Piccadilly Grand ReviewSEE PROJECT WEBSITE
Piccadilly Grand Review
February 11, 2022
12 Feb 2022: Piccadilly Grand is slated for Preview in April 2022, register with us to book your Preview Slot!
11 Feb 2022: Floor plans and development details are not yet ready for Piccadilly Grand, but our review on the locality and price trends of the area are ready for your reading pleasure!
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Table of Contents
- Land Bid Price
- Northumberland Road Site
- Price Analysis
- Property Market Landscape
City Fringe Living with Direct Connection to MRT
The team in PropertyX has done an analysis about Piccadilly Grand, an upcoming launch expected in April 2022. In this article, we will put together our analyses and share our views to provide a guide for our readers looking to buy a new launch condominium.
See more information about the project at the Piccadilly Grand website
Landscape of New Condominium Launches in Singapore
Piccadilly Grand is one of the most highly anticipated launches for the year for both developers and consumers in 2022 for several reasons. On one hand, the site location itself is exciting and has many interesting features (as we will see later). On the other hand, it is also one the first new launches faced with the cooling measures implemented since 16th December 2021.
In this article, we will also examine the current economic situation: the available stocks (new private units) in the market and the potential demand for these new private units. Interestingly Piccadilly Grand will also be the biggest new launch development in the first half of 2022 with 407 units (technically North Gaia is the biggest at 616 units, but it is an EC and considered a different segment with its own unique restrictions). All eyes will be on this launch and its results as it will impact other developers’ and consumers’ outlook and pricing for the rest of the year.
Introduction to Piccadilly Grand
Piccadilly Grand is a mid-sized leasehold development located at Northumberland Road District 8, just on the outskirt of the Central Business District. It will be a mixed development with a commercial space on the first storey named Piccadilly Galleria, which will house shops such as F&B, retail and a childcare centre.
Piccadilly Grand will have 3 blocks of 23 storeys with a total of 407 units of 1-5 bedroom apartments, including dual-key units.
The Story Behind Its Name
The naming of the project as Piccadilly, as we understand it, is an interesting one.
First of all, there are many existing streets in Farrer Park that are named after places in UK. Northumberland itself is one, and others include Gloucester, Dorset, Oxford, Cambridge.
The Northumberland site being an integrated development with direct access to Farrer Park MRT station is envisioned to be the next transformative landmark within the Farrer Park district, while being surrounded by historical shophouses and hotels, old school eateries and cultural monuments.
These characteristics have been likened by the developers to be similar to Piccadilly, an iconic district in London as well as a hub of culture, tradition and modernity.
Piccadilly is known to be a muse for artists and musicians; likewise in Farrer Park, there are many quaint cafes and art galleries inspired by Farrer Park’s creative, entrepreneurial spirit.
Northumberland Road Land Bid Price
On the 5th May 2021, the Urban Redevelopment Authority (URA) awarded the tender for the site at Northumberland Road to Maximus Residential SG Pte. Ltd. and Maximus Commercial SG Pte. Ltd (a joint venture between CDL and MCL land).
The companies submitted the highest bid in the tender for the site.
The site at Northumberland Road was launched for tender on 27 October 2020. The tender for the site closed on 27 April 2021. The land parcel was offered for sale on 99-year lease term.
Details of the awarded land parcel and the successful tenderer:
- Location: Northumberland Road
- Allowable Development: Residential with Commercial at 1st storey
- Site Area: 8,732.9 m2
- Maximum Permissible Gross Floor Area (GFA): 36,679 m2
- Date of Launch: 27 Oct 2020
- Date Tender Closed: 27 Apr 2021
- Lease Period: 99 years
- Successful Tenderer: Maximus Residential SG Pte. Ltd. and Maximus Commercial SG Pte. Ltd.
