How will the real estate market react ahead of the new Downtown MRT Lines 3 opening?

With the upcoming Downtown Line 3 (DTL3) opening up yet another pathway from eastern Singapore to the city centre and beyond, how does this affect the properties that lie along this stretch? In this post, you’ll see how new infrastructure affect property prices, and find potential properties that might see an upside soon.

HOW WILL SINGAPORE’S TRANSPORTATION INFRASTRUCTURE AFFECT REAL ESTATE?

Over the past decade, the Singapore Government has made a concerted effort and considerable investment to expand the train and bus network across Singapore, with the goal of getting at least 85% of the population from their home to destination within an hour (“door-to-door”). This involves building new roads and subway tunnels that cut through old estates and forests, and breathes new life into other inaccessible neighbourhoods.

In the past, there is always a direct correlation between property prices and the opening of new MRT stations. In most cases, the prices would have already been factored into the latest transaction prices, once the authorities release the plans for construction. In light of the recent depressed real estate market however, you might find bargains as properties near 16 stations vie for attention from property buyers.

WHERE ARE THE NEW STATIONS LOCATED AT?

The new DTL3 stations run from central Singapore to the Expo station in the east, almost in parallel to the existing East-West MRT line. While the DTL3 aims to alleviate the human traffic from the existing line, it also serves to connect Singaporeans to the industrial and commercial districts that are seldom served directly by MRT, easing rush hour congestion on feeder buses and taxis.

From central Singapore to Expo, the 16 Downtown Line 3 stations are:

Fort Canning – at intersection of River Valley Road and Clemenceau Avenue
Bencoolen – near Bencoolen Street, near the junction with Bras Basah Road
Jalan Besar – near junction of Jalan Besar and Weld Road
Bendemeer – at Kallang Bahru, near the junction with Kallang Avenue
Geylang Bahru – along Kallang Bahru, at the junction with Geylang Bahru
Mattar – near junction of Merpati Road and Mattar Road
Macpherson – along Circuit Link, near the junction with Circuit Road
Ubi – near junction of Ubi Avenue 1 and Ubi Avenue 2
Kaki Bukit – along Kaki Bukit Avenue 1, near the junction with Jalan Damai
Bedok North – at Bedok North Road, near the Pan-Island Expressway flyover
Bedok Reservoir – Bedok Town Park, beside Bedok North Avenue 3
Tampines West – at Tampines Avenue 4, near the junction with Tampines Avenue 1
Tampines – along Tampines Central 1
Tampines East – along Tampines Avenue 7, near the junction with Tampines Avenue 2
Upper Changi – at Upper Changi Road East
Expo – along Changi South Avenue 1

WHAT KIND OF PROPERTIES WILL BENEFIT FROM THE NEW DTL3?

COMMERCIAL & INDUSTRIAL PROPERTIES

As the new MRT line cuts through Geylang Bahru to Bedok North, expect to see commercial and industrial properties near the new stations rise in value. With easy access to these buildings, you might also expect a better class of corporate tenants replacing the medium-heavy industrial businesses like car and heavy machinery workshops. This also happened previously at Tai Seng, as the Circle Line MRT station helped pull more corporate offices and large organisations like Bread Talk and Charles & Keith into the area. As a result, overall rent will rise over time.

OUTSIDE OF CENTRAL REGION HDB ESTATES

The other group of properties that will enjoy an upside are the “outside of central region (OCR)” HDB estates beside the new MRT stations. Mature estates in Jalan Besar, Geylang Bahru, Kallang and Macpherson will now have an MRT station at their doorstep, which will give residents a reason to cheer. However, HDB prices may not see a marked increase, as these districts already have a premium priced in due to their distance from the city centre.

TAMPINES HDB ESTATE

The large HDB estate of Tampines tells a different story, though. Long earmarked to be one of three new major commercial centres (along with Jurong and Woodlands), Tampines has been woefully underserved by a single MRT station, surrounded by three large commercial malls. Two new DTL3 stations, Tampines West and Tampines East, will now help move commuters easily towards the Tampines Central, down to the CBD area, or up to Changi Business Park at the Expo station. As a result, Tampines should be even more highly sought after, as the new stations drastically improve transportation convenience and reduce travel time.

Tellingly, the resale transaction statistics of Tampines show that prices have hardly risen over much of the past decade, perhaps in light of the market downturn. While Tampines in general has been priced higher than other HDB estates, it is still comparable to places like Jurong East and nearby Bedok. This might provide a good reason for bargain hunters to start looking for good buys here.

Quarter / Year	Average Resale Price 3-room flat	Average Resale Price 4-room flat	Average Resale Price 5-room flat
2017 Q1	$319,000	$423,000	$519,000
2016 Q1	$323,000	$423,400	$526,500
2015 Q1	$333,000	$420,000	$525,000
2014 Q1	$365,000	$457,400	$550,000
2013 Q1	$375,500	$481,200	$565,000
2012 Q1	$362,000	$448,000	$523,000
2011 Q1	$326,000	$412,000	$472,300
2010 Q1	$293,000	$370,500	$430,000
2009 Q1	$258,500	$331,000	$388,000
2008 Q1	$228,000	$307,500	$380,000
2007 Q1	$192,000	$263,000	$310,000

Source: HDB

SHOULD YOU BUY NOW?

With all these in mind, is this a good time to buy? Analysts have been sharply divided over whether the real estate market is bottoming out, but sentiments have been buoyed by recent positive news. With the cooling measures still in place, you’ll also need to make sure you are financially able to support the transaction. And remember that there’s no rush – in this buyer’s market, you’ll have enough time to do the sums, no matter what the seller or agent says!

Source: KRIB October 2017

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