). The typical size of a 1+Study unit is 506 sq ft.

Without much surprises, the 1-BR and 1+Study units do come with big aircon ledge that runs across the entire bedroom’s window width and the balcony seems to be almost 75% of the size of the living room. This point about a high proportion of non-useable balcony and aircon ledge spaces is something that I point out earlier about The Santorini, another MCC Land’s project.

The 1-Bedroom units were sold at S$1,100 psf to S$1,200 psf on average during the initial launch and the price quantum is in the range of S$500,000 to S$550,000 per unit for most of the units. The 1+Study units were also sold at S$1,100 psf to S$1,200 psf on average during the initial launch and the price quantum is in the range of S$550,000 to S$600,000 per unit for most of the units. As The Alps was only launched in 2016, buyers are subjected to the 4-year SSD rule if they had bought during the launch.

The Alps

 

Is the 1-BR and 1+Study units at The Tapestry better investments than the ones in surrounding projects?

Yes, the 1-BR units and 1+Study units at The Tapestry are considered better choices for investments for the following reasons:

  • Good affordability
  • Efficient and functional layout
  • Less area wastage from aircon ledge
  • Better preservation of value as it is developed by a renown developer
  • Comprehensive list of fittings provided – cost embedded in price and finance by mortgage, also means lower ‘upfront’ capex for renovation upon TOP, improving returns

If you missed my earlier review of The Tapestry, click here to read!

Advertisements

Categories: Property Review

Tags: , , , , , , , ,

Leave a Reply