- Tendered Price ($psm of GFA): $445,888,000 ($12,156.49)
The land tender attracted a total of 10 bidders, with their bids as follows:
|RANK||NAME OF TENDERER||TENDERED SALE PRICE ($)||TENDERED SALE PRICE IN $PSM/GFA|
|1||Maximus Residential SG Pte. Ltd. and Maximus Commercial SG Pte. Ltd.||445,888,000.00||12,156.49|
|2||Winrich Investment Pte. Ltd.||421,888,999.00||11,502.19|
|3||Holland V Properties Pte. Ltd.||418,777,000.00||11,417.35|
|4||CSC Land Group (Singapore) Pte. Ltd.||388,890,565.00||10,602.54|
|5||EL Development Pte Ltd||383,800,000.00||10,463.75|
|6||Sim Lian Land Pte Ltd||368,800,000.00||10,054.80|
|7||Intrepid Investments Pte. Ltd., Garden Estates (Pte.) Limited and TID Residential Pte. Ltd.||351,000,000.00||9,569.51|
|8||Peak Vista Pte Ltd||333,800,000.00||9,100.58|
|9||GLL C Pte. Ltd.||315,847,000.00||8,611.11|
|10||Japura Development Pte Ltd||256,000,000.00||6,979.47|
Piccadilly Grand Developers
The project for Piccadilly Grand was awarded to a joint venture by two giants of the real estate industry, CDL and MCL Land. Both are well-known giants in the real estate industry with reputations for building high-quality and innovative homes in Singapore.
City Developments Limited (CDL)
CDL (Co. Regn. No. 196300316Z) City Development Limited is a multi-award leading real estate company with businesses in property development, investment, and management. It is listed in the Singapore Exchange SGX and is one of the largest companies by market capitalization. CDL achievement includes winning some of the most prestigious awards in real estate with its outstanding and innovative developments.
Malayan Credit Limited Land (MCL Land)
Since its inception more than 50 years ago, MCL Land (Co. Regn. No. 196300074K) has established itself as a leading residential developer on both sides of the causeway. MCL Land constantly thrives to create long-term value and innovation in their property development projects, the end-products are always smart and practical homes that their clients can connect, live and play within their community.
With two industry giants in collaboration for this project, there is definitely a very high degree of assurance for buyers for the quality and value of the project.
The Northumberland Road Site: A background
The site where Piccadilly Grand sits on is part of the expunged Northumberland Road; Exit E of Farrer Park MRT station will be within its vicinity.
The site is within the Little India Historic District, launched by the Urban Redevelopment Authority (URA) on 27 Oct 2020 and the developer’s tender was closed on 27th April 2021. Though the site was launched in the midst of Covid-19 uncertainties, it still attracted 10 bids from different real estate ventures. This gives some indications of the potential of the site from the developers’ views. The winning bid of $445.88m came from CDL and MCL Land joint venture.
The site area is about 8,732 sqm/ 94,000 sqft and the maximum permissible Gross Floor Area (GFA) is 394,809.47 sqft.
This works out to be a bid of $1,129 psf ppr (per square foot per plot ratio) for the site.
DBS provided the 4.5-year green loan financing package for the development. This will secure Building Construction Authority (BCA) Green Mark GoldPLUS certifications and will be within CDL’s Sustainable Finance Framework. We could see residential units installed with energy-efficient green features such as 5-ticks air conditioning systems and LED lighting, as well as a Pneumatic Waste Conveyance System for the development.
Piccadilly Grand: An Excellent Location
The Piccadilly Grand development is situated at the intersection between Race Course Road and Gloucester Road.
The site is located within the Kallang Planning Area, a central area in Singapore. The site was earmarked predominantly as a mixed development: residential (Piccadilly Grand) at the city fringe, with commercial retail space on the first storey (Piccadilly Galleria) to provide local amenities for Piccadilly Grand residents and enhance the street experience while walking to the Farrer Park MRT station. For those who drive, the site can easily access major arterial roads such as Race Course Road and Bukit Timah Road. A short drive away is the Central Expressway (CTE), which can go on to link to the Pan Island Expressway (PIE) and the Kallang Paya Lebar Expressway (KPE).
Although Piccadilly Grand is centrally located and near to the Central Business District, it is classified under Rest of Central Region (RCR) and not Core Central Region (CCR). This means that though Piccadilly Grand is next to the CCR area, buyers will be paying for a unit in line with RCR prices. To make it simpler to digest: though Piccadilly Grand is next to Orchard Road, Novena, Raffles City, etc (CCR region), buyers will not need to pay a huge premium on the price of a residential unit.
Bonus to this, as we mentioned earlier, Exit E of Farrer Park MRT station (along the North East Line) is right in the development of Piccadilly Grand itself! This means residents of Piccadilly Grand will have quick and easy access to MRT services to travel to any part of the country. Do note that this exit will still be used by the public and the residents of HDB flats some distance behind Piccadilly Grand.
Using Farrer Park MRT station to travel to other parts of Singapore is also a breeze considering its centrality and connectivity to other stations, such as Orchard, City Hall, Promenade, etc.
