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!

New Launch Review: The Tapestry @ Tampines

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The long-awaited blockbuster new launch of the year is finally coming! The Tapestry, a 861-unit condominium developed by City Developments, is due to launch this coming weekend!

Is The Tapestry a good place to call home? Is The Tapestry a good investment? Should you be bringing your cheque book down to the launch this weekend?

Let us explore more below.

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A Well-established Location for Private Housing

The location of The Tapestry needs no further introduction. The Tapestry is located along Tampines Ave 10 and close to Bedok Reservoir. Around the area, there are already 5 private condominiums and 1 executive condominium. This area is a well-established location for private housing. In the area, we can find plenty of schools – Primary, Secondary, Polytechnic and International School. Neighborhood retail amenities at Tampines Street 81 is a short 10-min walk away. The nearby retail warehouses – Ikea, Courts and Giant are just 6 min drive away from The Tapestry. For outdoor lovers, the Bedok Reservoir is also approximately 10-min walk away from The Tapestry.

The empty plot of land across the road along Tampines Industrial Ave 2 is zoned for future industrial development. The Tapestry is probably the last plot of land in the area that is left for private condominium development. There is another plot of land along Tampines Ave 10, beside United World College but this land is zoned for Executive Condominium development. Tender for this land will be held in May 2018 and this future EC is likely to be launched only in mid-2019.

The nearest MRT Station that serves this area is the Tampines West MRT Station that connects to the Downtown Line, but it will take 20-min to get there by foot. Nonetheless, the well-connected road network allows residents to access to different parts of Singapore easily. Tampines Ave 10 serves as a major arterial road that connects to TPE (towards the East) and PIE via Bedok North Road (towards the West).

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What are the strength and weakness of the Condominium?

Strength

  • A well-designed project that caters to market demand
  • Well-established location for private housing
  • Plenty of schools in the area – Primary, Secondary, Temasek Polytechnic, United World College
  • Neighborhood retail amenities and large retail warehouses – Ikea, Courts and Giant nearby
  • Probably the last site in the area for private condominium
  • Bedok Reservoir is nearby for recreational activities
  • Low entry price point
  • Developed by CDL – the top developer in CONQUAS ranking
  • Constructed by Woh Hup – the top contractor in CONQUAS ranking

 Weakness

  • Long walking distance to MRT station
  • Lack of a shopping mall in the area

 

Developed by CDL, Build by Woh Hup, Quality can be assured

The Tapestry is developed by one of the biggest developers in Singapore – City Developments Ltd. CDL has been ranked as the top developer in Singapore under the Construction Quality Assessment System (CONQUAS) developed by the Building and Construction Authority of Singapore (BCA). CONQUAS assesses the quality of workmanship in structural works, architectural works, and mechanical and electrical works, by sampling a representative number of units in a housing development. Several of CDL’s projects such as The Glyndebourne, Tree House, Nouvel 18 and Hundred Trees are also rated among the top projects in Singapore, in terms of construction quality.

The main contractor for The Tapestry is Woh Hup. Woh Hup is a highly reputable construction firm and it has also been ranked as the top contractor under CONQUAS.

At The Tapestry, buyers can be assured that they are getting a condominium of high quality.

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Analysis of Surrounding Condos

In the area, there are already 5 private condominiums and 1 executive condominium.

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The unit distribution of these developments is shown in the table below, with some of my observations.

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  • There is a total of 3,660 units in this area from 6 projects, including The Alps which is still under construction
  • Majority of the units in the area are 2-Bedroom and 3-Bedroom units. There are 1,095 units of 2-Bedroom and 2+Study apartments, i.e. 30% of the total units in the area. There are 1,598 units of 3-Bedroom and 3+Study apartments, i.e. 44% of the total units in the area
  • There are only 472 units of 1-Bedroom and 1+Study apartments in the area, i.e. 13% of the total units in the area. These units are typically bought for investment purposes
  • This doesn’t come as a surprise since the developments here primarily target the HDB upgraders’ market and families and hence developers tend to build bigger units

 

Site Plan and Unit Distribution

Below is my review of the site plan:

