Investment opportunities in Bukit Timah?

TRANSACTION volume has certainly been affected by the recent (Singapore) government cooling measures introduced on Jan 12. Just based on caveats lodged with URA Realis alone, the number of transactions for the month of February (downloaded as at March 13) was 732 compared with 2,927 in January, implying a precipitous drop of 75%. While some may attribute the contraction in volume to the absence of any significant new launches in February and the Chinese New Year festivities, the number is still sobering.

Even though sentiment is more subdued, there are still buyers looking for value buys, especially in the Dunearn Road neighbourhood. There were three transactions in the 140-unit Jardin, which was developed jointly by Far East Organization and Yeo Hiap Seng Ltd, and completed sometime last year. As at end-February, 126 units had been sold at an average price of $1,825 psf.

The three recent transactions at Jardin in late February ranged from $2.91 million ($1,690 psf) for a 1,722 sq ft, third floor unit to $3.15 million ($1,850 psf) for a 1,701 sq ft, fifth floor unit in the 10-storey linear residential block, according to caveats lodged with URA Realis.

Next door to Jardin is the 318-unit GardenVista, a 99-year leasehold condominium by Far East Organization that was completed in 2006. The condo saw two transactions in late February. One was for a 1,341 sq ft unit on the fifth level that changed hands for $1.75 million ($1,301psf) while the other was a 786 sq ft first level unit that was sold for $940,000 ($1,196 psf). The last time the 786 sq ft unit changed hands was in June 2010, when it traded for $785,000 ($999 psf).

Meanwhile, on the other side of GardenVista is the boutique 72-unit freehold condo, Suites de Laurel, which was completed last year and fully sold to date. The most recent transaction at the 999-year leasehold condo took place last November when a 721 sq ft unit was sold for $1.23 million ($1,706 psf). The previous owner paid $967,000 ($1,341 psf) for the unit in mid-2010, hence seeing a capital appreciation of 27.2% in over two years.

"This area in Bukit Timah is very sought after by families because of its proximity to good schools, and even Pei Hwa Primary School is within the 1km range," says Grace Ng, deputy managing director of Colliers International. Other sought after schools in the Bukit Timah area include the likes of Nanyang Primary School, Hwa Chong Institution, Methodist Girls' School and Raffles Girls' Primary School.

The upcoming Beauty World MRT station on Upper Bukit Timah Road and King Albert Park MRT Station on Blackmore Drive are also fuelling buying interest in the area. Both stations are part of the Downtown Line and scheduled to open in 2015.

"Jardin is very attractive compared with the older developments in the area because of its more modern facilities," points out Ng. This can be seen in the disparity of pricing between new condos such as Jardin and Suites De Laurel, where transaction prices are from $1,700 to $1,800 psf, and the freehold King Albert Lodge at 1 King Albert Park located across the road but was completed in 1997, and where recent prices have been hovering at $1,324 psf. "The variety of condos — from 99-year leasehold, 999-year leasehold to freehold — means buyers have a lot of choices within that location," she adds.

Located next to King Albert Lodge, and across the road from Jardin is McDonald's Place at 11 King Albert Park. The commercial building was sold in April last year to a consortium led by Oxley Holdings for $150 million, and is expected to be redeveloped into a mixed-use project, with strata-titled retail and residential units for sale. The project is expected to be launched sometime in 2Q or 3Q this year.

"Bukit Timah is going to be the focal point and will be another retail and F&B hub like Holland Village," says Mary Sai, executive director of investments (commercial) at Knight Frank, which brokered the sale of McDonald's Place.

According to market sources, the new project on the site of McDonald's Place is likely to see strata freehold shop units priced in the $7,200 psf range. Further down at the Upper Bukit Timah area, Fragrance Group launched Suites at Bukit Timah, a mixed-use project with 71 residential units, 43 commercial units and two restaurant units. The residential units are fully sold with prices ranging from $1,203 psf for a 1,023 sq ft unit to $1,675 psf for a 366 sq ft unit. Meanwhile, the shop units hit a high of $5,792 psf when an 86 sq ft unit changed hands in a sub-sale for $498,800 in August last year. Prices of the shop units had started from $4,300 psf in November 2011.

"The commercial sector is the only one that is unaffected by government policy measures so far," says Knight Frank's Sai. "This is the sector that people are interested in, especially in buying new developments under construction, where there is a prospect of capital appreciation when the project is completed in three to four years' time."

Collier's Ng agrees. She reckons that the new development at McDonald's Place will also feature compact residential and shop units, similar to Suites at Bukit Timah. Such units will appeal to singles and young couples, as well as investors, she adds.

This story first appeared in The Edge Singapore weekly edition of Mar18-24, 2013.

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