Farrer Park MRT station which sits on the North East line is on the same track as:
- Dhoby Ghaut MRT Interchange, which is an interchange with 2 other lines, is 2 stops away. The two additional lines (Circle Line and North South Line) lead to other parts of Singapore. You can reach Orchard station in another 2 stops with the North-South (NS) line. if you work in the financial district, the NS line in the opposite direction will take you to Raffles Place in also 2 stops. By changing over to take the Circle (CC) Line, you can also travel quickly to the Marina Bay area.
- Some places accessible on foot from Dhoby Ghaut MRT include Fort Canning Park, The Cathay, National Museum of Singapore and even the Istana
- One stop away is Little India. It also connected to the Downtown Line (DTL) and the nearby Sim Lim Square at Rochor Station
- 3 stops away is Clark Quay station, the popular hangout for locals and ex-pats.
- 4 stops away is Chinatown station. This station is also connected with the Downtown Line (DTL)
- 5 stops away is Outram Park station. This station is also where the pan-island line East-West (EW) Line is connected to.
- Traveling to the end of the NE Line is HarbourFront to shop at Vivo City or to spend a day in sunny Sentosa Island. The other end of the NE Line lead to Punggol with its own appeal of the Punggol Waterway, Coney Island Park, etc
With Farrer Park station within easy and comfortable walking distance, traveling to any part of Singapore will not pose much of a challenge.
Piccadilly Grand Facilities
Piccadilly Grand is a mixed development. This means that there will be a mix of residential and commercial units. All commercial units will be housed on the ground floor. There will be a mix of F&B, retail, and an early childcare development center / infant care (ECDC) of at least 500m² capable of accommodating about 100 toddlers.
There will be 3 blocks of residential units with a total of 407 units of 1-5 bedroom apartments. There will not be any penthouse unit for Piccadilly Grand. The design of the buildings will be interesting and aesthetic in our opinion as the developer have to be sensitive to the nearby fine-grained low-rise shophouses especially when viewed from Race Course Road and Farrer Park View. There must be a minimum 20m wide building separation from the fifth storey onwards. This will give some privacy between the 3 blocks of apartments.
Although the developer has not released any information at this point of writing about the facilities, we expect Piccadilly Grand to have some of the basic condominium facilities like a swimming pool, gym, clubhouse, etc… for its residents.
As an ECDC is required by the authorities, we think that it could be due to a lack of such facilities in the Farrer Park area. The inclusion of an ECDC will make Piccadilly Grand appealing to couples with young children as it will be right at their doorsteps. Coupled with the retail and F&B shops on the ground floor accessible by the public, this will be a boisterous development on the first floor. With these facilities, we think Piccadilly Grand may not be suitable for potential buyers looking for a quieter and more serene environment.
For our readers who are particular about noise but still like the convenience of this location can stay tuned and look out for our future detailed analysis on the site map to identify stacks and units which will be in the quieter areas.
If you do not feel like venturing too far from your home in Piccadilly Grand, there is a host of shopping malls, restaurants, eateries for residences’ enjoyment and entertainment.
It is possible to travel to City Square Shopping Mall from Piccadilly Grand via Exit E of Farrer Park Station using the underground pass throughout the walk. This option is very appealing for most people as they want to avoid the sun or the rain. City Square Mall has about 200 retail shops including NTUC FairPrice for your weekly grocery needs.
Other popular brands for your dining and entertainment fix are:
- Value Stores: Daiso, Don Don Donki, Japan Home
- F&B and Quick Service Restaurants: Haidilao, Din Tai Fung, Food Republic, Astons, Starbucks, KFC, McDonald’s, Subway, Mos Burger, ToastBox, etc
- Cinema: Golden Village
- Education: Mindchamps Pre-School, Kumon Learning Centre, I Can Read
- Sports Outlet: Decathlon, Adidas
- Health & Beauty: Watsons, Guardian, The Body Shop
If this is not enough, next to City Square Mall is Mustafa Centre with its mind-blowing six-storey of 400,000 sq. ft. retail space; selling 300,000 over items from electronics to cosmetics at the most competitive price.
Restaurants and F&B
Without even venturing to City Square Mall, the surrounding area of Piccadilly Grand is scattered with well-loved restaurants and F&B Outlets in close proximity.
Just across Race Course Road is Muthu’s Curry if you fancy some good Chettinadu Indian curry.
If you want to have your bak kut teh fix, Jia Bin Bak Kut Teh is slightly more than 5 minutes walk away. Their herbal broth originated from Seremban, Malaysia, and has several other tasty dishes.
