What makes homebuyers go nuts over far-flung properties?

Properties in the extreme ends of Singapore offer lower investment yields compared to other regions but such kind have grown in popularity in the past 1.5 years with some even achieving record selling prices, says an expert.

Far flung private residential properties are essentially properties in the extreme ends of Singapore. These include those in western tip of Singapore (Jurong East and Jurong West), the northern part like Woodlands, Sembawang and Yishun, and the eastern tip.

Here’s some examples of projects in such areas which fared really well:

According to Cushman & Wakefield senior manager for research in Asia Pacific, far- flung properties are popular despite their off-the-beaten locations due to the satire interest for many people to simply own a piece of private residential property which became very evident especially in 2010 and 1H 2011, before the impact of US and Europe economic conditions took its toll.

Buyers of far-flung properties, he said may include many who have already been staying in HDB flats in the vicinity and have their families and generations in the neighbourhood.

Mr. Ong also noted that there are some who may feel that far flung properties are value buys as they may be priced cheaper than better located properties. Not to mention, they are increasingly creatively conceptualized.

“With plans to improve connectivity to the rest of the island, the homebuying interest for such properties have been encouraging,” he said.

“Additionally, there are projects which appeal as they offer SOHO units with high ceilings, which can be used for small home businesses,” he added.

On top of locals, Mr. Ong noted that these properties can also potentially attract selected foreign homebuyers who are less location sensitive and whose daily activities revolves around the neighbourhood – e.g. children who are receiving education in the schools nearby and who themselves have jobs in the suburbs such as industrial estates, business parks or have small scale businesses in the vicinity.

“Buyers of such properties can also allocate part of their wealth for non real estate assets, e.g. spending on their own transport vehicles, compared to channeling all their financial resources in servicing a better located property which may be costlier. They may therefore live with the inconvenience of such a property since their mobility is easily facilitated by personal (not public) transport,” he said.

Investment prospects for far-flung properties

According to Mr. Ong, sompared to other regions, the investment proposition of far flung properties may be lower but there is still an investment significance, which is project-specific, depending on the concept and the proximity of these properties to the industrial, business parks, or suburban office centres

“Many far-flung properties were purchased for owner’s occupation, catering to the HDB upgraders’ market, instead of investment. However, the buyer of far-flung properties can still find some investment value by tapping on a niche tenant demand base – i.e. on foreigner professionals who work near the far flung areas instead of at the CBD, mainly in engineering and pharmaceutical related industries such as in Tuas and Woodlands areas,” he said.

“Additionally, some junior expatriates on local terms may find such properties to be worth leasing as it is within their budget and a heartland staying experience is close to their humble lifestyle at home, as well as offering a reflective, down-to-earth Singapore living experience,” added Mr. Ong.

The expert noted that the northern tip of Singapore can be a good spot for Malaysians who reside in Johor Bahru, who find the area offering them proximity to their hometowns. It may be even attractive for those who work in the northern part of Singapore as well.

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