Recently, we reviewed the landed housing performance of District 15, the city fringe area of the East Coast. Which got us thinking, if the landed market in D15 performed exceptionally well, what about its western counterpart, District 05? With D01 representing the downtown core, technically, the lower the District no. the better right? Well that is what we are about to find out.

The areas of District 05

 

 

District 05 is the coastal area in the west which has Rest of Central Region and Outside Central Region components. The towns in RCR consist of Buona Vista, Dover and Pasir Panjang. While the towns in OCR consist of Clementi and West Coast. Add them all together, that will total to this very large district.

One unique observation that we have right away, is the PSA Port area. If you have been keeping track of future developments, you would already know that this area will soon be vacated and transformed as part of the plans for the Greater Southern Waterfront. The boundaries of D05 are met by the other Districts, 03 (Alexandra/Commonwealth), 04 (Harbourfront/Telok Blangah) and 10(Holland/Bukit Timah), all of which are notable prime areas. You may be wondering, with such a prime locale, why is D05 not mentioned more often? And like every other Singaporean hunting for good buys, are there undervalued properties in this area?

Those are the exact thoughts we had before we decided to dive deeper, more on price movements a little later.

The Forces of District 05

Unlike its Eastern counterpart, D15, D05 seems to have a very well rounded and holistic array of amenities and developments. Not that D15 is a lesser being than 05 or anything. But perhaps the sheer size of D05 allows for more room to play with. To put it into perspective, D15 is like this rich cultural and historical area with a deep heritage. While D05 is this jam packed miniature version of a self-sustaining town, which we cannot really seem to find what is lacking.

D05 is especially popular amongst parents, who are notoriously known for their tenacity when it comes to the education of their children. You would not even need to move out of the district from Primary Education all the way to Post Graduation from University, with the notable schools within the district. For those who would prefer to pursue a career in Academic or Medicine, National University Hospital is right beside NUS Campus. At this point you may think that D05 is all about work and school, but just hold that thought for one moment.

For the working class, Singapore’s Research & Development hub area of one-North, PSA’s HQ and Pasir Panjang Port, the industrial area of Jalan Buroh, are all areas with consolidated workforces.

There are also 3 extensive parks for those who would prefer the leisure lifestyle, Kent Ridge Park, Hort Park and West Coast Park. There is also the Republic of Singapore Yacht Club for the more acquired leisure activities. Or if you prefer ‘travelling overseas’, Sentosa is just next door.

To sum it up, you would not even have to leave the district from the start of the work week to an activity packed weekend. Or to be more dramatic, you would not even need to leave the district from Birth if you were born in NUH. At this point, hopefully you understand our perspective on why we think that D05 offers a wider, more well rounded and holistic array of amenities and developments. With this much driving force behind the district, it would be natural to assume that prices are overvalued, but is it?

Non-Landed Residential Prices

 

 

Having many non-residential developments in the district also means that the residential developments would be rather scattered, which is prominent in D05. Clementi and the West Coast area are more densely packed with residential developments, for those who would appreciate more amenities. Buona Vista and the Pasir Panjang area have relatively lesser developments, for those who prefer lesser crowds.

As for the prices in D05, they are relatively similar to D15 in terms of the average PSF. At the same time, it performs similarly to the neighbouring RCR district 03, both coming in at around the 55% growth rate over the last 10 years from 2011 to 2021. One unique observation that we had was that the growth rate for D15 and D10 are relatively similar, possibly attributing this lesser percentage because of the abundance of landed housing. Thus, diminishing the rental volume which is often correlated to the growth rate of a district. At the same time, potential homeowners who look to buy into these districts often prefer to stay in these districts rather than renting their units out. Additionally, district 05 and 03 are in closer proximity to commercial and industrial nodes which further increases the attractiveness for tenants who are working in these areas.

With all of the districts mentioned sharing almost the same proximity to the City Centre, connectivity is unlikely to be a differentiating factor. So, if according to what we have mentioned on the abundance of landed housing possibly affecting the growth rate of the non-landed residential houses, how is the landed market in D05 stacked up against others?

Landed Residential Prices

 

 

D05 is represented in orange, D19 in light blue and D15 is the darker blue.

Right off the chart, we can easily observe that the landed market in D15 is on a different tier or pricing with their current average PSF at $1,600. On the other hand D19 and D05 PSF prices have been similar over the years.

Overall, all three districts have performed similarly with growth rates ranging from 34% to 39%. If we were to relate this observation back to the comparison earlier in the non-landed residential market, D05 seems to have performed relatively better across all types of properties. However, in terms of availability of landed housing, D05 is likely to have lesser supply considering the abundance in the other two districts. But there are some implications on having an abundance of supply.