No problem if you are a vegan or into vegetarian diet. The highly-rated MTR Restaurant is about 10 minutes walk away. It serves some of the best Southern Asian vegetarian dishes in Singapore.
Near Tekka Centre is the very popular Banana Leaf Apolo Restaurant which serves a whole range of delectable Indian cuisine.
Piccadilly Grand is located almost in the middle of the triangle of 3 hawker centres: Pek Kio Market and Food Centre, Berseh Food Centre, and Tekka Food Centre. These 3 hawker centres have some of the best hawker fares around at affordable prices.
Pek Kio Market and Food Centre (11 min walk)
- Sheng Seng Hokkien Mee – fried Hokkein mee
- Good Spice Carrot Cake – Fried carrot cake with eggs
- Wah Kee Big Prawn Noodle – dry or soup noodles with big prawns
Berseh Food Centre (14 min walk)
- Mei Xiang Black & White Fish Soup – sliced and fried fish soup
- Coffee Hut – coffee and toast
- Hock Kee Fried Kway Teow – fried kway teow
Tekka Centre (14 min walk)
- Allauddin’s Briyani – nasi briyani. Another interesting stall to check out is Yakader Biryani
- 545 Whampoa Prawn Noodles – dry or soup prawn noodles
- Lim Cendol – local dessert stall
Medical Centres and Hospitals
With three world-class medical centres and hospitals around your vicinity, you know that the health of your family is in good hands and need not worry about check-ups or any emergency issues.
Farrer Park Hospital (or Farrer Park Medical Centre) is the nearest hospital from Piccadilly Grand and is less than 5 minutes walk away. It is a private tertiary healthcare institute, with a team of medical specialists, nurses, and allied healthcare workers using state-of-art facilities to treat and care for the patients. The hospital comes with a medical centre in Connexion, which revolves around the lifestyle concept, combining healthcare and hospitality.
Slightly further away is KK Women’s and Children’s Hospital. This historical and reputable public hospital specializes in taking care of women and children. It has built its reputation in fields such as Obstetrics, Gynaecology, Paediatrics, and Neonatology. The team of about 500 specialists manages high-risk conditions in women and children using the latest medical innovations and technology to deliver results. Today, KK Women’s and Children’s Hospital has the capabilities to manage the 830 beds under its care.
Further up North along Serangoon Road is Kwong Wai Shiu Hospital, a charitable healthcare institution offering Traditional Chinese Medicine.
The much-anticipated Health City Novena is also a couple of kilometres down the road. Upon completion in 2030, it will become Singapore’s biggest healthcare complex. Health City Novena is in the Novena area and the health hub will include several partners like Tan Tock Seng Hospital, HCA Hospice Care, Dover Park Hospice, Ren Ci Hospital, the National Skin Centre, and the National Neuroscience Institute supporting each other. The hub will be capable of providing comprehensive healthcare for Singapore residents in the central of Singapore.
Schools Around Piccadilly Grand
Near the vicinity of Piccadilly Grand, there are a number of good primary schools and secondary schools.
Farrer Park Primary School is a mere few minutes walk away, making it the nearest primary school to Piccadilly Grand.
For those families with children whose siblings are studying in or have parents affiliated with Anglo Chinese School (ACS) and Singapore Chinese Girls’ School, Piccadilly Grand is less than 10 minutes drive away from them.
Due to Piccadilly Grand’s excellent location near to city centre, other popular schools such as Nanyang Girls High School, Chinese High School, and Methodist Girls School are easily accessible via Bukit Timah Road.
For buyers looking for International Schools, there are a number nearby:
- Invictus International School (Centrium)
- Lotus Bridge International School
- KB International School
Here are some of the primary schools and secondary schools nearby:
- Farrer Park Primary School
Within 1-2 km:
- St. Joseph’s Institution Junior
- Hong Wen School
- ACS (Barker Road)
- Bendemeer Primary School
- Bendemeer Secondary School
Piccadilly Grand Unique Selling Points
Here are several USPs about Piccadilly Grand which makes it worth considering:
• It is located at a Prime City Fringe location, RCR
• The development is Integrated with Retail, F&B and Childcare Centre
• There are a total of Three Clubhouses and Five curated Lifestyle Zones, an unprecedented architecture design by any developers
• The units will be equipped with Branded kitchen appliances. Quality fittings and wares from Bosch, Hansgrohe and Villeroy and Boch
• There is Direct link to Farrer Park MRT
• It is a mere Two stops to Dhoby Ghaut MRT Interchange
• It is Well connected to Singapore City Centre (Orchard Road, CBD)
• It only takes Eighteen minutes to drive to Changi Airport and Jewel
• There are tons of Amenities within reach
• The project is Jointly developed by two established developers – CDL and MCL
Piccadilly Grand Launch Price
At this point in writing, we do not yet have the actual pricing for units at Piccadilly Grand, but we can make some informed estimates.
