Offshore: Renewal of Balestier speeds up

The main Balestier Road has retained some of its charm with the presence of the Tua Peck Kong temple, Balestier Market and Food Centre, shophouses selling lighting fixtures and other home fittings, as well as popular eateries such as the famous tau sar piah shop, the Founder Bak Kut Teh Restaurant, the bak chor mee stall and Boon Tong Kee chicken rice restaurant. The greatest transformation, however, is happening on the side roads off Balestier Road, for instance on Bhamo, Mimbu and Mandalay Roads. Many of the old apartment blocks have made way for new condominium towers, with some newly completed and others at various stages of construction.

The biggest agent of change in the Thomson Road-Balestier Road neighbourhood has been giant developer City Developments Ltd (CDL), which snapped up a cluster of eight collective-sale sites in 2006/07, and has since launched and fully sold three new larger projects on those sites, starting with the 336-unit The Arte early last year, and most recently, 368 Thomson, which was fully sold as at end-July.

Each project has been launched at successively higher prices. For instance, The Arte is a redevelopment of the former Lok Cho Apartments, Comfort Mansion and a walk-up apartment block along Jalan Raja Udang, just off Balestier Road. When it was launched in early February last year, sentiment in the property market was still rather cautious and CDL initially priced the project at an average of S$880 (RM2,053) psf. Units at The Arte have been changing hands at S$1,000 to S$1,250 psf in sub-sales in the last two months, according to caveats lodged with URA.

Meanwhile, the 177-unit Cube 8 (to be located on the site of the former Albany and Thomson Mansions) was launched and fully sold early this year, at an average price of S$1,250 psf. The latest launch in the vicinity was the neighbouring 157-unit 368 Thomson, a redevelopment of the former Concorde Residences, Balestier Court and Bright Building. Since VIP previews began on July 9, the project has been fully sold at an average price of S$1,400 psf, with most of the units snapped up during the first few days.

The success of CDL’s projects at the Thomson end have certainly contributed to the hype and boosted prices of projects in the Balestier neighbourhood. Since the start of the year, a handful of collective sale sites have been put on the market, with three transacted successfully. The first collective sale transaction of the year was 6 Jalan Ampas, an industrial building jointly sold by the owners for S$27.5 million in February. The other collective sales were Diamond Tower at Jalan Rajah, which was sold to boutique developer EL Development for S$49.6 million in April; and Goodwill Mansion, along Balestier Road, for S$20 million.

What’s adding to the buzz in the Balestier neighbourhood is a circular sent out by URA in July 2008, which said it had completed the review of 15 industrial buildings in the Jalan Ampas and Lorong Ampas neighbourhood and deemed that this cluster of buildings could be rezoned for residential use at a gross plot ratio of 2.8 upon redevelopment. “Following the announcement, the global financial crisis came, so the owners couldn’t do anything about it because nobody wants to sell at the bottom of the market,” notes Tan Hong Boon, deputy managing director of Credo Real Estate.

But, things are looking up now. “Such sites have attracted new entrants, mainly the small- to medium-sized developers, and the contractors-turned-developers,” says Ho Eng Joo, executive director of investment sales at Colliers International.

One such player is Indonesian Satia Narjadin, managing director of Global Orion Properties, who purchased the site at 6 Jalan Ampas in his maiden foray into residential development in Singapore. The sale was brokered by Credo Real Estate. The 38-year-old Narjadin, who runs the family-owned business, had decided to focus on Singapore since 2006, developing three strata-titled industrial projects, two of which have been launched with units sold to investors or business occupiers. The company’s maiden project was i-Lofts@Changi, a three-storey building with terraced units; and the second was the 654-unit Northstar@AMK, located at the corner of Yio Chu Kang Road and Ang Mo Kio Avenue 5. Next month, the latest industrial project will be launched in Pasir Panjang. Called Meissa, it is near Mapletree Business City and across the street from the upcoming Pasir Panjang MRT station.

“We want to ensure that, just like all our industrial developments, our residential project will also have a distinctive address,” says Narjadin. His idea is that the project will be modern and sleek, with full-height glass — an orientation that will allow every unit to enjoy an unobstructed view of the city.

Global Orion paid S$27.5 million for the 27,838 sq ft freehold site and will be paying an estimated S$18.7 million in development charges to have the site rezoned for residential use. Inclusive of the development charge for the conversion of use from industrial to residential, as well as construction costs, Narjadin estimates that the total cost of the project could amount to S$80 million. The site can be redeveloped into a residential tower of about 100 units and up to 36 storeys.

He says: “The whole area [Balestier] is undergoing a transformation and, owing to its proximity to the Novena and the city area, it’s benefiting from a spillover effect. That’s why we decided to focus our attention on this site.”

Given that the project is just a short driving distance to both Orchard Road and the CBD via the Pan Island Expressway and the Central Expressway, Narjadin foresees the project will appeal to singles and young couples because of its central location. Thus, he intends to build largely one- and two-bedroom units. “While our units are not large, we still want to give buyers the luxury of space,” says Narjadin. The one-bedroom apartments will be around 500 sq ft, and the two-bedroom apartments will measure 800 sq ft, he adds.