Highly Competitive Market

Having an abundance of supply also means that there is tougher competition when it comes to exiting the property. Consider this, if everyone in D15 and D19 were to unload their landed properties in a similar time period, how will each particular property stand out from the others? Price is one of the key factors that most consider when buying a property. All things considered, given the same condition of the landed house, the likelihood of a buyer choosing the lower priced unit is the obvious result. Hence, in a competitive market like that of D15 and D19, there is slightly more competition when selling your property. Whereas in districts with lesser supply like D05, those who want to exit in the future could benefit from lesser competition. The caveat here would be that each district would still likely have their own dedicated audiences that look to buy into that particular district and this observation is just a generalisation.

Exclusivity

Landed housing being a scarce supply has often been referred to as being available only for the select few that are able to afford the property price and maintenance costs. Hence, the clout for landed housing has always been rather exclusive. After all, to own a piece of land in this small and dense country is no small feat. However, with the level of exclusivity, naturally you would expect to have the environment that reflects that status. In some landed enclaves which are relatively dense and consolidated. The amount of traffic in these areas are also in abundance. For those who frequent these areas, waiting for several rotations of the traffic lights before being able to make a turn is not uncommon.

In contrast, the landed enclaves in D05 are scattered across the southern part of the district, consolidated in West Coast and Pasir Panjang areas, which are both relatively nearer to the coast. These enclaves have relatively easy access in and out of the areas. At the same time, because the supply of houses is not very large, the number of residents in each enclave is also reduced. Hence, they are somewhat more secluded and exclusive, accessible to even lesser selected few.

Find out more

At this point, if you are already intrigued by this booming district, we would be hosting a webinar to elaborate more. We would also be introducing some newly built landed houses that will possibly interest you.

Some quick information that you might be wondering about:

• Yes, it is free and non-obligatory

• Yes, it is about landed properties in D05

• Yes, you absolutely do not want to miss it. 

Link to webinar: PLB Insights Webinar on D5 Landed Trends and Analysis

Inter-Terraces

To elaborate further on how having a lower supply affects the landed market, we have compiled some statistics relating to the Median Prices year-on-year in D05 and D19 to portray our examples. At the same time, since Inter-terraces are usually the forefront of landed housing having the most supply and most transacted types, these types reflect the landed housing market more promptly than the semi-detached and detached houses.

One thing that both districts have in common is the current overall quantum. If you have been keeping up with our Signature Home Tour Series you would have already heard us mention that prices for inter-terraces are in the $3Mil range and our statement is derived from these transacted statistics.

One key difference between the two is the growth rate over the years. From the compiled statistics of 2016 to 2021 the growth rate of D05 has been uniform throughout with an average growth of $100K per year. However, D19 saw a spike in growth which compiled the increase of 5 years into a single year. The increase from 2016 to 2020 was about $300K and the increase from 2020 to 2021 was a similar $300K. While this increase is of course seen positively by the residents in D19, what is the reason for the sudden increase?

The Answer: Demand

Demand is often the fuel for growth in any asset. If you are a keen investor in the equities and stock market you would know that demand driven counters such as TSLA, NKE and AAPL are quite known for sudden rallies due to the increased demands for their products. The same holds true for the property market. Due to the pandemic, the sudden surge in demand for larger houses has fuelled the prices in D19. However, we have not seen this sudden surge in D05. Is D05 lagging or is it not eligible for this surge? We believe that it is more likely to be the former than the latter. Because if we reference back to the earlier Non-Landed Residential average PSF prices, we do notice the same spike increment from 2020 to 2021. Relating it back to the Landed Residential Market, we believe that prices in D05 are simply lagging because the overall quantum in D19 for 2020 was already past the $3Mil quantum. Hence, potential homeowners who were looking to enter into a landed property at a lower cost, would have their sights set on D19. However, that would also mean that prices in D19 have caught up with D05 in 2021 and that is very significant given the upcoming developments in this district.

The C4 of D05

Something in D05 is slowly brewing and it will cause a bang once the deed is done. If you have not already heard, PSA will be consolidating all their port operations in Tuas. Their current operations include Tanjong Pagar, Keppel, Pulau Brani and Pasir Panjang. The first movers are Tanjong Pagar, Keppel and Pulau Brani which will momentarily consolidate their operations at Pasir Panjang before their lease expires in 2027, till the Tuas facility is fully operational. The Pasir Panjang Port lease will expire in 2040. All PSA operations are expected to move to Tuas by then. If you know where we are headed with this, you will already understand the magnitude of the upcoming demand.