The Northumberland Road land plot was sold on the 5 May 2021 at at a price of $1,129.4 psf ppr, which gives rise to an estimated Breakeven Price of $1,837 psf.
(The land being sold in May 2021 and a projected launch in April 2022 places the launch timeline at around 12 months from the time that the land plot is awarded to the highest bidder.)
Factoring in a 20% markup in prices, we may see launch prices at $2204 psf, and if there is a 30% markup in prices, we may see launch prices at $2,388 psf.
In the following sections, we have tabled and analysed information relating to the current economic situation in real estate that will hopefully help you make an informed decision on whether this is the right time to enter the real estate market, and whether Piccadilly Grand is the right choice for you.
Firstly, for buyers looking to enter the Piccadilly Grand development as a property investment, one of the most crucial indicators is perhaps a direct comparison of capital gains and rental yields of the projects in the immediate surrounding area.
Here we will take a closer look at these 2 dimensions.
Projects Around Farrer Park MRT
In a 300m radius around Farrer Park MRT, there are around 15 developments, most of which are boutique small sized freehold apartments.
Short of analysing every single project in the vicinity, and to help make our discussion focused and relevant to current price trends, here’s a shortlist of 6 projects that are less than 10 years old within the area.
|A||City Studios||Freehold, TOP 2013, 25 Units|
|B||Loft @ Rangoon||Freehold, TOP 2013, 24 Units|
|C||Rangoon 88||Freehold, TOP 2014, 48 Units|
|D||28 RC Suites||Freehold, TOP 2016, 45 Units|
|E||8 Farrer Suites||Freehold, TOP 2015, 34 Units|
|F||Uptown @ Farrer||99 Years, TOP Sep 2021, 356 Units|
Freehold Project Price Analysis
Of the above 6 projects, 5 are Freehold and quite close in terms of age, so it is useful to analyse them as one group first.
These 5 Freehold projects are boutique sized apartments, and apartment developments typically have limited facilities. For buyers looking for a larger set of facilities for living enjoyment, these projects may not have as large an appeal.
At the same time, because there are not that many units in the development, transactions do not occur as frequently as larger sized developments, hence the price support level is not as strong, and prices can see a larger degree of fluctuation.
Rangoon 88 is the largest development with 48 units, and Loft @ Rangoon is the smallest development at 24 units.
Here’s a closer look at the transactions that have occurred at Rangoon 88 (unit numbers hidden for privacy). There is almost an equal number of profitable vs unprofitable transactions.
The most profitable transaction comes in at $77,000 for a 1.1% annualised return, whereas the most unprofitable transaction comes in at at a loss of -$222,843 for a -2.1% annualised return.
As for the smallest development Loft @ Rangoon, it is a slightly rosier picture with more profitable transactions than unprofitable ones thus far.
The most profitable transaction comes in at $175,200 for a 9.0% annualised return, and the most unprofitable transaction is a loss of -$65,000 for -1.2% annualised return.
Leasehold Project Price Analysis – Uptown @ Farrer
For a more apples-to-apples comparison, it is fairer to look at the prices of Uptown @ Farrer, a 99 year leasehold project by Perumal Development Pte. Ltd, a subsidiary of Low Keng Huat (Singapore) Limited.
Uptown @ Farrer comprises of 1 Block of 21 Storeys with 116 Residential Units, and 1 Block of 16 Storeys of Serviced Apartments with 240 units.
Uptown started sales in Sep 2019, and achieved TOP in Sep 2021.
At this point in writing, Uptown is averaging at $1,801 psf, and since buyers have not cleared the 3-years Seller’s Stamp Duty period, there are, for now, no profitable/unprofitable transactions to look at.
The price trend chart below may seem to suggest that psf took a plunge in Jan 2022, but it was primarily because of the sale of a 1,948sqft unit for $3m at $1,540psf.
Smaller units tend to have higher psf and larger units tend to have lower psf. The price trend chart below does indicate that prices are holding steady, which is to be expected as during the new launch phase, the developer is the only party setting prices and hence sale prices are well managed and maintained within a certain range.
