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Buying interest at Caribbean, The Interlace

INVESTORS are turning their attention again to developments in District 4, especially the Telo­k Blangah and Keppel Bay neighbourhoods. With the construction of the 1,040-unit The Interlac­e at an advanced stage, buying interest has also picked up. Developed by a CapitaLand-led consortium and designed by world-class architect Ole Scheeren, the project is a redevelopment of the former Gillman Heights, a privatised HUDC estate in Telok Blangah. The project is pitched at the mid- to upper-end of the condominium market, and contains a mix of two- to four-bedroom apartments and penthouses. The 99-year leasehold condo is scheduled for completion sometime next year.

Only mainly large units are left for sale at The Interlace, according to David Neubronner, head of residential project sales at Jones Lang LaSalle (JLL), and the developer is pricing them at an average of S$1,500 psf. As at end-October, 737 units or 70.9% of the units have been sold by the developer, with the latest median price achieved at S$1,294 psf.

Meanwhile, those who bought units when the project was launched in late-2009/early 2010 at prices from S$900 to S$1,000 psf are offloading them on the secondary market as it approaches completion. Sub-sale prices achieved over the last two months have ranged from S$1,096 to S$1,353 psf, according to caveats lodged in October and November. For instance, a 1,464 sq ft, three-bedroom unit on the seventh floor was sold in a sub-sale for S$1.98 million (S$1,353 psf), according to a caveat lodged with URA Realis in November. The original owner purchased it from the developer in April 2010 for S$1.5 million (S$1,024 psf), thus realising a capital appreciation of 32%.

Meanwhile, a 1,550 sq ft, three-bedroom unit on the eighth floor in another block recently changed hands in a sub-sale for S$1.89 million (S$1,218 psf). The seller purchased it for just S$1,003 psf two years ago, thus enjoying a capital appreciation of 21.4%. Owners who bought their units two years ago are now putting them on the secondary market with price tags of S$1,300 to S$1,400 psf, says Neubronner. At such prices, they still get a capital upside of 20% to 30%, he estimates.

However, for those who plan to hold on to their units at The Interlace, Neubronner reckons that, based on an estimated rental rate of S$4 psf per month, they are likely to achieve rental yields of about 5%, relative to the more recent buyers where the yields for their units will likely be 3% to 4%.

Meanwhile, at the 969-unit Caribbean at Keppel Bay, a handful of units have been sold in November at prices ranging from S$1,561 to S$1,735 psf based on caveats lodged to date. The 99-year leasehold condo project was completed in 2004.

The most recent caveat registered with URA Realis was for the sale of an 893 sq ft, two-bedroom unit on the sixth floor of one of the blocks for S$1.55 million (S$1,735 psf). The previous owner paid S$1.26 million (S$1,407 psf) for it three years ago.

A similar-sized unit on the third floor of another block also recently changed hands for S$1.55 million, or S$1,735 psf. The previous owner paid just S$671,175 (S$751 psf) for the unit seven years ago, hence seeing its price increase by 2.3 times over that period.

Elsewhere at Caribbean at Keppel Bay, a 1,227 sq ft, three-bedroom unit on the eighth floor of another tower recently changed hands for S$1.86 million (S$1,516 psf). Three years ago, the same unit was sold for S$1.73 million (S$1,410 psf), according to a caveat lodged with URA Realis.

Caribbean at Keppel Bay is popular with expatriate tenants and investors, with rental rates hovering from S$5 to S$6 psf per month, according to JLL's Neubronner. This means, based on today's selling prices, the gross rental yield is likely to be compressed to 3% to 3.5% per annum.

Meanwhile, also in the Telok Blangah neighbourhood, Bukit Sembawang Estates has substantially sold its freehold Skyline Residences, which is still under construction. To date, around 80% of the 283 units at the high-end condo project have been sold at an average price of S$2,000 psf. The last recorded transaction captured by URA Realis was in August — a 1,346 sq ft, three-bedroom unit on the 22nd level was sold for S$2.82 million, or S$2,096 psf. "Skyline Residences stands out for its freehold status and hence it commands a premium," says Neubronner.

This story first appeared in The Edge Singapore weekly edition of Dec 10-16, 2012.

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