Narjadin has appointed renowned Singapore-based architectural firm Ong & Ong Architects to design the project and execute his vision. Founded by the late former President Ong Teng Cheong and his wife, Ong & Ong is now helmed by their son, Tze Boon, who is now chairman. The firm has designed some significant condominium projects in Singapore in recent years, including CDL’s 910-unit City Square Residences, adjacent to the City Square shopping mall with 700,000 sq ft of retail space; the 315-unit Raintree by developer Frasers Centrepoint, located at the foot of Bukit Timah Hill Nature Reserve; and the 646-unit Icon in Tanjong Pagar by Far East Organization.

Narjadin is familiar with the Balestier neighbourhood, having been educated in Singapore and attended Bartley Secondary School. “Yes, I grew up here,” he says. “When I was in secondary school, I had a lot of friends who lived in the old apartments on Moulmein Road, some of which have probably been torn down and redeveloped.” Narjadin is looking at buying the penthouse in his development when it is launched early next year.

Another new entrant in the Balestier neighbourhood is BS Capital, which also picked up an industrial building, Colourscan Building, at the corner of Lorong Ampas and Kim Keat Road, for S$36 million. URA has already approved the rezoning of the site from business to residential use with a plot ratio of 2.8, which means a 20-storey residential project can be built there.

The price tag works out to S$670 psf per plot ratio (ppr) for the 32,544 sq ft freehold site, assuming an estimated development charge of S$25 million. Colliers’ Ho brokered the sale.

BS Capital appointed renowned architectural firm Palmer & Turner Architects (the same architect for its recently completed Lumiere on Mistri Road) to design its project at Kim Keat Road, a 160-unit development that will also be made up largely of studios and one- and two-bedroom apartments. “While the design will be a blend of contemporary and traditional, given the location, the units will be user-friendly,” says BS Capital CEO Chin Teck Chuan.

To him, a user-friendly size for a studio apartment is about 400 sq ft, while one-bedroom apartments should be a comfortable 500 sq ft and two-bedroom apartments 700 sq ft. “We want to pitch our project as a mid-tier city fringe development, something that people can aspire to upgrade to, or downsize to,” he adds. “People are increasingly recognising that they don’t have the luxury of space anymore in Singapore, and even HDB flats have shrunk over the years.”

EL Development, the property development arm of construction group Evan Lim & Co, which purchased Diamond Tower, is also a new kid on the block in the Balestier area. It has developed projects in the prime districts, including the 32-unit Stevens Suites, which was launched in June, as well as Illuminaire on Devonshire, which was sold out within three days of its preview last year. The developer paid S$49.6 million for the site and intends to build a 108-unit project of 30 storeys there. Based on today’s construction prices, the quantum price paid translates into a breakeven price of S$1,200 psf.

“We want to create a product that’s different from the surrounding developments,” says Lim Yew Soon, managing director of EL Development. He is entering the neighbourhood because land prices in the area are still affordable compared with that in the prime districts, which “are now very high”, he says, “and will put a strain on affordability unless you build very small units.” He intends to build regular-sized one-, two- and three-bedroom apartments in his new project, targeted at both HDB upgraders as well as private property dwellers. He expects to launch it in 1Q2011. It terms of pricing, it could be around S$1,400 psf, which is “the new price benchmark set by 368 Thomson”, he adds.

New completions, pricing differential
Since last year, a handful of new developments has been completed in the Balestier area. Along Irrawady Road, there is the 53-unit The Centrio by Soilbuild Group, which was completed last September and is fully sold. The project was launched at an average price of S$1,025 psf. The most recent resale was in June, when a unit changed hands for S$1,056 psf and another went for S$1,264 psf. The most sub-sales were seen just after completion in January, when units changed hands at S$1,080 to S$1,209 psf. Another Soilbuild project that was recently completed is the 151-unit, 34-storey Montebleu on Mimbu Road, which is also fully sold. The project was launched in March 2007 at an average price of S$980 psf and, most recently, sub-sales in June and July have ranged from S$1,290 to S$1,380 psf. A major player in the Balestier neighbourhood, Soilbuild also launched the 127-unit The Mezzo (the former Ruby Plaza) in March last year, and to date, all the units in the 28-storey tower have been sold.

Nearby on Mandalay Road is The Axis by Novelty Group, a 52-unit project that was recently completed and is fully sold. Prices may have started in the S$800 psf range in 2007, when units were first released, but the most recent resale of units for April and May have been at S$1,034 to S$1,141 psf.

Another project that was completed last year is the 180-unit twin tower Pavilion 11 by UOL Group. In the resale market, the high-floor units are commanding S$1,300 to S$1,350 psf, while low- to mid-level units have changed hands at S$1,151 to S$1,292 psf. Pavilion 11 is closer to the Novena area near the medical cluster, and is considered to be in prime District 11.