For investors looking to purchase a unit for renting out and earn a rental income, the rental demand of the developments around this area would be vital in assessing the viability of this move.
Here, the distinction between Freehold and Leasehold matters even less – tenants do not care if the development is free or leasehold, they are only looking for Location and Proximity to Amenities.
These projects near Farrer Park MRT do extremely well in terms of rental yield – the average is at least $4.1 psf/month, with Uptown @ Farrer hitting the highest average of $6 psf/month.
Here are some rental contracts at Uptown – the smaller units are providing impressive numbers for rental yield.
Units from 500 to 600 sqft in size can fetch at least $3,100 in rental income per month, and a rental yield of at least $5.6 psf/month.
City Square Residences
An analysis of price performance of the residential projects around the Farrer Park MRT area would not be complete without taking a look at the nearby mega development City Square Residences.
It is crucial to note that City Square Residences is a Freehold project, hence its price performance is not a direct comparison with Piccadilly Grand, but will serve as a good indicator of demand for that area.
Some quick facts:
- Project Name: City Square Residences
- Developer: City Developments Ltd
- Tenure: Freehold
- TOP: 2009
- No. of units: 910
City Square Residences has done very well in terms of price appreciation, and prices have been able to hold since 2014.
This is in contrast with our earlier examples of smaller Freehold apartments where there are less transactions and prices experience a greater degree of fluctuation and see less support in movement.
With prices moving on the uptrend, many sellers have exited the project with a plump amount of profit, with some recent transactions gaining as much as 6.5% in annualised return.
In comparison, there are a lot less unprofitable transactions.
30 Unprofitable Transactions compared with 784 Profitable Transactions, or just 3.6% of all recorded transactions are unprofitable.
And lastly, for rental yields, units at City Square Residences are seeing around $4 to $5 psf per month returns.
District 8 Price Performance
Another important indicator to take a look at is the price performance of District 8 as a whole.
The following chart was generated based on these parameters:
- Timespan : Jan 2012 to Jan 2022 (10 years)
- For all of District 8
- All unit sizes
- Specifically Condominium unit types (not including Apartments)
- 99 year leasehold developments
The results are excellent – average price has grown by 64% over 10 years, or 6.4% per year.
To put this price performance in perspective, lets look at price performance for the same parameters but for District 9, where Orchard Road is at:
- Timespan : Jan 2012 to Jan 2022 (10 years)
- For all of District 9
- All unit sizes
- Specifically Condominium unit types (not including Apartments)
- 99 year leasehold developments
Average price has grown by 26% – still good nonetheless, but this is testament to the headroom for prices to move up still for District 8.
The Property Market Landscape
We believe that a holistic analysis of the value of any real estate asset (whether it be Piccadilly Grand) involves a range of economic factors to determine. From the macro environment where the governmental policies determine taxes and regulates land prices, to the micro level of price movements based on organic demand and supply forces in the market.
In the following sections, we tabled and analysed more information relating to the current economic situation in the local real estate scene. From here, we hope to help you form an objective assessment of Piccadilly Grand (in fact, for other projects as well) and determine if the project is worth investing in.
Cooling Measures 16 Dec 2021
Buyers will undoubtedly be concerned about the newly implemented cooling measures on 16 December 2021. The main concerns will mainly be with the increase in ABSD (Additional Buyer’s Stamp Duty) and TDSR (Total Debt Servicing Ratio). Without going into complicated details, the following is what you need to know.
Increase in ABSD
The increase in ABSD does not affect everyone. The ABSD is raised for:
- Singapore citizens to 17% from 12% (+5%) for their second property
- Permanent Residents to 25% from 15% (+10%) for their second property
- Foreigners to 30% from 20% (+10%)
However, it will not affect buyers who are looking to purchase their first property. These include:
- Young couples looking for their first matrimonial home. This group is currently facing delays and long queues for BTO flats and if purchasing a new launch condo, can move into their new home in the next 3-4 years. They will probably have a sum of money for down payment after working for a few years and banks will also be willing to lend considering they still have many years of earning power.
- People who want to right-size to the right unit. This could include people who need a bigger space for their growing families, HDB upgraders whose flats have just MOPed, the silver generation looking for a smaller, more manageable unit
Reduction of TDSR from 60% to 55% for private properties
The definition of the Total Debt Servicing Ratio (TDSR) by MAS refers to the portion of a borrower’s gross monthly income that goes towards repaying the monthly debt obligations, including the loan being applied for.
