Price trends in Tanjong Pagar

If you’re looking to buy in the Tanjong Pagar area, it is important to understand the sub-market there. Property seekers should not only look at the big quarterly headlines for overall real estate prices, but also at the trends in the area, and even the project itself, if only to get a better idea of what is a fair sale or rental price to pay, or potential windows of investment returns.

For this article, we will be delving into overall price trends in District Two for the past four years, and comparing it with the overall movements in real estate industry.

Overall price trends in Tanjong Pagar

Tanjong Pagar Price Trends Chart 1

Looking at the chart above, we see that prices in Tanjong Pagar have been on the decline since Q4 2013. A small caveat though: A number of quarters saw less than non-landed 20 transactions during the quarter, which affects representativeness of the price. Two particular quarters, Q2 2012 and Q1 2013, stand out particularly due to their anomalously high volumes. These spikes were due to strong sales of two particular projects – Eon Shenton for the first, and Spottiswoode Suites for the second.

However, as the market was hit by cooling measures, transaction volumes plummeted, and prices came down slowly.

When we compare prices in Tanjong Pagar however, with overall prices in the Core Central Region, we see that this sub-market is a little more volatile.

Tanjong Pagar Price Trends Chart 2

Figure 2 looks at how the Urban Redevelopment Authority’s Core Central Region Price Index for non-landed private residential property has moved over 17 quarters, and compares it with the median prices in the Tanjong Pagar area. The Authority’s Price Index has fallen from its peak in Q1 2013 at 141.2, to Q1 2016’s 129, a decline of 9.5 percent. The cycle of continuous decline only broke in the first quarter of this year, led by the stronger sales of properties in the Orchard area. However, between Q4 2015 and Q1 2016, prices in District Two continued to decline a further 4.7 percent. For the most part however, the movement of prices in Tanjong Pagar largely follow prices in the overall Core Central Region.

However, it is possible for prices in the District Two to move in the opposite direction from URA’s price index. For instance, even as the URA price index saw its largest decline of 2.1% in Q4 2013, prices in District Two rose by almost 14 percent for the quarter, led by sales of the Wallich Residence at Tanjong Pagar Centre, with prices above $3,000 per sq ft.

This suggests that buyers are willing to pay a premium for products with certain value, despite a slower market. Wallich Residence, for instance, is a landmark building that will be the tallest building in Singapore when completed, and will integrate with office, retail, hotel and public transportation. Investors with deep enough pockets and a longer term outlook are likelier to gravitate to such projects, or to assets like shophouses.

Good time to buy in Tanjong Pagar?

For those looking at capital appreciation, the usual adage of buying low and selling high definitely applies.

Per square foot prices in Tanjong Pagar are close to their lowest level in the past four years, and it is definitely worth considering entering the prime property market. The last time prices bottomed out in the Core Central Region was in Q2 2009, due to the Global Financial Crisis. Paper gains since then, for those who bought at that period and then sold at the last peak in Q4 2013, would have been about 32 percent overall, or a Compound Annual Growth Rate of 10.5 percent, a healthy returns by any means.

Timing when the market is likely to bottom out is an inexact science at best, and given the propensity of Singapore’s real estate market to be affected by global macroeconomic conditions, it is hard to predict if this quarter, the next, or the quarter after will be the lowest point for District Two. However, prices have reached a level that should provide investors with holding power a decent amount of returns in time to come.

Source: PropertyGuru

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Price trends in Tanjong Pagar

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