Boutique developer Roxy-Pacific Holdings is another major player in the Balestier area. Construction is underway at two of its projects, Nova 48 and Nova 88, which are one street apart from each other. The former is on Prome Road and the latter, launched early last year and fully sold, is on Bhamo Road, next to the Balestier Market. The company’s project in the Balestier neighbourhood that was recently completed is Marque@Irrawady, where all units except the penthouse have been sold.

Launched in mid-2007, units were sold at an average of S$1,000 psf. The most recent transaction was the sub-sale of a 16th floor, 1,690 sq ft unit that was sold for S$1.6 million, or S$947 psf.

Keith Yip, a specialist real estate agent in the Balestier neighbourhood, says demand for resale apartments in the area in recent months has come mainly from beneficiaries of the old projects in the en bloc sales. “While there’s interest, transaction volume has been thin as even sellers of the older projects are asking for prices of S$1,000 psf, and buyers are holding back,” Yip observes. Most of these people have lived in the Balestier area for many years and want to continue to live in the same neighbourhood. “So, they tend to look for older projects where units are larger than the new developments,” he adds.

‘Spillover demand’ from Thomson Road and Novena area
There is spillover demand from the Thomson Road area, where the most recent transaction at the recently completed Sky@Eleven hit a high of S$1,530 psf, notes Yip. At the other end of Balestier in the Novena enclave near the MRT, units at Frasers Centrepoint’s 417-unit Soleil@Sinaran recently sold at a median price of S$1,750 psf. “In comparison, most of the new projects in the Balestier area are S$1,000 to S$1,200 psf,” he says.

In the Newton area, directly across from Novena Square and the MRT station, is Newton Suites by UOL Group, which was completed in 2007. The owners are already asking for S$2,000 psf for their units, with most recent transactions in May at S$1,842 to S$1,850 psf. At the 175-unit Lincoln Suites, located just next door to Newton Suites, which was launched last year, the most recent transactions ranged from S$1,833 to a high of S$2,627 psf, according to caveats lodged in June.

Recently, there has also been a rise in rental inquiries in the Balestier area, notes Yip. Most are from tenants in the Newton-Novena area who are looking at new units in the relatively cheaper Balestier area. For instance, a two-bedroom apartment in Balestier can command monthly rental rates of S$3,000, compared with S$4,000 to S$5,000 in the Novena area, he says.

Yip is also seeing an increase in new enquiries about rental apartments from those in the medical field as the medical hub in the Novena area develops. The only drawback of the Balestier Road area is that the MRT stations at Novena and Toa Payoh are not within walking distance of any project, unless it is at the Novena end. For those who drive, however, it offers easy access to both the Central and Pan Island Expressways, he says.

The close of the tender for the collective sale of Melrose Court on Aug 12 has also drawn keen interest. Located on Lorong Limau, the four-storey, 32-unit apartment block was put up for sale at S$48 million, or S$688 psf ppr. Colliers’ Ho who is marketing the project, says interest has mainly been from small- to medium-sized developers and contractors-turned-developers.

Based on recent deals, the owners of collective or even industrial sites put up for sale today are looking at prices of S$600 to S$700 psf ppr, notes Tan Hong Boon, deputy managing director of Credo Real Estate. “Pricing of projects in Balestier has already surpassed the previous peaks,” he says. The 50-unit Pastoral View and an adjoining land parcel at Bassein Road owned by OCBC in the Novena area were recently offered for sale by tender. The indicative price for the site is S$130 million to S$150 million, or S$904 to S$1,043 psf ppr, says Tan, the marketing agent for the site.

“The site is located just 400m away from the Novena MRT station,” says Tan. “It is also next to the cluster of developments in the Novena area such as Novena Square, Velocity@Novena, the Novena Medical Centre, the upcoming Parkway Health Hospital and Tan Tock Seng Hospital, as well as the shopping and commercial area across the street like United Square, Goldhill Plaza and Goldhill Centre.” The tender for the site closes on Aug 23.

Given the location of the sites and their combined land area of 51,395 sq ft, it is said to have attracted the interest of the medium-sized to large listed developers as well. The combined site can be redeveloped into a high-rise tower of 140 apartments, assuming an average size of 1,000 sq ft each.

In May, MCL Land launched D’Mira, a 65-unit, 17-storey boutique development along Boon Teck Road, off Balestier Road. In the first phase of 32 units released, 21 were sold at an average price of S$1,100 psf, says the developer. MCL Land plans to release the second phase after the Hungry Ghost Month, which ends in early September.

With the new residential towers springing up as the Balestier neighbourhood is renewed, perhaps District 12 in Balestier will one day become as desirable a residential neighbourhood as the prime District 11 neighbourhoods that flank either end of the area — Thomson Road on one side, and the Novena-Newton area on the other.

Cecilia Chow is City and Country editor at The Edge Singapore

This article appeared in City & Country, the property pullout of The Edge Malaysia, Issue 820, Aug 23-29, 2010.