As of 16 Dec 2021, a borrower’s TDSR should be less than or equal to 55%, a reduction from its previous level at 60%.
Most buyers should not be overly affected by this reduction in TDSR, unless there are heavy existing loan obligations such as car loan, credit card or outstanding amounts from overdraft.
To put this reduction in perspective and to see the impact of this change, lets take the following example:
- A couple both 35 years old
- $10,000 combined income
- 2 credit cards in total
- $1000 monthly car loan
As a result of the TDSR change, their maximum loan amount drops from $1.09m to $979k, or a 10% reduction.
A (Still) Favourable Loan Environment
With the Covid-19 pandemic emerging from 2019 onwards and hammering the global economy, interest rates have seen corresponding adjustments in response.
In particular, the Federal Reserve in the United States has reacted by reducing interest rates till zero, as a measure to continue to support the economic recovery from the coronavirus pandemic.
This reduction in interest rates has had a ripple effects on the world’s economy; its impact extends to bank’s lending rates for consumers.
(See: The Fed keeps rates near zero — here’s how you can benefit, 28 April 2021)
Over on local shores, changes were afoot with consumer mortgage loan rates.
On 31 March 2021, the Steering Committee for SOR and Sibor Transition to Sora (SC-STS) recommended that financial institutions cease the use of Singapore Interbank Offered Rate (Sibor) in new contracts by end-September 2021.
(See Singapore banks to stop issuing Sibor-linked loans, SOR derivatives by September, 31 March 2021)
This move was in preparation for the discontinuation of the less widely used 6-month Sibor by March 2022, and the widely used 1-month and 3-month Sibor benchmarks by end-2024.
In its place is SORA, the Singapore Overnight Rate Average, the volume-weighted average rate of borrowing transactions in the unsecured overnight interbank SGD cash market in Singapore daily between 8am and 6.15pm. Sora has been published by the MAS since July 1, 2005.
Sora was selected as the new interest rate benchmark as it was found to be the “most robust and suitable alternative”, underpinned by a deep and liquid overnight funding market.
Consumers looking to take up mortgage loans will be well placed to opt for SORA based packages.
From the following chart of 3M SORA rates, SORA hit its lowest at 0.0696% on 23 July 2020, but has been moving up ever since.
At this point in writing (11 Feb 2022), SORA is at 0.2176%.
For Floating Interest Packages (it is only possible to opt for Floating Rates for New Launches under construction), we are still seeing spreads of around 0.85% (this may not be available by the time you speak with your banker), which means overall interest rates are at
0.2176% + 0.85% = 1.0676%
However, as vaccine programmes continue to roll out world-wide and the global economy takes on a more optimistic outlook, such a recovery would also mean increasing interest rates.
As recent as Dec 2021, the local authorities (MAS) sounded an alert on impending potential interest hikes, a strong indication for what lies ahead for potential home buyers.
The interest rates are favourable for now; however such low interest rates may not be here to stay for long.
The Increasing Cost of Land
The government of Singapore maintains a steady stream of supply of housing units via the GLS (Government Land Sales) Programme.
The GLS releases state land for development and is planned for and announced every six months. GLS sites are released either through the Confirmed List or Reserve List.
In chronological sequence, here’s a quick look at some land bids that have occured during the time when Piccadilly Grand’s site was successfully tendered and other land bids that have taken place since:
|Land Cost ($psf ppr)||Date Awarded||Site Name||Bidder|
|$930||13 Nov 2020||Tanah Merah Kechil Link||MCC Land|
|$1,129||5 May 2021||Piccadilly Grand||CDL & MCL|
|$1,118||2 Jun 2021||Ang Mo Kio Ave 1||UOL & Kheng Leong|
|$1,205||29 Jul 2021||Lentor Central||Guocoland|
|$989||30 Aug 2021||Jalan Anak Bukit||Far East|
|$1,210||11 Oct 2021||Slim Barracks Rise (Parcel B)||Gao Xiuhua|
|$1,246||11 Oct 2021||Slim Barracks Rise (Parcel A)||EL Development|
|$1,060||18 Jan 2022||Lentor Hills Road (Parcel A)||Hong Leong, GuocoLand and TID|
|$1,302||18 Jan 2022||Jalan Tembusu||CDL|
From the chart above, a few observations can be made:
- The cost of acquiring the Piccadilly Grand site is almost the same as the Ang Mo Kio Ave 1 site which is much further away from city centre
- Sites that are much further away like Lentor Central, Slim Barracks Rise (Parcels A & B) were also acquired by developers at much higher cost.