With all operations consolidating in Pasir Panjang by 2027, we would expect a surge in housing demand in D05. From now till 2040, that is another good two decades. For those who would prefer to live closer to their places of employment, D05 has more affordable housing compared to the proximity of the three other ports which are being vacated. Thus now, it would make more sense to stay nearer to work for employees of the other three ports. For those who have the luxury to dwell in a Private Housing development, Non-Landed and Landed residential properties will benefit greatly from these moves. D05 has always been popular amongst tenants due to the proximity to the city centre, the coast and the abundance of amenities in the area. Notable companies that some of these tenants might be employed under, include Google, Unilever and Cisco, which are all housing in Mapletree Business City. The tenant pool will only grow with the consolidation of PSA’s operation being consolidated in Pasir Panjang. As the rental demand grows, it would only be natural for rental prices to increase in tandem with the demand. And as the rental prices increase, this will translate into capital appreciation for owners in D05 as more investors take notice of this transition.

At this point, you will probably be wondering, does that mean that if I choose to invest in D05 or to buy a unit, my investment or capital growth will cease when PSA moves out of Pasir Panjang in 2040?

The Crystal Ball

While we do not have an actual crystal ball, we have the benefit of precedence. Keppel and Tanjong Pagar are some of the first movers which will free up space for redevelopments. There are already plans to increase the number of houses in the Keppel area including Public Housing (HDB). This is significant because it allows us to understand a little more on the motivations and intentions of our Government. The purpose of adding more housing in Keppel is to allow for more residents to live nearer to the city. Public Housing seeks to provide affordable housing to those who do not have the luxury of purchasing private developments. In essence, the only thing we should be concerned about is that there will be more housing available.

Will Pasir Panjang experience a similar fate in the future? 

We believe that the probability of residential developments in that area is rather unlikely because D05 already has a good number of private and public housing. Unless there are more significant demands for housing, we believe that the 9,000 additional houses in the Keppel area will be able to sustain the demand for a few more decades. Which leads us to the golden question, since we are reviewing D05, what about Pasir Panjang? In a country where land is so scarce, our motivation to develop land is to increase the intensity of use in order to make full use of the precious land we have. With such a prime piece of land, having it occupied for only a few hours a day will be such a waste. Hence, we think that the likelihood would be for recreational or commercial facilities. These developments will seek to complement the existing residential facilities and to promote more traffic in the area in order to achieve the purpose of increasing the intensity of use of land. These developments will further increase the housing demand in the area, because it has already been proven that amenities are a prime factor when selecting housing.

Spillover Effect

Seems like in recent years, the Singapore Government has been placing a lot of emphasis in the development of the West. Jurong Lake District is another mega development just right beside D05. Touted to be the second Central Business District (CBD) of Singapore, JLD will help in easing the current CBD traffic and to aid with decentralisation. These developments will have a spill over effect on D05 in terms of the appreciation of the land and increase in tenant demand. At the same time, we foresee that the developments in JLD will affect the future plans for the Pasir Panjang area in order to avoid conflicting uses and to fully utilise to create a holistic ecosystem in the West.

The Jurong area is also another region that has jammed packed plans for developments which include a new MRT line that will enhance the connectivity in the west. Seeing that the authorities have planned for a new MRT line to service the area, they are likely preemptively catering for the increased population in the area. Thus, we believe that there will be a spillover effect from the developments of JLD for those who would want a more secluded level of living. Hence, the spotlight will be placed on the coastal areas in D05 like West Coast and Pasir Panjang.

Our Take

After all that we have researched on D05, we hope that you are as excited as we are for what is to come over the next decade. The property market has been performing well in the last few years, we foresee that in the near future, major developments will be the prime motivating factor for prices in any district. With two major developments coming towards D05, we expect this district to be under a lot of attention from home owners and investors. We do still notice a level of Price Disparity between D05 and other districts, where D05 is still priced lower. However, we foresee that as time counts down and the years pass, more attention and emphasis will be on District 05. We are very enthusiastic about this prime area and will continue to observe the price developments. If you are interested or perhaps considering developments in the area, feel free to contact us for a consultation. We would be more than happy to share further on the prices that we have compiled and at the same time, elaborate on the developments we have highlighted. Till our next article, we will catch you on one of our Signature Home Tour episodes, Take Care!

P.S. Just a reminder to sign up to our upcoming webinar where we will elaborate more on the explosive District 05. Free advice you will definitely not want to miss.

Link to webinar: District 05 The Ticking Time Bomb