  • Most of the blocks are at least 30 m apart from each other
  • Car entry is via Tampines Street 86
  • The inwards pool facing units are the most premium units
  • A lot of landscaping, pools and facilities surrounding the entire development
  • The smaller 1-BR/1+S units are all located at Blk 51 and 61 that are nearer to Tampines Street 86
  • Bin Centre and Substation are located beside Blk 51
  • There will be a future place of worship beside Blk 51
  • Carpark ingress and egress are also located next to Blk 51
  • CDL has cleverly put the small units in Blk 51, knowing that the small units are sellable despite the ‘negative’ attributes of the block location
  • Majority of the units do not have issues with the evening sun. Units along Tampines Ave 10 will receive some evening at an angle, but these units do enjoy an unblock view towards Tampines Quarry

Site Plan

Looking at the unit mix and sizes table below, The Tapestry has a higher proportion of the smaller 1-BR, 1+S and 2-BR units and smaller proportion of the bigger 3/4/5-BR units than the other projects in the area. This is probably to fill the shortfall gap of these smaller units in the area. The developers for the older condominiums such as Tropica, Waterview and Q Bay built a lot more of the bigger 3/4/5-BR units in the area. CDL is targeting the segment that has been underserved with pent-up demand.

unit mix

Unit Layout Review

After comparing the different unit layouts at The Tapestry against the other surrounding projects’ layouts, my conclusion is that the developer CDL has made the effort to study and understand the other condominiums in the vicinity and then design a project to offer unique design, layout and sizes that are lacking in the area. All in all, CDL has put in the effort to make sure that The Tapestry can meet the requirements of buyers and offers what other surrounding condominiums can’t provide.

Below is a review of the various typical layouts at The Tapestry:

1BR

1+S

2BR

2BRP

3BR

3BRP

4BR

5BRDK

 

Pricing

Indicative pricing for The Tapestry is listed in the table below:

The-Tapestry-Price-and-Maintenance-Fee

You might think that pricing at The Tapestry does not look cheap. But if we consider the recent land sale prices in the collective sales market, I would think that The Tapestry is fairly priced.

Among the surrounding condominium developments, the supply in the secondary market is low. Santorini and The Alps were launched in 2015 and 2016 respectively and buyers of these projects are still under the 4-year seller stamp duty restriction period. Other projects like Waterview and Q Bay tend to have bigger units and hence, higher price quantum. The Tapestry would probably appeal to buyers who are focusing on affordability and the price quantum of a unit.

Moreover, the Tapestry is the last private condominium in the area (excluding the EC land that will be launched later this year). This might be the last chance for someone who wants to buy an affordable unit in the area.

CDL is also generous in its fittings. The list of definitely looks impressive and gives buyers a feeling of good value for money:

  • Wireless SMART Home System
    • 1 smart home gateway with built-in IP camera
    • 1 smart home voice assistant
    • 1 digital lockset
    • 1 main door sensor
    • 1 lighting control
    • 2 air conditioner controls
  • Haiku designer ceiling fan
  • Teka Cooker Hood
  • Hob
  • Oven (Teka combi steam oven for 4/5 BR)
  • Refrigerator
  • Washer Dryer
  • Kitchen and Bathroom wares from Grohe and Duravit

 

Early buyers of The Tapestry to benefit from Sim Lian’s Tampines Court project

After the launch of The Tapestry, we might have to wait for another 1 to 2 years for the next condominium launch in Tampines to happen – Sim Lian’s Tampines Court project.

According to a report from DBS, the estimated breakeven selling price for Sim Lian’s project is around S$1,160 psf, higher than the estimated breakeven selling price of S$1,065 psf for The Tapestry. This would probably mean that Sim Lian is likely to launch the Tampines Court project at a higher price than The Tapestry. It may be around 9% higher if we compare the difference in the breakeven price for the 2 projects. If there is no major shock to the property market within the next 2 years, we can expect buyers of The Tapestry to benefit from a paper gain when the Tampines Court project launches.

 

Why you should keep a close watch on The Tapestry launch

You might not be interested in The Tapestry. But nonetheless, it is important to keep a close watch on the pricing and sales performance of The Tapestry. Why?

Singapore residential property market has been overly-hyped up by all the media reports on enbloc deals, recovering residential prices and rentals. The expectation of a strong pick-up in the residential market has already been set in the mind of property buyers. Now it is the time to see whether this expectation translates to actual property sales transactions.

The Tapestry is the first major new project launch in 2018 and this project should be a bellwether of the Singapore property market, particularly the mass market segment, for the year ahead.

 

To find out whether the 1-Bedroom and 1+Study units are good for investment, please continue reading by clicking this link!