- Jalan Anak Bukit is the only site that is visibly acquired at a much lower cost compared to Piccadilly Grand. This is due to the site being further away from CBD, it’s 4 times larger than Piccadilly Grand and there were some special conditions attached to secure the tender
Of course, a lower land bid price does not translate to low unit prices, although a lower land bid does allow the developer to release units priced to sell and maintain a large degree of competitiveness against other land plots with higher costs and hence lesser opportunities to price units lower.
Limited Supply of Units (RCR/OCR)
Taking a look at the number of unsold units in the CCR, RCR, OCR regions throughout 2021, it is apparent that there has been a steady take up of units throughout the year, especially for the RCR region.
As at 2021 Q4, the number of unsold units in OCR is the lowest at 3,972; next is RCR with 4,306 unsold units and CCR with 6,805 units.
With a decreasing supply in the RCR region, any new project emerging (in this case Piccadilly Grand) is bound to attract attention.
|Unsold units by region||CCR||RCR||OCR|
Pipeline Supply of Private Residential Units as at 2021 Q4
Related to the earlier point about residential units being in limited supply, the final key metric we will take a look at is the pipeline supply of residential units, because supply and demand is directly correlated with price – low supply, high demand will result in higher prices.
As per the 2021Q4 Real Estate Statistics Report by URA, in the current year of 2022, there are 11,247 private residential units slated for completion, and a higher number of 17,276 units projected for completion in 2023 (excluding Executive Condominiums).
This number drops off precipitously – as compared with 2023, the number of units in 2024 drops by 39% to 10,532 and a further 61% to 6,706 in 2025.
Whilst the government will most definitely ensure a pipeline of units via the GLS (Government Land Sales) programme, any new piece of land sold today to developers will still take a few years to construct before it is ready for buyers to move in.
In light of consistent housing needs from a growing population (Singapore is, after all, a nation heavily dependent on foreign workers), a growing inclination for housing arising from Work From Home arrangements due to the ongoing Covid pandemic, prices will move in tandem with demand.
And if the supply pipeline is not sufficient to keep up, acquiring a unit today would mean demand for it in future.
Despite the many positive traits that we’ve covered, let’s touch on the biggest con that we can see for the Piccadilly Grand project.
It’s Going To Be The Highest Priced Project Within the Area
Going by the earlier analysis of Piccadilly Grand’s land price at $1,129 psf, the estimated breakeven price at $1,837 psf alone already places it on par with the selling prices at Uptown @ Farrer.
We do expect selling prices to go above $2000 psf, which will make it the priciest project within that area.
The con with buying the highest priced project in an area is that other resale projects will look cheaper in comparison with yours, and in the resale market, buyers may choose those projects over yours.
Subsequent price appreciation of that highest priced project really depends on the project itself, since there is no other project to hedge against, and the other factors that will cause further increase in price is general inflation and capital appreciation arising from a demand in residential housing across the country and also demand of units specifically in that area.
Mitigating Factors – Undeveloped Land
On the upside however, there are mitigating factors that can help alleviate the effect of this con.
Analysing the Master Plan reveals that the 2 nearby empty plots of land are slated for residential development.
The first plot nearer to Piccadilly Grand is currently empty.
The other plot is currently occupied by the Farrer Park Tennis Centre and the Farrer Park Swimming Complex.
Right at the edges of both plots along Hampshire Road is the Little India Bus Terminal.
It is too early to tell how these land plots will be developed – for public or private housing. This is especially since HDB has launched the King George’s Heights BTO project along King George’s Avenue, not far from this location.
If they are slated for public housing, then it will mean the government is invested in developing the area.
If they are slated for private housing, the eventual higher land cost would mean higher unit costs and more headroom for units at Piccadilly Grand to appreciate in value.
We do think Piccadilly Grand is the development to look out for, based on these key factors:
- Headlined by two of the top developers
- City fringe location with direct access to MRT, rain or shine
- A multitude of amenities – at the first level of the development and in the immediate vicinity
- Excellent rental yields for the surrounding area – as high as $6 psf/month, making it ideal for investors considering to rent it out
- District 8’s price performance as a whole is performing well: 64% growth in average prices over the past 10 years
- Although do be aware that the biggest con is that Piccadilly Grand will be price defining project within this area.
Check out more information about Piccadilly Grand here
(Prices and charts referenced from URA, Edgeprop and Squarefoot)